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Facebook gunning for the US Dollar, not Bitcoin with "Facecoin"

26 Mar 2019   #Bitcoin

Ted Livingston, the founder of instant messaging platform Kik, has developed a reputation as someone who is always one step ahead of the market when it comes to all things crypto and messaging related. He thinks Facebook is looking to create a cryptocurrency that will rival the US Dollar in the future and this is how they plan to do it...

Facebook's plans are no secret; they are a global company and need to keep their investors appraised on any major moves they are planning to make. We know their moves include launching a stablecoin, that they plan on using it in Whatsapp first and most important of all. We know that they plan on launching it in India specifically for remittances. Bloomberg does not name the sources, but a publication of that stature can be allowed some leeway.

Livingston set out a detailed plan, based on his extensive knowledge of the cryptocurrency market and of the monetization of the same, in a Medium post. He does draw on the story of WeChat. Today, over 900 million people use WeChat to process 10 trillion dollars worth of transactions a year.

The blockchain is key to Facebook's strategy

The problem, as Facebook see it, is that there are many people who want to send money to family in other countries, but always have to wait until a sizable sum is gathered. This is because the institutions that handle the transfer of money, large international institutions that have built the trust required to handle these types of transactions, charge large fees to provide the service.

In some circumstances, they can charge $14 for a $200 transfer. It is slow and built on old systems that are fast becoming a burden on an ever quicker changing economic landscape. The problem concerning anyone who had ideas to challenge these large institutions before was one of cost. It is not cheap to move money, with the required amount of trust, across the world.

This is where the blockchain comes in and shakes things up. Blockchains allow cryptographically and mathematically verifiable transactions to take place at much quicker speeds than the legacy systems allow. Facebook adding remittances to Whatsapp, the most popular messaging service in India, will allow the largest market for remittances to open up in a way that has never been done before.

Once people start sending remittances and the Indian users start withdrawing money, Livingston envisions Facebook borrowing from WeChat's playbook. First, they will offer bill paying via the app. Then they will offer restaurant payments. Move to other services such as taxis, grocery stores and more. The more services people can use on Whatsapp, the less reason they will have to withdraw those remittances. Remittances which were mainly sent int the form of US Dollars.

Future expansion is key for Facebook

Livingston does add that Facebook would need to expand quickly, but that it already has a heavy presence in the countries where remittances are extremely popular. Vietnam, Mexico, and Egypt would be next. If it needed to expand into Western Europe, it could tie the currency to all its services – Facebook, Messenger, and Instagram as well as Whatsapp. Facebook already has strong marketing and legal departments in all those countries.

Livingston leaves off with a word for the naysayers

People who think that a potential "Facecoin" could not become the world's currency because it would be a stablecoin pegged to the dollar, are forgetting that the US Dollar was once pegged to gold – which was for a long time the reserve currency of the world. Then, they unpegged it and made a deal that oil could only be bought in dollars – and suddenly the world looked to the US Dollar as the reserve currency for the world.

He says there is a precedent for everything he says – and that we should expect Facebook and Mark Zuckerberg to take full advantage of these opportunities.

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