Facebook, a company that in just six years was able to convince one billion users to join its platform, is reportedly working on a cryptocurrency-related project.
The company is a worldwide known phenomenon that has leveraged technology to amass a huge following and build exceptional network effects within its environment. With the emergence of blockchain technology, Facebook now is looking to leverage its user-base to bring the adoption of cryptocurrencies a little bit further.
According to internal reports, the tech giant is developing a stablecoin that will be available to its Whatsapp users. Initially, the digital currency will be used by Whatsapp users in India.
Choosing India as the inflection region can prove to be a great decision — but doesn’t come without issues.
If Facebook launches the stablecoin they are reportedly building, it will quickly become the most used product in crypto.
WhatsApp has over 200,000,000 users in India alone.
The Indian government has been fighting crypto too so things are about to get very, very interesting…
— Pomp 🌪 (@APompliano) December 21, 2018
The Country of Remittances
First of all, Facebook wants to target a market as large as possible and one that is in need of digital currency. Developed countries in the west already have a well developed financial infrastructure that offers a great user experience. India, on the other hand, is lagging behind and has a very high remittance volume.
Presently, the use of cryptocurrencies would offer different benefits to developed and under-developed countries. On one hand, western society is betting on cryptocurrencies to enable a fundamental change in monetary policy, which now is deemed inefficient, flawed and opaque.
On the flip side, people from under-developed countries are in need of digital currencies because they have restricted access to capital and the global financial infrastructure. The need to bank the unbanked is more pressing and a solution could quickly gain traction with the people.
Moreover, Facebook has been going backward with its reputation in the U.S. and Europe. Negative headlines surrounding Facebook’s privacy policies have set the company back, both in its valuation and perception as a trustworthy platform. Surveys are showing users losing faith in the social platform’s capability to safe keep their private data.
Facebook Has Officially Lost The Public's Trust https://t.co/0X5Y0LR8vB
— zerohedge (@zerohedge) December 21, 2018
That is why it’s not going to be a digital currency on the Facebook or Messenger platform, as previously rumored, but on its $19 billion acquisition from 2014.
The digital currency will reportedly be a stablecoin pegged to the U.S. dollar.
2018 has seen many stablecoins released with TrueUSD, Paxos, GUSD, and USDC trying to gain market share against the stalwart Tether (USDT). The differentiating factor for Facebook’s stablecoin is that it has a clear target market and already has a large user-base to leverage.
Taking into consideration Facebook’s caliber and experience in developing products that people use, releasing a stablecoin could be a huge milestone for public-wide use of cryptocurrencies.
The only issue with choosing India as its ground for experimentation is that the Indian government has had a negative stance on cryptocurrencies. The Reserve Bank of India (RBI) has been involved in imposing bans on cryptocurrency-related projects and restricting banking access to startups in the industry. If Whatsapp’s stablecoin would start to pose a risk to RBI’s authority and influence, the government might decide to restrict access to the messaging app altogether.
What are your thoughts on this? Can Facebook’s stablecoin contribute to the development of the crypto scene? Will the Indian government be an obstacle in the process? Let us know your thoughts in the comments below!
Images courtesy of Twitter.