Facebook is considering supporting non-fungible tokens (NFTs) within its Novi Digital Wallet. The wallet has yet to launch and will come in conjunction with the launch of Diem, the stable digital coin that Facebook initially created in 2019. The stable coin is a digital coin that is backed by a fiat currency like the U.S. dollar. Launching the Facebook stable coin Diem would provide crypto trading opportunities and an environment where NFTs would be supported.
Who is Developing The Novi Digital Wallet?
Facebook Financial, also known as F2, is the internal group developing the company’s Novi digital wallet. A digital wallet is a software service that allows you to pay and receive digital currencies. It facilitates crypto trading and stores several other items such as gift cards and tickets for entertainment. Digital wallets that deal directly with crypto trading generally focus on creating an address for customers to transfer and trade cryptocurrencies.
Facebook Faces Regulatory Concerns
The digital wallet and potential crypto trading potential have generated regulatory concerns in the U.S. Congress. Facebook was able to swerve quickly in 2020 as pressure from congress pushed the company to switch from its initial concept of cryptocurrency Libra to a new stable coin called Diem. The production of Diem will come in partnership with Silvergate Capital Corp. bank. Facebook found a partner that has banked cryptocurrency firms as a core part of its business. The use of a stable coin backed by a fiat currency such as the U.S. dollar could avoid the volatility of other cryptocurrencies such as Bitcoin and Ether. Diem networks will register with the U.S. Treasury Department and its financial crimes network. The Diem network would provide access to peer-to-peer payments and the ability to shop for merchandise and services on Facebook platforms, though the platform would also be open to other wallets. This type of wallet would not be conducive to crypto trading as the coin is pegged to another fiat currency.
Since a dollar is worth a dollar in the U.S., the risks of a change in the dollar’s value would be subject to inflation. Meaning as the price of a good or service rose, the Diem coin would buy less, similar to a U.S. dollar. There would also be a change for those purchasing a Diem coin in dollars from outside the United States. Individuals that purchased Diem in U.S. dollars using Euros would be subject to exchange rate movements between the EUR and the USD. So, if you are buying 100 Euros worth of Diem in U.S. dollars, and the exchange rate moved in favor of the U.S. dollar, the value of the Diem in Euros would increase.
While Facebook continues to prepare for the launch of its digital wallet and Diem, the company faces a plethora of criticism. According to sources, the founder of Ethereum, Vitalik Buterin, said that Facebook lacks trust. These comments are not the only jabs at Facebook’s foray into the crypto trading arena, but the source wants to build the entire new internet on the Ethereum platform.
What is an NFT?
Facebook wants to use its platform to facilitate the creation, purchase, and selling of non-fungible tokens. A non-fungible token (NFT) is data or programming code stored on a digital ledger, called a blockchain. The blockchain is a ledger that keeps track of transactions and has them certified by either proof of work or proof of stake. Each transaction on the blockchain needs verification. One way it can be verified is for a miner to answer a puzzle that certifies the transaction. The miner will then receive a reward of Ether on the Ethereum platform.
An alternative strategy is proof of stake. Instead of providing proof of work, a miner can show that they have skin in the game. When this situation is completed successfully, a file can be created on the blockchain. NFTs can represent photos, videos, and other types of digital files. While copies of these NFTs are available for purchase, these digital files are tracked on blockchains to provide proof of ownership that are separate from copyright.
The Bottom Line
The upshot is that Facebook has created a digital wallet where you will be able to keep digital coins and facilitate crypto trading. In the Facebook digital wallet, you will be able to hold Diem, their crypto coin, which allows individuals to purchase goods and services on the Facebook platform. You can buy and sell non-fungible tokens (NFTs), digital files, and strings of programming code that live on the blockchain. An NFT is an original file and will get placed on a blockchain either through a proof of work or a proof of stake concept.
Source link: https://coincodex.com/article/12420/facebook-considers-nft-support-in-novi-digital-wallet/