What happened

Facebook (NASDAQ:FB) stock got another boost Tuesday when Facebook Financial head David Marcus went on Twitter (of all places) to announce a new pilot project to permit money transfers via cryptocurrency on Facebook.

By 1:30 p.m. EDT, Facebook stock was up 1.8% on the news, although it's subsided somewhat since.

Glowing green arrow climbs on a stock screen.

Image source: Getty Images.

So what

So what was it about Facebook's announcement that got investors excited? Marcus dubbed the company's pilot project "Novi," a Facebook subsidiary that describes itself as "a digital wallet changing the way money moves" and "a licensed money transmitter."  

Initially, Facebook will be activating the Novi digital wallet for operations in just two countries: the U.S. and Guatemala. (Guatemala seems to have been chosen as the counterparty because 90% of money transfers into Guatemala come from the U.S.) Between these two countries, says Marcus, "people can send and receive money instantly, securely, and with no fees," in cooperation with Coinbase and utilizing "a new stablecoin ... as a payments instrument" -- specifically the Pax Dollar (USDP) from Paxos.

Now what

Marcus also noted that Facebook's plan to launch its own virtual currency known as Diem (the virtual currency formerly known as Libra) "hasn't changed" and it intends to allow transfers of Diem currency via Novi as well "once [Diem] receives regulatory approval and goes live."

Ultimately, Facebook says it hopes to steal business from credit card companies by offering "cheaper merchant payments," and "make a profit on merchant services" for itself.

And this, in the final analysis, is why Facebook stock is going up today:

Novi for now may be just a pilot project, but Facebook sees cryptocurrency payments over its platform as a new route to revenue growth -- and profits -- for the company. Investors today are betting that Facebook will find a way to make that happen.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.