Nubank, a digital banking company in Brazil, will become the next major financial institution to move into digital assets with the launch of its own cryptocurrency in the country next year.
On Wednesday, October 19, the company announced that the launch of Nucoin tokens will take place in the first half of 2023. A new report via CNBC describes Nucoin as “a new way to recognize customer loyalty and encourage engagement with Nubank products.”
Nubank has said that token holders are eligible for special prizes and other benefits.
For Fernando Czapski, general manager for Nucoin at Nubank, the initiative represents another step forward in the company’s belief in the revolutionary potential of blockchain technology and to democratize it even more.
Related story: CryptoWatch: Google Accelerates With Cryptocurrency, HYVE To Let Freelancers Earn Coins
Brazil’s New Cryptocurrency
To help guide Nucoin’s creation and ensure it adheres to established principles in blockchain projects, Nubank announced that it will invite 2,000 customers to participate in a discussion group. The idea is to study a decentralized method of product development, typical of Web3, rather than relying solely on user input.
The Polygon network, a so-called “Layer 2” protocol, made the cryptocurrency possible. According to CNBC, the stated goal is to reduce transaction costs and processing times on the Ethereum blockchain, which have been major drawbacks for the platform in the past. Polygon claims that its platform can handle thousands of transactions per second.
The Trend “Companies Entering the Crypto Market”
With regard to financial institutions, Nubank is not the pioneer in creating its own cryptocurrency. The token released by JPMorgan is called JPMCoin and is known as “stablecoins” with a value of exactly $1 each. But other than that, the value of Nucoin varies with supply and demand, just like the prices of cryptocurrencies such as Bitcoin and Ether.
Nubank’s new venture is following similar steps from other financial and payment institutions entering the cryptocurrency sector.
Crypto Secure, introduced by Mastercard in October, is designed to help card issuers prevent fraud related to crypto assets. PayPal and Robinhood are just two examples of companies that enable crypto trading. Similarly, Goldman Sachs, a major bank on Wall Street, has its own dedicated crypto trading desk.
The Downside of the Increasing Number of Newly Launched Tokens
For cryptocurrencies, the new token offering comes at the wrong time. Many digital currencies, including the largest, Bitcoin, have lost nearly half of their value since early 2022. Some are calling the current drop a “crypto winter.”
Since then, regulators have become increasingly suspicious of digital currencies and the potential harm they cause to consumers. These push governments in the United States, the European Union and others to develop frameworks to regulate the sector.
Background
Based on CNBC’s report, Nubank introduced a purple free credit card in Sao Paulo, Brazil in 2013. The said city is known for its high-fee, low-tech banking system. After nine years, the company had 70 million Brazilian, Mexican and Colombian users.
Last year, Warren Buffett invested in Nubank. In June 2021, Berkshire Hathaway also invested $500 million. Its stock valuation was $20.4 billion, worth half at launch in December 2021.
Nubank previously traded Bitcoin and Ether on its Nucripto platform. A month after its debut, this Paxos-powered exchange reached 1 million customers.
Related story: Google-Coinbase deal to let cloud users pay with crypto; Start date and other details
This article is owned by Tech Times
Written by Trisha Kae Andrada
ⓒ 2022 TECHTIMES.com All rights reserved. Do not reproduce without permission.
