New cryptocurrency from Facebook could alter future of money, global transactions

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Facebook plans to launch its own cryptocurrency in a way that could significantly impact on the future of money as we know it now and how global transactions take place.

According to The New York Times, “the social networking giant has held conversations with cryptocurrency exchanges about selling the Facebook coin to consumers.” Facebook expects to launch its new currency later this year, 2019 to alter how the world uses and interacts with bitcoins.

Last December 2018, Bloomberg offered a peep on how Facebook is looking to develop a stablecoin for its WhatsApp users. There are reports that when Facebook eventually launches its cryptocurrency, it will be “backing every coin with a set number of dollars, euros and other national currencies held in Facebook bank accounts.”

Analysts Sarvesh Mathi writes in Medium recently on ‘A New Era of Money — Facebook Coin.’

Here’s excerpts of his viewpoints:

If the widely accepted and stable US dollar, and the revolutionary but volatile Bitcoin gave birth to a new currency, it would most likely be the one Facebook plans to introduce later this year.

The details on this secret cryptocurrency project are still scarce but here’s what we know: the digital currency will be a stablecoin and will be first made available for foreign remittances on WhatsApp. We do not yet know how much control Facebook is going to have over this currency and how does it plan on overcoming the regulatory and technological hurdles. We also do not have an official name, so I will refer to it as “Coin” for simplicity.

How is Coin different from Bitcoin and other cryptocurrencies?

Let’s start with reach. Bitcoin currently has 23 million distinct wallet addresses and Ether has 60 million, but a single user usually has multiple addresses. With Facebook’s plan to integrate its three messaging services — Messenger, WhatsApp and Instagram Direct — the potential reach of 2.7 billion users dwarfs the competitors. Even if Facebook manages to get 5 percent (135 million) of its users on-board, it will be far greater than all cryptocurrencies’ combined.

The next difference, the biggest one, is that Facebook’s product will be a stablecoin pegged to the US dollar or a basket of foreign currencies. This solves one of the main problems of Bitcoin and other major cryptocurrencies — the volatility.

 


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