What ‘Facebook Coin’ means for the crypto industry?
Founded by Mark Zuckerberg in 2004, Facebook has quickly become the most popular social networking site around the world. More than 2 billion people worldwide actively access Facebook, and the company owns other huge social networking apps such as Instagram, WhatsApp, Masquerade, and many more.
2018 was not the best year for Facebook, following the scandal with millions of users’ data exposed through the Cambridge Analytica breech, and the company’s mishandling of the alleged Russian interference in the 2016 presidential election came to light. All eyes have been on Facebook: what scandal could they possibly dish out next? Yet, what many of us have failed to see was the development of a new division dedicated to crypto.
Facebook entering the cryptocurrency industry
Facebook launched a new division in 2018, headed by PayPal’s former president, David Marcus. According to Forbes, more than 40 people have been hired, with many of them previously being PayPal employees. Zuckerberg has expressed interest in cryptocurrency before, and now it seems he may finally have a few things in progress.
Facebook’s custom coins, and what they could do
Bloomberg released a report confirming that Facebook has some form of cryptocurrency in the works. The cryptocurrency is currently being developed for WhatsApp, Facebook’s free messaging and phone app. The app is being widely adopted in India, as remittance payments are frequently made to the country.
Facebook isn’t building just any cryptocurrency though: they are planning on building a stablecoin. Stablecoins differ from traditional cryptocurrencies like bitcoin in that they are less volatile. Stablecoins offer price stability by being backed by either a fiat currency, such as the US dollar, or other cryptocurrencies. We can most likely assume Facebook will use a fiat-backed stablecoin. However, the development of a stablecoin for WhatsApp is just the tip of the iceberg for Facebook’s future with cryptocurrencies.
Paying with Facebook
Think about how prevalent Facebook is in many of our day-to-day lives. We use it for news, selling and buying items, socializing, games, memes — the list goes on and on. If Facebook builds its own form of cryptocurrency, it would increase awareness and use of the digital asset on a substantial level.
We use Facebook as the main platform to use other services. When you purchase an app from the store, you’re usually asked if you would like to sign in with Facebook. Now, think about the same feature, but in terms of payments. “Pay with Facebook” could be a function spread across both the digital and the real world. Many people link their bank accounts to their phones, and use Apple Pay to make purchases quicker. Facebook could implement the same feature into phones, taking banks out of the process altogether.
What would it mean for other cryptocurrencies?
One of the main problems cryptocurrencies face is a lack of streamlined adoption. Bitcoin Market Journal estimates that there were between 2.9 to 5.8 million active bitcoin users in 2018. It’s an impressive number, considering there were only 300,000 to 1.3 million active users in 2013.
Now, consider Facebook’s 2 billion active users. Those are 2 billion potential adopters of cryptocurrency use, right on the spot. A Facebook-based cryptocurrency would have the ability to reinvigorate cryptocurrency markets. A Facebook user might start off using Facebook’s crypto money, or whatever they plan to call it, but determine that it may not suit his/her needs. Instances like this are when bitcoin, Litecoin, Ethereum and all other altcoins would benefit.
Cryptocurrency markets are already in shambles, and the bear market seems as if it will never end. Facebook’s introduction to cryptocurrencies might just be what the market needs to ensure the longevity of cryptocurrency use in the future.
Where does Facebook go from here?
Kodak launched its own cryptocurrency, KodakCoin, in 2018 and the price of its stock rose by 60% in a matter of moments. Kodak and Facebook are completely different companies, but the hype around cryptocurrencies and blockchain is real.
Given the growing popularity of cryptocurrencies and blockchain technology, Facebook will most likely do much more with cryptocurrencies then just introduce a stablecoin for WhatsApp. Now that a whole division has been put in place dedicated to blockchain and cryptocurrency, we can expect huge developments from Facebook in the upcoming years, possibly even as soon as 2019.