Facebook will introduce a cryptocurrency, which will allow WhatsApp users to send money instantly likely in the first half of 2019.
And another failure in a series of failed trials. Why?
Let’s analyze some facts, some facts from the history, let me present you a few details about Facebook previous attempts to offer financial services through payment systems as gathered by TechCrunch. Think about it, Facebook’s every initiative made in payment-systems were failed. I mean failed, we do not even remember them.
Do not over-excited and overreacted. There will be probably no universal bank by Facebook/Whatsapp. So, my simple and straightforward message to crypto community that there will be almost no billions of user base and trillions of dollar transactions in the near future at least not by the initiative of Facebook/WhatsApp.
Facebook’s History of Failure in Payments is Long
Apart hype, Facebook failed in many trails, shows a lack of strategy in the company.
- Facebook Credits, previously launched as a virtual currency in 2011 and what happened after just two years.
- Facebook Gifts, launched in 2012 and closed two years later. Quoted by Josh Constine, “Facebook never found a way solve distance and localization problems to make Gifts work internationally.
- Facebook Messenger Payments launched in the US in 2015 and later expanded to Europe within two year’s time. What is happening now? We all know very well. No mass-adoptions.
We all are observing the fact that Facebook has been long expected to grab more market in financial services after hiring former PayPal President David Marcus to run its Messenger App in 2014. With each passing year AliPay and WeChat Pay expanding their business and move globally while Facebook remained flat, a niche digital advertising company stuck around behaviour targeting network.
So the question is what will make Facebook’s upcoming Stable Coin different?
Facebook has been thinking about meaningful adoption of blockchain tech for what feels like years. Wouldn’t telegram a better stand to do this? Yes, off-course telegram already enjoying very important space in crypto world and founders already concluded a private ICO of more than a billion dollar. Telegram Blockchain known as TON and Coin called Gram will win the game very soon. However, Line, Square, WeChat and others find a better sweet spot for their consumers than Whatsapp strictly using for communication purposes.
Facebook Coin will be similar like JPM Coin, will not take the spot like Bitcoin or Ethereum but only an internal centralized Coin where the “blockchain” benefits are quite limited.
Facebook is treating the stable coin like an alternative world of digital coins that you can clone and copy, but that’s not how the crypto universe works. The cryptocurrency adoption rate is high mostly due to the idea of decentralization — where technologies like Bitcoin show there’s no owner of the network.
“A Facebook intermediary means you are only making the rich richer.”
Facebook or WhatsApp Coin will join the e-commerce battle in India
Facebook specialized team is making cryptocurrency for Whatsapp that will let users transfer money on its WhatsApp messaging app, focusing first on the remittances market in India, is being invaded by the Chinese, from Alipay to Xiaomi to ByteDance, to an E-commerce battle between Walmart and Amazon, everyone is starting to recognize the importance the Indian market.
Facebook is operating the project in a very secret manner even by internal employees, but multiple leaks actually means that this is not even a real crypto, simple an internal digital coin that mimic a stable coin. Therefore, it misses the entire Satoshi Vision of Decentralization and Peer-to-Peer Payments. This is like Mark Zuckerberg head-fake into crypto world, or like a public stunt of Facebook, saying it is still relevant.
Can a private stable coin help Facebook into payments?
There were over 8000 kinds of money before the Civil War of The States, not unlike 2000 kinds of cryptos today. Tokenization means assets are transforming or issuing into Blockchain, by having, simple an internal coin, Facebook compromises the entire purpose of Cryptocurrency enthusiasts.
Everyone is exploring ways to leverage the power of Blockchain technology but Facebook does not seem to understand cryptocurrencies. Telegram & Signal, are planning to roll out cryptocurrencies over the next year. The most innovative and massive move by Square is appreciated. Square wants to integrate Bitcoin Lightening Technology.
After many hit and try, WhatsApp still has a monetization problem, it always has, ads between stories and digital coins are probably not an answer. Cloning and Copying consider as bad at innovation and this is one of the reasons, I am a bit sceptical about this Facebook/WhatAapp Coin. WhatsApp, which Facebook owns, could send to friends and family instantly anywhere in the world. I’d trust a JP Morgan instantaneous transfer somehow, but Facebook? Facebook has a family of apps that are more distracting than useful, and the product has never been very consumer-focused. Facebook makes the majority of its revenue with ads and micro-targeting of people’s interests, habits and value to brands.
Facebook going for a backed stable coin used for P2P transfer, barely even makes sense. Facebook would have to acquire Coinbase for this to even be relevant over the long-term. Now Telegram, which has an estimated 300 million users worldwide, is also working on a digital coin after a huge ICO essentially raising $1.7 billion dollars.
By going to private Blockchain that’s centralized, Facebook is missing the entire point about what makes decentralization, Bitcoin and consumer Blockchain adoption special. That is why I expect it to be a failure and I’m not sure if the crypto community agrees with me as well?
The Author is a Pakistani Blockchain Evangelist and involved in international Blockchain based projects, He is the Founder & CEO of Go4 Blockchain. And CMO of NAiTech.io,
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