The Good, The Bad, And The Beauty Of Facebook Cryptocurrency

The news about Bitcoin and other cryptocurrencies have been spreading like wildfire. But, wait a minute. How many of you knew that Facebook has its own cryptocurrency? I guess not so many. But it's official; Facebook now has its own digital money. And to be specific, it`s a “Facebook cryptocoin.” The coin is still very new in the global market. But according to Ross Sander, Barclays Internet analyst predicts Facebook Coin to accumulate to $19 billion in incremental revenue by 2021; base-case $3 billion. Here are the three new things investors, as well as the public, should know about Social Media Giant entrance into the crypto market.

The Good

Facebook launched its own cryptocurrency within Whatsapp to allow subscribers to effortlessly transact with one another via the services without incurring expenses. The inspiration behind this creation began when Mark Zuckerberg realized there was a problem in the payment structures, took the opportunity and run with it. And in fact, India was the main focus for Whatsapp, because there are less advanced payment structures in place compared to developed markets like the United Kingdom and The United States. Although money is still King in India, the adoption of mobile technology is increasing rapidly, indicating that whatapp- enabled coin could enjoy fast and extensive market penetration. The report surfaced by Bloomberg in December 2018 stated, “India is the largest beneficiary of remittances globally ($80billion in 2018) and Facebook-owned WhatsApp already introduced peer to peer payment in the country some time ago.”

Furthermore, as of early this year, some extra 300 million users out of the possible 2 billion Facebook subscribers were stationed in India, with WhatsApp reported enjoying over 200 million subscribers. Another good news is that the Social Media Giant could reward subscribers with digital coins for viewing ads, or issue them as loyalty points for purchasing products or engaging with contents across its networks. This technique would emulate Amazon`s reward of free “Amazon Coins” for subscribers who buy certain in game-items, games, or Android apps. However, the Amazon Coin isn`t a blockchain-powered cryptocurrency-it`s a simple digital coin with a restricted value of $5 per coin. In true technology giant fashion, Facebook could also gift merchants for allowing more Facebook Cryptocoin transactions. For instance, if the subscriber clicks via a FB ad and complete transaction with coins, the merchant can use those coins to purchase new ads at a discount.

The Bad

Not long ago, in early last year, Facebook issued a temporary ban on the advertisement of Digital Coins and ICOs on its social media networks. However, the breaking news of Facebook introducing its own virtual currency took the blockchain industry by surprise. The launch received a mixed reaction from the crypto community, in which are still sceptical about it despite others being excited. For example, one of those fanatics is Jake Yocom-Piatt, the Project leader and co-founder of Decred. He described Facebook in a recent interview as the “reverse” of what cryptocurrency entails. He indicated:

Facebook is the reverse of what cryptocurrency entails such as security, privacy, and decentralization. It is an institutional entity with centralized governance that`s under investigation for horrible breaches of security and confidentiality. Now, they`re targeting to spy even more into their subscribers' live. If you thought the social media giant knew too much concerning you before, this would even worsen it.

On a much larger scale, Facebook`s virtual coin is already a possible threat for the current financial firms and its giant Visa and Mastercard. These dual firms over the decades have made it possible for their users to make transactions without carrying liquid money. However, the global support they enjoy is already under threat by Facebook mobile wallet along with its stablecoin. Other tech giants are also silently against Facebook Crypto Coin. For instance, Facebook closed last quarter with 2.38 billion monthly active subscribers. Now, with its entrance of unified coin for all those subscribers, no doubt, the coin is likely to be the most accepted currency globally. But in case the company connects more third-party stores, apps, and websites to that system, it could rival payments platforms such as Square, Amazon Pay, Alphabet`s Google Pay, Apple, and PayPal. But again, the announcement by Telegram to join the space is already causing nightmare to Facebook Crypto Coin. Although Telegram is not as popular as Facebook, it`s the most secure messaging platform favoured by drug dealers, Isis, and crypto enthusiasts alike. And you can guess how moneyed those individuals are.

The Beauty

The beauty with Facebook Crypto coin is that unlike other altcoins, it’s a stablecoin; a type of cryptocurrency with values pegged to a stable commodity such as gold and assets like the dollars to reduce volatility. That`s a brilliant strategy because the prices of many other altcoins such as ethereum and Bitcoin Cash fluctuate ridiculously. The volatile price might make it attractive to traders, but it also makes it unsuitable for fiat payments. However, the value of stablecoin only fluctuates at the same rate as the currency they are tied to, which is usually the U.S dollar. So far the Whatapp coin is pegged to a range of various foreign currencies. It`s achieving this by backing every single coin existence with a certain amount of traditional money held in its own reserves.

The presence of Facebook coin is already attracting speculators and investors, who are usually discouraged by cryptocurrencies rigorously fluctuating value. And interestingly, it’s proving potentially interest for customers who are using it to make purchases without stressing about unpredictable price movement. The Facebook crypto coin is tied with the firm`s fragmented transactions and e-commerce strategies, which involves peer-to-peer in-app confirmations for transactions on Instagram, payments on Messenger, the Craigslists such as Facebook Marketplace, and engaging live videos that enable merchants sell their goods. The company only provide these serves in a selected market, but with the entrance of virtual currency for all its subscribers globally, it`s definitely going to widen their reach and create the foundation of a stable e-commerce ecosystem. For these payments services to grow, Facebook is charging transaction fees to its coin purchases.

The Bottom Line

Clearly, there are high chances that if Crypto market continues to thrive, it will decrease Facebook`s reliance on ads by increasing often ignored “fees and payments” enterprise. That segment gained 1% of its top line, which is equivalent to $165 million in revenue last quarter. Therefore, with those ambitious statistics, only time will reveal how successful Facebook`s cryptocurrency will perform. However, all that is in the public domain is that the entire crypto space has public attention focused on it.