For almost a year now, there were rumors, alleged reports, and whispers about Facebook launching its own cryptocurrency. Speculation and theories were present all over the internet, from social media networks to crypto-specific forums. Now, it appears that the social network giant is going into its final stage of designing the coin, which is said to be launched at some point in 2020.
The plan is to create and set up an entire digital payment system and make it active and available in a dozen countries by the end of Q1 2020. The official name of the coin was not yet confirmed, although many have taken to calling it GlobalCoin, and its testing is expected to start by the end of the year.
More details regarding the plan are expected to arrive during the summer of 2019. However, some details have slipped through the cracks, such as the fact that Facebook has already spoken to Mark Carney, Bank of England’s governor. The discussion between Carney and Facebook founder, Mark Zuckerberg, took place last month. The two were reportedly assessing the risks and opportunities that ‘going crypto’ might bring.
However, it was reported that Facebook had also contacted the US Treasury, seeking advice regarding regulations and operational matters. Not only that, but it is also known that the company is collaborating with money transfer companies, such as Western Union. The two are constructing plans to bring the unbanked and underbanked to the global economy — something that has been one of the major issues worldwide for a long time, now.
Facebook’s GlobalCoin, and how will it work
As mentioned, details about Facebook’s cryptocurrency, as well as the company’s plans for the coin, are rather scarce. However, those familiar with the company’s goals have reported that Facebook is making a coin that will provide safe and affordable ways to make digital payments — with or without a bank account. The move would break down financial barriers set up by the banks, which would result in a disruption of existing networks.
The project was reportedly named ‘Project Libra,’ and the plans were first reported in December 2018. However, speculation that the company might try to enter crypto space were present long before that.
It is said that the project will join up with brokers and banks around the world, and allow people to easily purchase cryptocurrencies in exchange for various fiat currencies. Further, the company is allegedly also negotiating with a number of online stores, trying to work out deals in advance.
Many digital coins already have multiple real-world use cases, as they are accepted by many businesses already. These include some hotels, restaurants, and even real estate. With the expansion of the crypto and blockchain trends, the number of use cases for coins is growing. In addition, the number of coins that can be used for making such sorts of payments is growing as well.
Even so, cryptos are still quite far away from mass adoption, which is why Facebook’s coin is so important. With a platform that connects billions of people, introducing cryptocurrencies to such a wide customer base is bound to raise awareness, and encourage users to join the digital currency space as well.
Problems and concerns
Naturally, the crypto world still has issues, but so does Facebook itself. The company was heavily criticized in recent years, mostly due to the way it was handling private data of its users. With that in mind, it will undoubtedly be closely monitored by the regulators, especially when it comes to its crypto project. Even the US Senate and Banking committee recently wrote an open letter to Facebook’s founder, asking for details regarding the coin, its purpose, security, and more.
Then, there are crypto-specific issues, such as money laundering, KYC procedures, and more, which need to be addressed. Allegedly, Facebook has already discussed the issue with the US Treasury. Further, there is the issue of cryptocurrencies’ high volatility, which will supposedly be prevented by pegging the coin to multiple fiat currencies. This would essentially make it a stablecoin.
But, the project is believed to be bound to succeed, or at least have a more than decent chance at it. This is, of course, due to the fact that Facebook has been exploring digital payments before. Around a decade ago, the company attempted to introduce Facebook Credits, something that would today be considered an early form of a cryptocurrency.
The platform would allow users to use the credits for buying items in various apps. But, the project did not attract attention back then. It was simply too new, too early, and Facebook’s plan was too big for its time. Even Bitcoin itself needed 9 years to go big, and 10 years to get where it is now. And, it should be noted that this is decentralized crypto, and it fell upon the community to make it work. Facebook Credits were a company project, and as unsuccessful, it was simply pushed aside in order for the company to develop something new that will bring profit.
Of course, there are also problems regarding the regulations of different jurisdictions, particularly in countries such as India. But, it is likely that Facebook’s real challenge will be to convince people that it is trustworthy enough to be allowed to handle their money.
Of course, going crypto does come with benefits, and these benefits are much appreciated by companies and even banks. Blockchain technology, which allows cryptos to function, cuts the time needed to make transactions, as well as the cost of sending money internationally. This also threatens the central banks around the world, as they might become irrelevant as a result.
But, opting to use Facebook’s coin will, undoubtedly, give the company even greater insight into its users, their spending data, and buying habits. Of course, Facebook did not need to go crypto in order to do that. They could have simply developed a PayPal-like platform, and offer to handle traditional money. After all, cryptocurrencies are highly volatile and potentially too complex and unfamiliar to regular people at this point in time. With that in mind, the fact that Facebook chooses to go crypto anyway means that the company predicts that the time of cryptocurrencies is truly coming. And, Facebook plans to be one of the pioneers that will help it come forth.