Why Facebook’s Cryptocurrency Could Change the World Forever
Note: Any reference to either a “Token” or a “Coin” refers to a form of cryptocurrency, in essence, they are the similar as they are a store of value, however, a “Coin” is used as a payment mechanism and a Token is used as utility access to a digital system, in most cases. Facebook is proposing its “GlobalCoin” (internal project ref.), to carry out both functions as a payment function and utility within its social media platform.
The last wave of tech that came over Facebook was Mobile when Mark Zuckerberg declared that “we are going to be a mobile-first company” and made sure that every department at Facebook had a Mobile engineer on the team, they almost missed out then and they won’t make the same mistake twice.
I have no doubt that Facebook will release a global decentralised digital currency unit in the next ten months to the public that will do for cryptocurrency what Apple and the iPhone did for mobile in 2007. Now we have successfully mastered peer-to-peer communications it’s now time for peer-to-peer payments.
It’s almost 2020 and there is still no globally accepted currency, why not? Sure you could argue that Gold is such a currency however it’s a bit hard to carry around in variable denominations. How would you know how big a piece it would take to purchase a coffee?
The Euro was an attempt in that direction however it’s only accepted in 19 countries, and you could argue the US Dollar itself is accepted everywhere however exchanging it into local currency is difficult and expensive.
Enter Cryptocurrency “the people’s money”, a digital store of value that is borderless, decentralised, divisible into any denominations and above all almost free and instant to transfer with a fixed supply. Truly fungible.
Facebook wanted to unify Instagram, WhatsApp and Messenger, to strive for a WeChat type platform. No doubt there are many strategic reasons to do this, but for person-to-person payments, it also maximises the universe of people that can exchange the company’s new cryptocurrency.
In China, WeChat is enormous where the app is the platform. China missed the desktop era and arrived on Mobile just as new fast cellular networks also were rolled out. Timing is everything with tech and they just got it all right.
Facebook generates 98% of its revenue from advertising. Other blockchain platforms that have launched in this space with their own cryptocurrency such as the BAT Token which raised $28M in 22 minutes via an ICO in 2017 has progressed well, however, their platform is a new browser called Brave and as everyone knows getting users onto a new platform is not easy, whereas Facebook has a couple of billion already on theirs.
The Facebook “GlobalCoin” (the internal project name), will be a StableCoin tethered to a basket of fiat currencies inc USD, EUR, GBP, JPY etc. The project will be backed by $1B in collateral which they will raise outside of the corporation and should be able to raise in a matter of hours given the $1B raised in May by Bitfinex in just ten days.
Third party providers can pay $10M to become node operators, which will also give them a seat on the foundation; Facebook has approached multiple financial institutions, tech firms, and potential merchants about supporting the token; it also plans to rollout ATM-like machines where users can purchase the cryptocurrency.
There are hundreds of solid Blockchain projects that are being built right now however all of them lack one key component to be successful, a market. I believe Facebook will change that. In the late ’90s, there were hundreds of great Web-based projects being built as well however there just were not enough people on the Internet at the time to make a solid enough market. The user experience was much more difficult and it wasn’t until the early 2000’s when the tipping point happened with Web 2.0 and people could realise a clear advantage using a browser-based communication interface.
If Facebook gets this right and manages to transition users to a wallet based app that enables peer-to-peer payments also allowing anyone to earn rewards by sharing personal data, consuming content or shopping online then we will have reached the Web 3.0 tipping point for the masses. This will change the world forever.