mark-zuckerberg,-facebook-quietly-abandon-their-in-house-venmo

Mark Zuckerberg, Facebook Quietly Abandon Their in-House Venmo

There has been no official announcement. 

And even if there was one, this announcement would have gone unnoticed: Mark and Zuckerberg and his company, Meta Platforms  (META) – Get Meta Platforms Inc. Report, no longer have a digital payments project. 

Zuckerberg has chosen his moment well: the crypto sector is currently going through an unprecedented crisis of confidence marked by a fall in the price of digital currencies. Bitcoin, the king of cryptocurrencies, has lost 71.3% of its value since its all-time high on November 10, according to data from CoinGecko. Ether, the second cryptocurrency by market value, is down 78% from its November all-time high as well. Overall, the crypto market has lost over $2.1 trillion in eight months.

Besides falling cryptocurrency prices, attention is focused on the liquidity crunch that is currently affecting many prominent crypto firms. Indeed, the collapse of sister tokens Luna and UST in May just caused the bankruptcy of the hedge fund Three Arrows, which had borrowed large sums of money from a multitude of crypto lenders like Voyager Digital  (VYGVF) – Get Voyager Digital Ltd Report, Babel Finance and BlockFi to invest in Luna. Faced with the default of payment by Three Arrows Capital or 3AC, these firms are currently in great financial difficulty and some have had to suspend withdrawals. Basically, their customers no longer have access to their money.

Novi Will Shut Down on September 1

It is therefore in this context that Zuckerberg and Meta, parent company of Facebook, Instagram and WhatsApp are abandoning Novi, its service which was supposed to allow people to send money to each other using a cryptocurrency.

The announcement was made on the website dedicated to Novi.

“The Novi pilot is ending soon,” the company wrote. “Novi will no longer be available for use after September 1.”

“Before Novi goes away, we’ve made it easy for you to get your remaining balance and download your Novi information.”

The social media giant then explains to users how to withdraw their money before the curtain finally falls on Novi.

“It’s important that you withdraw any remaining balance in your Novi account before that date. You can choose to transfer your Novi balance to your bank account or withdraw it as cash where applicable.”

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It warned that: “After September 1, 2022, you will no longer be able to log into your Novi account and you’ll lose access to that information.”

Facebook had launched Novi last October with the help of the cryptocurrency exchange platform Coinbase  (COIN) – Get Coinbase Global Inc Report in beta form, a kind of test that was then supposed to be extended. Coinbase brought a kind of digital storage and technology to secure user funds.

“Facebook has chosen Coinbase as its custody partner for its pilot of Novi, a new digital wallet that enables people to send and receive money abroad instantly, securely, and with no fees,” Coinbase said in a blog post last October.

How it worked: Novi had the ambition to allow users to send money to each other, through an app or through Facebook Messenger and WhatsApp, with the help of the Pax Dollar (USDP), a stablecoin whose value is pegged to the dollar. Basically, one USDP equals one dollar. There is no volatility. 

“Novi users who can participate in the pilot can acquire Pax Dollar (USDP) through their Novi account, which Novi will hold on deposit with Coinbase Custody. Novi users will then be able to transfer USDP between each other instantaneously,” the company explained at the time.

Facebook originally planned to issue and accept Diem/Libra, a stablecoin the firm intended to create with a group of financial institutions, but Diem/Libra encountered opposition from regulators who feared it would disrupt the financial system. Regulators also feared that Diem/Libra would become a means of money laundering and a competitor to fiat currencies like the dollar, for example. The outcry prompted Facebook to abandon Diem/Libra altogether in January.

“Despite giving us positive substantive feedback on the design of the network, it nevertheless became clear from our dialogue with federal regulators that the project could not move ahead,” Diem CEO Stuart Levey wrote in a statement on January 31. “As a result, the best path forward was to sell the Diem group’s assets, as we have done today to Silvergate”  (SI) – Get Silvergate Capital Corporation Class A Report, a crypto-focused firm.

The abandonment of Novi seems to bury Meta’s ambitions in cryptocurrencies, but the company is nevertheless working on a potential virtual currency that would be used in the metaverse, according to the Financial Times. The metaverse is a virtual world in which we are called upon to interact with our avatars and through objects. technologies such as virtual reality headsets.

“We have notified Novi pilot participants that we are ending the pilot program at this time,” a Meta spokesperson told TheStreet in an emailed statement. “We will be taking forward the technology we developed and what we have learned from the program into future products across the company as we focus on building for the metaverse.”

“We are already leveraging the years spent on building capabilities for Meta overall on blockchain and introducing new products, such as digital collectibles. You can expect to see more from us in the web3 space because we are very optimistic about the value these technologies can bring to people and businesses in the metaverse.” 

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