Is Facebook about to Change the Face of Cryptocurrency?

Cryptocurrencies have certain advantages, such as decentralization and anonymity, but also present several risks including unpredictable fluctuations, shifting demand, and possible links to terrorist funding and money laundering. Facebook recently announced plans to create its own cryptocurrency within WhatsApp, a type of stablecoin.

Stablecoins are pegged to major international currencies, thereby preventing the extreme fluctuations associated with cryptocurrencies. This means that the value of the coin  would remain steady regardless of demand levels. According to recent reports, Facebook is planning to launch a full payments network across its messaging apps, and is currently talking to Visa and Mastercard to bring them on board. It is also in the process of raising $1 billion from major banks in order to fortify the coin against currency fluctuations.

In-app payments for a readymade audience

With a built-in audience of 2.5 billion, Facebook will be able to revert its revenue model from ad-based to payment-based and transaction-based. The company recently announced plans to launch its first stablecoin project in India, where WhatsApp has 200 million users.

India is the perfect location to initiate the project because a large part of the population already prefers to use mobile payments. In addition, many Indians are unbanked, making an in-app remittance payment method ideal.

Frictionless payments through a global mobile commerce system

While India is a good starting point, the concept of frictionless payments through a mobile commerce system anywhere in the world is hypothetically a winning formula. This type of system has already proved itself for P2P payments, but a built-in e-wallet could significantly facilitate payments for online merchants and their buyers, and adopt a model similar to China’s WeChat.

Will it work?

While in theory all this sounds feasible, there is no guarantee that the attempt will succeed. For one thing, cryptocurrency is based on decentralization and has no controlling owners. Facebook’s new stablecoin would be controlled, by Facebook, of course. There are also crypto-related regulations that cannot be ignored.

In addition, several global competitors like New Telegram are hot on the heels of Facebook. Not to mention that TikTak and Toutiao are currently eroding Facebook’s global app grip.

Is this a crypto revolution or just a blip? Time will tell.     


Image courtesy of Freepik


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