Brazil-based fintech firm Nubank, the largest bank in Latin America and seventh most significant in the country has announced plans to launch its cryptocurrency for its 70 million users. The company has partnered with Polygon Technology Inc., which will develop a token called Nucoin. The bank will use this coin to reward loyal customers.
Brazil-based Nubank, has the most innovate idea yet. It is not common to find a bank that embraces the money of the future, cryptocurrency. Gladly, it is one of the top banks in Latin America, and hopefully, its decision will rub off on other banks.
The company’s proposal will be submitted next week to Brazil’s central bank as part of a process that will take several months before getting approval. They would use the electronic currency for payments between users and loyalty programs as a reward system.
The Cryptocurrency Will Run As A Token On Top Of Polygon Technology’s blockchain
Nubank Rewards is a blockchain network that uses Ethereum sidechains to process transactions. It can process 10,000 transactions per second and costs just $0.00002 per transaction.
That’s about 100 times cheaper than Bitcoin (BTC), the most popular cryptocurrency in circulation today.
But with this launch, Nubank wants to clarify that it’s not looking to compete with BTC because customers cannot use it for payments. They designed BTC or even other cryptocurrencies like XRP and Litecoin for purchases. Instead, the bank wants its coin — which they’re calling NBRs — to act as a loyalty system where users get rewards when they spend money with Nubank or any of its partners in different industries, such as airlines and hotels.
However, the company has not revealed much information on how the token will work. According to Nubank CEO David Vélez, “The point is that we want to give more flexibility to our customers and use technology. It’s an opportunity for them to have more power to choose how they want their rewards.”
Nubank announced that they would release their cryptocurrency later this year. The company is the largest fintech firm in Latin America, with over 70 million users.
Nubank will run as a token on top of Polygon Technology’s blockchain called Nubank Rewards. Customers who sign up for this service will be able to use their rewards as currency or trade them for goods and services offered by Nubank or other partners in the network.
Why Use Polygon
Polygon (formerly Matic) uses Ethereum sidechains to conduct transactions faster and cheaper than Ethereum mainnet. The network can process 10,000 transactions per second (TPS) and charges $0.00002 per transaction.
They launched the Polygon blockchain in 2020 as a public, permissioned blockchain that uses smart contracts to automate processes such as legal agreements and payment settlements in supply chains.
Good Plans For Customers
Nubank’s new crypto program could boost blockchain adoption in Latin America and across the globe. Brazilian-based fintech firm Nubank—which has raised over $400 million from investors such as Goldman Sachs, Founders Fund and Sequoia Capital—is poised to launch its cryptocurrency next month. The company’s general manager for Nucoin, Fernando Czapski, said Nucoin would be used to reward loyalty and engagement with Nubank’s product suite.
“Our mission is to create a financial ecosystem that helps people build their credit history,” he told Business Insider in an interview on Tuesday. “We believe firms should use cryptocurrencies to reward users who participate in this ecosystem.”
The Positives From The Development
This new cryptocurrency will likely boost blockchain adoption in Latin America and globally. Nubank is the largest fintech company in Latin America, with 70 million users across Brazil and Mexico. Loyal Customers will use the company’s new cryptocurrency to redeem rewards, much like some airlines reward their most frequent fliers with free flights.
Nubank will use Polygon Technology’s blockchain to create its digital currency, called “bonus.” Customers can redeem this token for rewards like gift cards or charity donations. Unlike most cryptocurrencies, there are no transaction fees associated with using bonus tokens; all transactions are free of charge!
The plan to bring Nucoin to the fore shows that the bank is taking a leading role in crypto adoption. It’s also a good sign for crypto investors since Nubank has been on a roll lately with its expansion plans. It has announced plans to expand its services across five continents, offering loans and credit cards to customers worldwide. The company also recently got a $175 million investment from American Express’s venture capital arm, which will help fund its expansion into markets like the US, where regulations are stricter than in other countries.