According to many reports, new details are emerging with regards to plans for launching the Facebook cryptocurrency GlobalCoin early next year. According to BBC,
“Facebook wants to create a digital currency that provides affordable and secure ways of making payments, regardless of whether users have a bank account. The social networking site, which owns WhatsApp and Instagram, is hoping to disrupt existing networks by breaking down financial barriers, competing with banks and reducing consumer costs.”
It seems that Facebook wants to build its own payment network to facilitate the transfer of funds across the globe bypassing local banks and financial regulations. If this idea catches on, it can have major implications for Facebook. Facebook can become a global marketplace where users can make secure transactions quickly. The scope of this project is huge as it has the potential to extend to Facebook Messenger, WhatsApp and Instagram. Users can send/receive money from each other and make on-platform purchases.
It is interesting to note how recent updates on Instagram can be a build-up to the launch of the Facebook cryptocurrency GlobalCoin. Instagram is rapidly growing and working to develop its e-commerce platform by providing new features like Shopping Tags, Checkout, Shop section in Explore etc. When Globalcoin launches, it will hopefully boost their use making them an integral part of the user experience. Facebook will be looking to facilitate essential tasks like fund transfers, bill payments, shopping and more.
In March, Ted Livingston, the Founder and CEO of Kik posted Facebook’s likely strategy for GlobalCoin on Medium. Facebook will most likely start with facilitating people working in foreign countries to send money back home via remittance. The country where the most amount of money is sent this way is India where WhatsApp is the most popular app. Livingston said,
“Every year people working in foreign countries send hundreds of billions of dollars home to family and friends. Today this process is slow, expensive and complicated, with an average fee of $14 to send just $200. If Facebook could offer people a way to send money home for free it would be a game changer for tens of millions of people.”
In December, Bloomberg wrote,
“Facebook is working on making a cryptocurrency that will let users transfer money on its WhatsApp messaging app, focusing first on the remittances market in India”
Facebook might be looking to follow the same strategy that worked for WeChat which is used by 900 million Chinese people daily facilitating $10 trillion in payments every year making it the dominant payment platform in China.
Starting with remittances, Facebook may expand its options to spend the money within the app. This could include bill payments, food ordering, shopping, on-platform purchases etc. The long term plan for Facebook could potentially transform the e-commerce landscape. How it actually plays out is something we will find out in early 2020.