In recent years, Facebook has made big moves into virtual reality and VOD with the acquisition of Oculus and the launch of Facebook Watch. However, those ventures may be dwarfed by the social networking platforms latest initiative; releasing its own cryptocurrency. It’s been reported that Facebook has assembled a 40 person blockchain team specifically for the purpose of developing a cryptocurrency for its WhatsApp messaging service.
Ideally, the new feature will allow users to send and receive money from friends and family anywhere in the world for a nominal fee. Moreover, Facebook intends its branded cryptocurrency to be a stable coin that will be pegged to several different currencies including the U.S. dollar and the euro. The company will reportedly back its coin with its vast international assets.
Though no firm launch date has been set for the Facebook coin, it has been said that the company is pretty far enough in the development process. The corporation has been negotiating with cryptocurrency exchanges to offer its coin to consumers in the first half of 2019.
Facebooks Wants to Rule the Remittance Market
Facebook is not getting into cryptocurrency just to make life difficult for PayPal and Venmo. The tech giant is interested in breaking into the remittance market. Specifically, it has its sights set on the Indian remittance market, which totaled $69 billion in 2017.
While making a major move into an established industry is ambitious, the company has already laid the groundwork to become a player in international payments. Currently, WhatsApp has more than 200 million users in India. If the service suddenly allowed all of them to make and receive payments, it could easily displace leading Indian mobile payment providers like Paytm.
While Facebook has yet to publicly comment on the status of its cryptocurrency program, there is evidence to suggest that it has been plotting to get into finance for a while now. In 2014, the company hired former PayPal president David Marcus to head up its Messenger service.
And in February of this year, Facebook purchased a small British blockchain startup called Chainspace. Prior to its acquisition, the English firm was working on a blockchain payments program.
Big Challenges and Big Rewards
Despite its wealth of capital and global reach, Facebook will not have an easy path to dominating the remittance market. In addition to striking agreements with cryptocurrency exchanges, Facebook will have to assure international regulators that it is on the level. Since the company is still dealing with the lingering aftereffects of the Cambridge Analytica scandal, that will likely be a major challenge.
Moreover, the corporation will have to convince consumers that its coin is a safe bet. With cryptocurrency theft spiking in recent years, that will likely be a hard sell. It’s also worth noting that this is the first time Facebook has dabbled with virtual currency. In 2011, the company launched Facebook Credits but shuttered it two years later due to problems with fluctuating exchange rates.
However, if Facebook can cut through all the international regulatory red tape and convince consumers it’ll take better care of their money than it did their privacy, it might be able to dominate a half trillion dollar global market.