Reports and rumors have been circulating for months that the social media giant Facebook is seeking to release its cryptocurrency, Facebook Coin. If the journalists and their sources are not mistaken, Facebook will introduce a stablecoin allowing the users to send money instantly at WhatsApp sometime later this year. Facebook acquired the messaging platform for $19 billion in 2014 and remains its largest shareholder.
Rumors or big plans?
Several highly regarded news international outlets including Bloomberg, TechCrunch, The New York Times and CNBC, have all been reporting on Facebook plans to launch a cryptocurrency. It is believed that the number of engineers working with blockchain technology for the social media behemoth has increased recently too.
Coindesk has recently reported that Facebook intends to raise as much as “a billion dollars in outside funding for its cryptocurrency project”.
Facebook has also been planning to list its stablecoin on cryptocurrency exchanges and expects to get the product out in the first half of 2019. According to the Coindesk, “involving outside investors in the stablecoin project could help Facebook present the cryptocurrency project as “more decentralized and less controlled” by itself”.
Following the Asian lead
The Facebook move to introduce its own cryptocurrency would totally make sense given the success of the Asian messaging platform WeChat recently integrating the ability to send and receive payments into their platform.
WeChat, owned by Tencent, the Chinese tech giant, has 1 billion daily users, just behind WhatsApp and Messenger, both owned by Facebook. WhatsApp, with 1.5 billion total users in 180 countries and 1 billion daily active users remains the most-popular messaging app in the world.
Since June 2017, WhatsApp had been suffering multiple challenges, until the ultimate block at the end of September that year. Whatsapp service remains greatly inaccessible in China without a VPN, thus its position significantly weaker in the second largest economy on Earth.
Although China remains the most powerful economy in all of the Asian markets, the significance of India has been growing steadily.
It is believed that Facebook’s cryptocurrency will initially be focused precisely on the Indian market. India is already known to have both a large WhatsApp user base as well as an enormous remittances market with $69 billion estimated to have been sent to India in 2017.
The impact on Facebook
Barclays analyst Ross Sandler estimates that the planned cryptocurrency could add $3 billion to $19 billion in additional revenue for Facebook. That is a significant amount keeping in mind that the total revenue of Facebook has been $55,8 billion last year.
The New York Times reported that the cryptocurrency is expected to launch in the first half of 2019 and that Facebook employees reported this to exchanges. If this is true, it increases the likelihood that the planned cryptocurrency will operate on a public blockchain as opposed to a private distributed ledger technology which most large enterprises use when implementing blockchain.
Facebook is among the largest public companies in the world and the successful launch of its own cryptocurrency that serves to add further revenue would both intensify its competitive advantage against other tech companies. The most importantly Facebook’s move might likely incentivize other companies to enter the market in one way or another.
Calculating the impact for the industry
In the technology industry, the launch of a cryptocurrency by one of the largest technology companies in the world could have a significant impact on the actions of other companies and investors.
While Facebook launching a cryptocurrency is bound to cause a huge stir among technology companies, cryptoanalysts have mixed thoughts on what kind of impact it will have on the cryptocurrency industry as a whole.
Anthony Pompliano, the Founder of Morgan Creek Capital and one of the most prominent faces in the crypto economy, predicts that a Facebook launched cryptocurrency would become the most widely adopted cryptocurrency product yet. A. Pompliano believes betting against the Facebook blockchain team which is being led by former PayPal president David Markus is a bad idea.
Other well-known figures such as the founder of The Block Mike Dudas contest that a Facebook issued cryptocurrency has no chance of competing with Bitcoin.
The great thing about the cryptocurrency industry is that time will tell which projects will be successful and which will fail to live up to expectations. For the moment, the prospects of Facebook launching a cryptocurrency is stirring up big anticipations in the minds of the public. The history demonstrates - high expectations are hard to meet.