Facebook is seeking an investment of $1 Billion for it's rumoured "FB Coin" according to a new report in WSJ. It's supposed to be a cryptocurrency stablecoin that the silicon valley giant has been working on for a while now.
It seems to be trying to have a cryptocurrency pegged to the US dollar which Facebook and WhatsApp users will be able ot use to make payments and transfer to each other.
The social media company used by more than 2 billion users worldwide has been talking to Visa and Mastercard amongst various other companies about the project which is known within Facebook as 'Project Libra.'
According to WSJ, "Facebook Inc. is recruiting dozens of financial firms and online merchants to help launch a cryptocurrency-based payments system on the back of its gigantic social network."
It may also consider paying users in it's digital token for viewing ads on its platform as well as have advertisers pay for ads using their in-house cryptocurrency.
The use cases for Facebook to develop it's own crypto are many and it would interesting to see how they pull this off.
The report also adds that Facebook might also look at taking the lions share of the tradition card swipe and card processing fees which are 2-3 percent. This is usually paid by the merchants to the banks and the intermediaries such as the payment processors and networks involved in a transaction.
It should come as a surprise that Facebook is going to try to reduce the dominance of card networks in the global payments sector.
I'm not the biggest fan of centralised cryptos but considering how unfavourable some markets are towards digital tokens I want large companies like Facebook to adopt cryptocurrencies and force protectionist governments like India to agree to adopt these changing technologies.
But a Facebook stable coin pegged to the US Dollar, backed by 1 billion USD collateral sounds good on paper. I'm not sure how this will pan out. We're gonna have to wait and watch I guess. But maybe it will help reduce any volatility. However, we've all seen how stable these so called stablecoin cryptos really are, haven't we? Maybe this will be different.
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