Strangely, Mark Zuckerberg’s Meta or Metaverse dream could grow the value of the Pax Dollar (USDP) stablecoin.
To explain, Facebook’s (FB) Novi wallet uses the Pax Dollar to facilitate no-fee money transfers and transactions. Currently, Novi allows users on a wait list to send Pax Dollars between the United States and Guatemala.
They are testing Novi in Guatemala because remittances make up 14% of that nation’s gross domestic product, Facebook Financial head David Marcus told Protocol. Remittances comprise money people working abroad send to friends and family back home. For example, a Guatemalan construction worker in Chicago could send a remittance to his mother back home.
Can Facebook and Pax Dollar cash in on Remittances?
There is an enormous market for remittances. The World Bank estimates people sent $548 billion in remittances to low and middle-income countries, such as Guatemala, in 2019. That number shrank to $540 billion in 2021.
Remittances to low and middle-income countries shrank by just 1.6% during the pandemic, the World Bank estimates. The remittance inflow to Latin American countries such as Guatemala grew by 6,5% in 2020, the World Bank estimates.
The World Bank estimates remittance flows to low and middle-income countries could grow by 2.6% to $553 billion in 2021 and 2.2% to $565 billion 2022. Hence, Facebook and Paxos are entering a growing market that could be pandemic proof.
Remittances can be expensive. The average remittance fee from the United States was 5.22% in the Fourth Quarter of 2020, Statista estimates. Hence, it could cost $5.22 to wire $100 from the US to Guatemala. That is an enormous cost to a poor Guatemalan, who is working as a cook, a construction worker, or a housekeeper.
Novi is an app that allows any user to buy Pax Dollars (USDP) and send them to users in other countries. Currently, Novi is only available in the US and Guatemala. You can download Novi from the App Store and the Google Play Store. Users can sign up for Novi with their phone numbers. They are currently placing Novi users on a waitlist.
They will use the Pax Dollar instead of Facebook’s proposed Diem stablecoin, Protocol notes. It is not clear if Diem is dead or delayed. I suspect Diem is dead because of all the political pressure Facebook faces in America. Another possibility is that Facebook (FB) could buy Paxos.
Novi also works with Coinbase Custody, which supports crypto transactions, CNBC reports. However, Novi does not work with Coinbase’s (COIN) stablecoin USD Coin (USDC).
What is the Pax Dollar (USDP)?
The Pax Dollar (USDP) is the stablecoin formerly known as Paxos Standard (PAX).
An organization called Paxos builds and issues the Pax Dollar. Paxos claims its stablecoins are 100% backed by USD cash and equivalents. Paxos admits reserves comprise Pax Dollars (USDP) and Binance USD (BUSD) stablecoins. The BUSD is a US Dollar stablecoin built by Paxos and Binance.
Paxos is a regulated blockchain infrastructure platform. Paxos calls itself a Stabelcoin as a Service company. The Paxos Trust Company holds all the dollars that back the Pax Dollar and the BUSD. Smart contracts built into the stablecoins make US Dollar payments from the Paxos Trust Company’s bank accounts, when you spend USDP or BUSD.
The New York State Department of Financial Services regulates Paxos and teh Pax Dollar. Strangely, Novi is not available in New York State State, the Novi website admits.
They designed the Pax Dollar to store and send money with an app. Paxos’ partners include DigiFinex, Polniex, KuCoin, itBit, Binance, Huobi, Bitpay, Mexo, BlockFi, and SALT.
What Value Does the Pax Dollar Have?
CoinMarketCap estimates the Pax Dollar (USDP) had a Coin Price of 99.996¢ Market Map of $945.27 million, a Fully Diluted Market Cap of $945.366 million, a 24-Hour Market Volume of $9.225 million, and a Circulating Supply of 945.643 million PAX on 8 November 2021.
They based those numbers on a Circulating Supply and a Total Supply of 945.643 billion USDP. The Pax Dollar was the 114th most valuable cryptocurrency on 8 November 2021, CoinMarketCap estimates.
In contrast, Coinbase gave the Pax Dollar a Coin Price of $1, a Market Capitalization of $945.6 million, and a 24-Hour Market Volume of $9.4 million. They base those numbers on a Circulating Supply of 945.6 million PAX. Hence, Mr. Market thinks the Pax Dollar has some real value.
If you are seeking a stablecoin to speculate in. I think the Pax Dollar could be a good choice. Pax could tap an enormous market through Novi. Thus, Pax could be one of the fastest growing stablecoins with Facebook’s (FB) help.
Originally published at https://marketmadhouse.com on November 8, 2021.