Update: Facebook’s New Cryptocurrency Project

Facebook is looking to launch its own cryptocurrency offering as reported by the New York Times in March this year. This offering would allow the users of Facebook’s apps to transfer and receive money among their friends without any additional charges. If reports are to be believed, this project has the potential to revolutionize the way eCommerce works and could be Facebook’s biggest shift yet.

Facebook would seemingly target the Indian market seeing as how the second most populous nation in the world sees the highest amount of funds transferred between family members, something that is in the company’s wheelhouse. From there, Facebook can break ground and establish a solid presence in India by expanding into other forms of fund transfers. All such fund transfers conducted through Facebook itself from start to finish would enable easy international currency exchange.

Facebook may be looking to play a bigger game as indicated by recent reports. As per the Wall Street Journal, Facebook is looking to launch a payment system using cryptocurrency which would be able to operate in direct competition to conventional payment methods like credit cards.

As per 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. The effort, should it succeed, threatens to upend the traditional, lucrative plumbing of e-commerce and would likely be the most mainstream application yet of cryptocurrency.”

Facebook’s effort would most definitely a stablecoin which is a cryptocurrency whose value is linked to the conventional currency markets to avoid fluctuations in the price of the cryptocurrency. It makes sense that Facebook would be looking for financial firms to back them up as insurance against the impact of the changing values of cryptocurrency.

Facebook’s bigger plan would be to position its payment network as a rival to companies like Visa and MasterCard. This would help them go beyond basic fund transfers and also reduce the charges associated with conventional payment methods. Additionally, this would enable easier international payments on its network using only Facebook’s credentials.

And that process could have benefits even beyond Facebook itself – as noted by Ars Technica:

“One of Facebook’s big strategic advantages is the fact that a fair number of websites already use Facebook APIs to allow users to log in using their Facebook credentials. It could be a straightforward matter to extend that existing infrastructure to allow users to make purchases on third-party websites using their Facebook credentials.”

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Aseem Gupta

Aseem Gupta

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