The rumor that Facebook is planning to enter crypto space is now an open secret; there are plenty of indications that now suggest the tech giant is ready to launch their coin in the near future; notably, the company is rumored to be working with Telegram and Signal to start a digital currency for its WhatsApp service.
According to a December 2018 Bloomberg article, initial reports indicated that the social networking platform may want to focus on the Indian remittance market. India is reportedly the largest recipient of international remittances worldwide, and with Facebook hosting 300 million of its 2 billion users there, targeting the subcontinent’s 200 million users makes a lot of sense business-wise.
Even though Facebook has played its cards very close to the chest and information is still scanty, there are a few things we can now reveal about the mysterious cryptocurrency. Founder and CEO Mark Zuckerberg made blockchain and cryptocurrency hints in a January 4, 2018, Facebook post when addressing the issue of users abusing Facebook, where he suggested that encryption and cryptocurrency could offer a remedy. He stated:
“I’m interested in going deeper and studying the positive and negative aspects of these technologies, and how to best use them in our services.”
According to two respected publishing houses, Bloomberg and the New York Times, Facebook is likely to spur a revolution and an earthquake in tandem for the world of cryptocurrencies later this year. Plans for the much-awaited Facebook cryptocurrency are slowly coming into focus, and the crypto world’s axis is tilting in the direction.
The California-based social networking titan declared in May 2018 that it was creating a team within its ranks to explore the technology behind Bitcoin to see if and how it would be incorporated into its products.
A hoard of media leaks in the recent past is helping to shape up a picture of exactly what Facebook is up to. The team of more than 50, led by the former Facebook’s head of Messenger David Marcus and former Head of Instagram Engineering James Everingham, are working on a digital payments platform for WhatsApp, Facebook’s end-to-end encrypted messaging App.
Is it a Cryptocurrency or a Stablecoin?
There has been a lot of debate on whether Facebook is taking the route of creating a ‘pure’ cryptocurrency. The information available shows that the tech giant wants to build a coin that will bypass the effects of price volatility; according to The New York Times report, the Facebook blockchain team is working on a stablecoin, a type of crypto that has its value pegged to that of a real-world asset such as oil, or fiat currency reserves.
This means that, unlike the ordinary cryptocurrencies like Bitcoin that fluctuate and make or break fortunes instantly, users will not have to worry about the coin’s value. Insider reports show that Facebook plans to peg the value of its coin to several select foreign currencies as opposed to just the U.S. dollar.
The proposition by Facebook is therefore not likely to attract speculators or investors who would have been enticed by a cryptocurrency with a potentially lucrative and wild value fluctuation. The end product will potentially be of great interest to consumers who would want to make purchases or remittances without getting worried about erratic price changes.
Will it be a Decentralized Crypto?
Rumors about Facebook’s dalliance with blockchain technology have been making the news for a while now, but questions remain as to whether the upcoming coin would run on a decentralized network. The answer to this question will depend on whether Facebook would, or could, control the currency. If the Social networking giant will want to approve every transaction on the network, then a centralized system like PayPal would serve them better than a decentralized blockchain.
Insider reports seem to point to speculation that Facebook, Signal, and Telegram are all working in the direction of a digital coin running on a decentralized network. This would mean that the crypto created would to some extent run independently of the company that created it.
There’s a rumor that Facebook has been talking to cryptocurrency exchanges to have them sell it coin; if that turns out to be true, FB will have potentially eased itself of the burden associated with regulation. If cryptocurrency exchanges hold the currency, they become responsible for the process of screening of potential customers and remove the cumbersome Know-Your-Customer (KYC) methods from Facebook’s jurisdiction.
When is it Likely to Launch?
As per The New York Times report, the Stablecoin is likely to be launched during the first half of 2019 or thereabouts. Quoting unnamed inside sources, the publication says the company has already approached select cryptocurrency exchanges that could be roped in to support their upcoming product. A Facebook insider who refused to be named stated:
“Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology. This new small team is exploring many different applications. We don’t have anything further to share.”
What’s in it for the Tech Giant?
Whether or not the social networking titan will make money from this venture is yet to be determined based on what ‘type’ of crypto they set out to make. Conventional cryptocurrencies have been launched via Initial Coin Offerings (ICOs) where investors buy into the project in anticipation of that the value of the coin will deliver, which value depended on the demand.
By taking the direction of a stablecoin, it may appear like the issue of demand will not play a significant role since the value is guaranteed from the beginning. Experts believe that is Facebook has decided to create a cryptocurrency for its own sake, and then have people offer it to users in exchange for fiat currency; the company will make a killing especially during the preliminary stages.
Let’s Sum it All Up
The choice of the Indian subcontinent for a WhatsApp-based cryptocurrency is a perfect business idea as the payment structures there are not as developed as what you find in the countries like the U.S and the U.K.
While cash still plays a big rule in the Indian economy, there is a slow but sure paradigm shift towards mobile technologies, with an estimated $400bn (£290bn) mobile wallet market via Paytm. This, therefore, makes introducing a WhatsApp-based payment system a walk in the park.
Facebook’s choice of populous India comes on the heels of Google’s launch of a mobile payment service Tez, now called Google Pay, in India in 2017 before it spread to the rest of the world. Current reports indicate that Google Pay serves at least 25 million users monthly in the country.
The Last Word
That blockchain’s electrifying technology has thrilled the entire world with its potential to solve hitherto tricky problems is a subject on everyone’s lips. Facebook has decided to join in and use it to improve areas of trust and money transmission will help it get a grip on the money market besides solidifying their hold on entire populations.
By entering the world of cryptocurrencies, the social networking giant is taking competition at the doorstep of mobile payment service providers in India and soon after that the rest of the world. Pundits believe the much-awaited launch is a trial ahead of a global launch, something which fits snuggly with Facebook’s aim to permeate all the aspects of our daily lives and remain gradually obligatory.