Seemingly, Facebook has transcended beyond the negative notions surrounding the cryptosphere. Not long back, in January 2018, Facebook imposed a blanket ban on the promotion of digital currencies and ICOs on its social media platforms. However, recently, the news of Facebook launching its own cryptocurrency in the first half of 2019 took the blockchain industry by a storm. The announcement received a mixed reaction from the crypto community. Some are sceptical of the launch while others, excited.
Much before this news came out, there was already a buzz about Facebook rapidly expanding its blockchain and crypto team, since its commencement in May 2018. Its website still has a number of job openings for its blockchain team. Amidst all this, what wasn’t anticipated was that Facebook would launch its coin this early.
The report surfaced by The New York Times stated, “ the Facebook project is far enough along that the social networking giant has held conversations with cryptocurrency exchanges about selling Facebook coins to consumers.” According to the report, five members of the blockchain team agreed to talk to NYT on terms of anonymity. They also told that the coin would be transferable via the messaging application WhatsApp, owned by Facebook.
Rumours have it that Facebook’s crypto will probably be a stablecoin backed by US Dollar and other foreign currencies. If this is to be, then Facebook would potentially become the world’s largest central bank, given that it has close to 2.7 billion overall users.
And, ironically, it will become a central bank with a decentralized currency.
Considering the most important target for the stakeholders in the cryptosphere — mass-adoption of cryptocurrencies — Facebook can be called the need of the hour. Due to the large audience it enjoys, Facebook coins would easily gain traction and act as the self-catalyzed cryptocurrency — in terms of audience scalability.
No matter the gains from Facebook Coin, there are community members who fear the very basic concept of cryptocurrencies — decentralization—put to risk due to this launch. And there’s no doubt to it that their fear might turn into reality. But for now, all we can do is hope that it doesn’t turn out that way.
On a much larger scale, Facebook’s cryptocurrency could be THE nightmare for the current finance industry and its giants — Mastercard and Visa. These two companies, over the years, have made it easy for their users to make payments without carrying any cash. But the user base they enjoy might shorten down immensely if Facebook comes up with a Facebook mobile wallet along with its stablecoin. People might very easily adapt to paying from the mobile wallet in Facebook Coin.
Taking into account that most applications today have Facebook sign-in for users, integrating payments to those applications would not be a long road for the social media giant. It is sure that if Facebook takes that road, it will put in an effective rewarding system — just like all other wallet providers — for users paying in its own coins. This will help Facebook emerge as a strong rival to the already battling giants.
However, Facebook turning up with a stablecoin will be a major deciding factor in that. Because the stablecoins values are hardly affected by the volatility in the crypto space, users of the cryptocurrency would be least bothered about converting it into fiat money. Additionally, they’d be able to pay through the coin almost anywhere — considering the reach of Facebook. So, it seems even more unlikely that anyone would waste time in the conversion process.
Not only that, if all the above happens as stated, Facebook will not fail to give its users a fitting reason to buy its cryptocurrency. And that reason will be e-commerce. Due to the availability of Facebook wallet and coins, the social media platform would become self-capable of handling selling and buying of items — from posting items to making the payments, all on the same platform. And users can then happily bid adieu to the days of entering credit card details or making payments from other mobile wallets.
It can possibly turn out to be a revolutionizing integration of direct messaging, social media and e-commerce. This will not only lower the transaction fees but also make the buying process a lot simpler. More like a four-step process where you see, you like, you click and you buy. And the e-commerce platforms will have to comply with this system— willingly or unwillingly — as the users would surely demand the more convenient method over the traditional one.
Of the 7.7 billion people on this planet, close to 2.7 billion are a user of Facebook, Instagram and WhatsApp. That’s a serious number because it doesn’t count the number of accounts but the number of users, as one user can have multiple accounts. No other fiat currency has ever witnessed this big a user base, forget comparing it to any other cryptocurrency.
If even half its users start to use Facebook’s coins, it would make Facebook the dominating central bank. The rest will then be history, and it’s hard to predict as to what the future might hold.
The one thing that might act as a hurdle in making Facebook's cryptocurrency so widely used is the company’s poor record at keeping user data private. However, it’s unlikely that the company would take the risk of upsetting its users when such a huge opportunity lies in front of it.
Will it be the revolution we expect it to be, or will it experience a backlash from the community is a question that will only be unravelled when the time comes — and that is not very far.
Mohammad is an established writer in the blockchain and crypto domain. He is always enthusiastic about bringing his ideas and creativity to your company and helping you find the right voice for it.