Biggest crypto idea, and the most successfull coin ever !
Facebook employs a significant portion of the world’s leading minds in computer science, artificial intelligence, and engineering. Most if not all of the people at Facebook are aware of Bitcoin and Ethereum. And I can only imagine that some of them have a profound knowledge of blockchain, digital currencies, smart contracts, distributed ledgers, Bitcoin, Ethereum, and emerging technologies in the cryptocurrency space.
With all of that knowledge, expertise, and skill, it would be easy for Facebook to have its own digital currency.
The most successful cryptocurrency to date is Bitcoin. Bitcoin is decentralized, peer-to-peer, and open-source. Although a cryptocurrency is not required to have the same attributes as Bitcoin, the crypto community at large has come to expect that any new currency follows the same pattern. It needs to be decentralized, peer-to-peer, and open-source.
I don’t know the technology that Facebook would ultimately come up with, but I’m confident that with their expertise they could “solve” cryptocurrency.
Facebook may not like the decentralization aspect because they would want control, but they could implement some decentralization where both Facebook and other entities could work together to secure Facebook’s blockchain, while Facebook still maintained some amount of control.
Peer-to-peer and open source wouldn’t be an issue for Facebook. Open source is not a threat for Facebook because the value of their launching a cryptocurrency lies in their 2 billion+ monthly user base, not in some unique code or technology.
The issue for Facebook would be to create a currency that satisfies all of the community requirements described above but is also extremely fast (transaction confirmations within 1 or 2 seconds), scalable, and has low fees. Again, I think Facebook has some of the brightest minds and can solve these issues.
Now we come to the structure of a token launch. Would Facebook do an ICO? No, they don’t need the money. Ideally, they would do a Universal Basic Income (UBI) or Univeral Basic Capital (UBC) style launch. The launch I will propose is UBC, but the ongoing persistence of the currency creates a UBI for users of the money.
Decentralization of a Facebook cryptocurrency could mean that the digital advertising duopoly of Facebook and Google would die. Just because it could die doesn’t mean that Facebook has anything to fear. I believe Facebook can structure its cryptocurrency so that the interests of all involved are met and exceeded. This includes the interests of Facebook shareholders, users, employees, and ultimately all of the participants in the Facebook Coin transaction economy.
But Does Facebook’s Mission Statement Support a Digital Currency?
“Give people the power to build community and bring the world closer together.”―Facebook
Facebook’s about bringing “the world closer together.” A single, easy-to-use cryptocurrency that gets rid of cross-border payments issues does just that. A Facebook cryptocurrency would over two billion people much closer together in an economic sense.
The Plan
Facebook could achieve two billion token users very quickly, too, by putting their crypto wallet within Facebook, Messenger, Instagram, and WhatsApp, as well as giving each unique user a small amount of the currency for free at the beginning just because they’re a user. That would be two billion monthly active users, virtually overnight.
The Giveaway
Facebook could merely give 1,000 of its tokens to every current user at launch. This is the Univeral Basic Capital (UBC) part of the plan.
At the same time, Facebook could give itself a bunch of the currency at the beginning so that they have a vested interest in increasing its value. Facebook could have anywhere from ten to thirty percent of the initial supply.
(An aside: At some point, Facebook could link that supply of digital currency to the stockholders, so that the stockholders have stock as well as the currency, or Facebook could pay out the currency as a dividend. Even more extreme would be if Facebook gave the coin in proportional share to the stockholders and forgot about their stock altogether. Then, hypothetically, all users and shareholders would be joined together as the owners of Facebook, and any transaction economy that it creates. But I’m getting way ahead of myself here)
The Continual Giving
Going forward after launch, Facebook will have an algorithmically enforced “inflation” rate of 5% of the total supply of the tokens each year (or a similar percentage). That inflation would go to all users based on the ad revenue that Facebook generates from that user. The increase would act as a Universal Basic Income (UBI), compliments of the user content that provides value to the users of Facebook’s apps, and so to Facebook. But this would also be thanks to Facebook’s cryptocurrency, which would enable this.
Users would enjoy Facebook more because they would pay 5% over a year (perhaps on a daily basis) to each user proportional to the ad revenue that Facebook brings in from that user. Facebook brings in ad revenue from users not just because users look at their ads, but also because the content that we post draws in others to look at Facebook’s ads. So Facebook’s algorithm would be built in such a way that users are being paid for the ads they interact with and see, but also for the content they post and how much it is drawing in other users to Facebook’s services.
The users would have a vested interest in making Facebook as good a community as possible, with the best content, because they would want to enjoy more of the benefits of valuable Facebook apps and services.
Along with their traditional ads, Facebook could do rewarded advertising similar to SwagBucks.com and pay people using the FB digital currency. Here are a few example rewarded ads: you’re paid to fill out a survey, paid to watch a 30 second video commercial, paid to get a sample of a product, paid to test a product, paid a percent of your shopping cart basket when you purchase from an online retailer, or even paid to buy something offline such as a car or a home improvement.
Traditional and rewarded ads are just the tip of the iceberg for the sort of economic activities that could one day go on within Facebook. I’m sure they could come up with other ways for someone to earn their token.
Advertisers could pay for the advertising on any of Facebook’s apps, including the rewarded ads, using their currency. The sky’s the limit on what people would be able to buy with the token both on and off of Facebook.
The Facebook Buyback
Here’s the kicker that would guarantee real and significant value to Facebook’s currency: Facebook would set aside some portion of their revenues or profits to buy back the currency and destroy it to lower the total supply. And Facebook would commit to a program like this so that the buybacks are quite predictable for the community and the markets to absorb and price. In this way, the total supply could shrink faster than the 5% inflation rate, depending on profits.
Facebook would buy back their coin on multiple, reputable cryptocurrency exchanges at the best price they could find (perhaps including their own exchange), and then they would permanently destroy that currency. It would be just like buying back stock. They could start small. Maybe they’d use just 1% of revenue to buy back their token each day. It would be sort of like a dividend, only instead of payouts, it would merely increase the value of each token for all token holders.
Facebook could buy it back on a very regular basis. Perhaps they would take their current earnings and project out future earnings so that they’re buying a consistent amount over time that would gradually be changed to reflect the new situation. Or they could use past profits.
At 2016’s revenue of 27.638 billion U.S. dollars, they could buy up $525.84 worth of the currency (at whatever best price they can find for each token) every minute, year-round for the next year and will have bought back 1% of 2016’s revenue. The would create great consistency for the currency’s price, which would be much appreciated by its holders.
Growing Buybacks
Over time they might increase the buybacks to 5%, then 10%, then eventually 50% or 100% of their profits. Facebook could have an incentive to buy back their “coins” with every last penny that they make. At this point, they might be the primary coin in town, and all transactions around the world might be in their coins, so how would they buy back their currency with their coin? They wouldn’t need to, they could just agree to destroy any coins or 50% of the coins, that they earn. This way they can earn coins and increase the value of the coins they already have while increasing the value of the coins of others. This would encourage other apps and people into the Facebook token system. But it doesn’t stop there.
The Dominance of Facebook Tokens
Once all of Facebook’s users are using the Facebook currency, there would be ridiculous network effects at work that could make the money more valuable than Bitcoin. Does that mean it would have an insurmountable advantage, compared to other currencies? No, I don’t think so.
I see the future world as having tons of competing currencies.
(this has already happened, but the competition will be much more fierce. Maybe Google, Amazon, and Facebook will all be fierce crypto competitors soon)
Perhaps there will be one dominant currency at any given time, perhaps not. Just like brands mean so little to so many people in many of the older industries like carbon-emitting autos and pharmaceuticals, one day the “brand” of your digital currency may make little difference to you. In that world you may want to own a bunch of currencies just in case one becomes dominant over some of the others, if only for a short time.
Currency trading could be the last way to make a significant profit on Earth, and then even that could disappear. Or maybe something will crop up in its place as the way to make bank―something still unimagined by everyone but Satoshi Nakamoto. (the one thing I can imagine is that there are things that no one has yet imagined… but I can’t yet imagine what those things are)
In the ancient world, salt had extreme value and wars were fought over bars of salt. Today, salt has little value, and few would imagine trying to make a living or substantial profits from trading salt. Someday, digital currencies could be like salt. Or perhaps they will be the last store of value, since everything else we will have in abundance except for the one thing that can be well-limited: an algorithmically-controlled, decentralized currency.
We could all have an abundance of Bitcoins, but the creator, the code, the miners, the built-in economic interests of key constituents, and now the community at large all ensure that there will only ever be 21 million Bitcoins.
Perhaps land and buildings and robots and software and ultimately algorithmically-limited currencies will go the way of the salt bar, or maybe not.
The Facebook Transaction Economy
Many apps and eventually brick and mortar businesses will want to start transacting in the Facebook Coin. Why? Because it will be the easiest way to get something of value from their customers in exchange for whatever good or service they’re providing.
Facebook will create an open source API and multiple SDK’s for the token so that it’s easy for anyone to hook up and start accepting the currency for payments, and also use the money to pay for stuff. It will be an open platform where anyone with some programming chops will want to take a stab at creating a little better wallet or a slightly better interface, all to try to get a piece of the transaction fee pie. And since over two billion people will be users of the currency from day one, it will have a larger user base than Visa and MasterCard combined.
As a business receives a currency that is growing in value, they will recommend the currency to other companies because of the benefits they got in their own business, but also because as more businesses adopt it the network effects grow and its value grows.
But Facebook could take this a step further. Transactions will have fees: perhaps 0.1% or maybe even 1 or 2% of transaction value, to create even more value through a transaction fee sharing system. Whoever is securing the network with their servers (decentralized actors which probably would include Facebook) would get the fees. But Facebook could create a fee sharing system ahead of time where it is understood that some percent of the fees go to whoever is producing the transactions. So 50% or 75% or 90% of the fees could go right back to the apps and the physical businesses that are generating those transactions.
You might ask, why not just make the fees lower? There are two reasons.
One reason is that the business owners could use part of those fees as a sort of rewards program to pay back users in some way. Perhaps it would be a power user or preferred customer program, or maybe a business would merely implement a universal discount and build it into their pricing.
The second reason has to do with the different economics created by currencies. In a typical business, there are no transactions fees when one user sends money to another within the same app. But since Facebook’s coin would be decentralized, the fee would still apply. So this would help create ecosystems within ecosystems. Facebook would have an incentive to have as many transactions as possible on their platform, such as through the ads, the rewarded advertising earnings, and virtual goods buying and selling within games. But also, every other app and business that uses the currency would be incentivized to make the token integral to the operations within the app or company.
An app could transact everything in the Facebook Token within its app and externally to earn transaction fees. This would give anyone within that platform’s influence an incentive to join the system. They’d have an incentive because they would now own some of the currency which they could help grow in value by bringing all of their users/customers on board with it just by adopting it as one currency users use, or even better, the only money that users use.
This transaction fee system would create an incentive for every app and business within the platform to pay employees in the Facebook Coin, to buy stuff in the coin, to only accept the coin for payments, and to create earning opportunities for anyone within their platform to get the currency. It’s platforms within the larger Facebook Token platform, and some of those larger platforms will even have platforms within them. So it’s platforms within platforms within a platform. Who knows how far the rabbit hole could go?
The Conclusion
The ultimate goal of this Facebook cryptocurrency is multi-fold: security for Facebook, security for Facebook’s users in the form of UBC and UBI, and a much larger global economy that all accrues partly to the benefit of Facebook and its users. This larger economy will be owed to a single, international currency with low transaction fees, and fast transaction confirmations. Couple that with an initial amount of capital that all Facebook users will receive, and regular income that any Facebook user can earn and then can spend as needed.
In creating a more connected world, it’s hard for me to imagine a future where Facebook won’t launch its own digital currency. It’s just a matter of when.
Of Facebook’s 20,658 employees, it probably has hundreds or thousands of them who are seriously thinking about a cryptocurrency launch. It doesn’t matter if this initiative is from the top down, or from the bottom up, they are thinking about it.
The three central questions now are, “Will it happen?” (which seems increasingly likely to me), “When will it happen?”, and “How will it happen?” I hope Facebook takes to heart what I’ve written and considers a formula that could help ensure some small amount of minimum viable income for billions of people around the world. I don’t know that this income will be necessary for the poor in the future, but it could be a nice perk.