Facebook’s New Cryptocurrency Gets the Backing of Visa, Uber and Other Big Names
As we approach Facebook’s cryptocurrency announcement on June 18th, major news continues to surface, most notably the backing of major e-commerce, financial, and telecommunication giants including Mastercard, Visa, Uber, Paypal, and Booking.com. While the details this recent development aren’t crystal clear, the Wall Street Journal reported that each company has been asked to invest $10 million into the project to launch and govern the digital coin while running their own nodes (nodes are a network of computers that verify transactions on the blockchain – the technology backing cryptocurrency). The proceeds will go towards the creation of the new stablecoin that’s pegged to a portfolio of government-issued currencies; avoiding major price swings and volatility. Last month, the Wall Street Journal reported that Facebook asked for a $1 billion investment to kickstart the secretive crypto-based payments project.
We could see Facebook implement the following strategies to facilitate mass adoption:
- Crypto Salaries: One possible outcome is that the company will offer the opportunity for employees to accept a portion or all their salary in Facebook’s coin. In addition, Facebook could extend this service to other companies around the world to do the same for their own employees. This could certainly cause a spike in global usage of Facebook and its currency, assuming that any company can easily integrate to the company’s merchant platform and compensate their employees in cryptocurrency – reducing time and friction as compared to traditional electronic payment methods, particularly in emerging markets.
- Proprietary ATM Network: Facebook could possibly look at creating a network of crypto ATM kiosks that enable any individual to purchase the cryptocurrency with USD, CAD or any other fiat currency. This will make it accessible to anyone in the world, regardless of whether they have internet access or not.
- Banking the Unbanked: Facebook’s coin will offer an immediate benefit to individuals and companies who are “unbanked” or don’t have access to adequate banking and remittance services. It’s likely that third-world countries and emerging markets could immediately adopt the currency and utilize it as their primary remittance option of choice.
In addition to the ideas listed above, the social networking company will likely offer users and advertisers preferential treatment such as access to exclusive features, discounts on purchases, and reward users/merchants for transacting with the currency and sending money to friends.
The truth of the matter is, we don’t know the full details of Facebook’s project. We are, however, only a few sleeps away from the company’s unveiling of the coin and approximately one year away from its official launch. One thing is certain though; this will be one of the largest and most important milestones in the crypto industry as it will likely onboard several millions of Facebook users at the beginning of the launch and open the opportunity to +2 billion users.
One risk factor is particularly important for those who are privacy conscious. Not only will everyone’s transactional data be available to Facebook, but also by all major firms involved. But as one of the world’s largest companies by market cap and with some of the world’s top talent working on the project, Facebook is likely to have addressed the risks involved with plans to mitigate them.
Similar to Bitcoin’s launch that was released by pseudonymous creator, Satoshi Nakamoto, Facebook plans to release a white paper next week introducing the new cryptocurrency. Exciting times are ahead.