Coinbase is helping Facebook launch its latest cryptocurrency project Novi, a digital wallet. The product launched early Tuesday morning and Coinbase – one of the world’s most popular digital currency exchanges – was hired to assist with the logistics of the wallet.
Coinbase Is Facebook’s Knight in Digital Armor
The social media giant is offering a batch of varying digital currencies to users that will be stored on Coinbase. These assets are available to anybody who signs up to take part in the early testing of the Novi wallet. Following the news, stock in Coinbase rose by as much as two percent.
The product is designed to help people send and receive digital money no matter where they are in the world. The wallet will undergo a short period of testing in both the United States and Guatemala before being released to the public. All transactions are alleged to be fully secure and will not incur any fees.
All this sounds fine and dandy except for one thing… The wallet is arguably coming a little too late. The product – which was first described as “Libra” – was initially announced in the summer of 2019. This was more than two years ago, and with 2022 right around the corner, one wonders if the product really holds any resonance in the crypto space anymore.
The same thing happened with Bakkt, which was supposed to be one of the world’s first crypto trading platforms designed for institutions. The product was first announced in late 2018, though several delays were experienced, and it wasn’t until late 2019 when Bakkt first arrived on the scene to ultimately lackluster reception.
The price of bitcoin experienced major hurdles during this time, and many analysts blamed the drop on the fact that Bakkt failed to reach its target audience and did not achieve the major levels of trading it was initially talking about when it was first announced. Bitcoin had been trading in the $9,000 range at the time of the product’s launch, but just a few days later, the currency fell into the low $8,000 range.
What if Things Don’t Go So Well?
The good news is that the Novi wallet does not pertain directly to bitcoin, so we are probably wrong to assume that BTC will fall if Novi doesn’t live up to its hype. Rather, Novi users will primarily utilize the Paxos dollar, a stable coin also known as USDP. The asset is ranked number 100 on CoinMarketCap.com and is allegedly backed by the U.S. dollar. This prevents it from suffering from the same volatility and price swings that bitcoin is known to incur.
Facebook chose this currency given that it would allow the company to test their systems with a well-known stable currency. At the time of writing, USDP has been around for roughly three years.