Facebook is rumored to be developing a cryptocurrency for messaging service WhatsApp, which it acquired back in February 2014. Bloomberg reports that India will be the target of its first iteration, where the token will be used for remittances, one of the key USPs of digital currencies.
The World Bank found that in 2017 India led the way in remittance payments, spending $80 billion on them, so it is clear why Facebook would want a slice of that. With more than 200 million users, WhatsApp is the perfect vehicle for Facebook to gain a foothold in the market.
Zuckerberg Follows Through
Facebook creator Mark Zuckerberg announced in January that he was “studying” cryptocurrency, which was pretty hard not to do in January seeing as it was all over the news. He seems to have taken the technology very seriously however, assuming that the rumors of a Facebook coin are true. If so, this could well be the moment cryptocurrency goes mainstream, and not just because of the price. With Facebook’s reputation and share price having taken a battering in 2018 however, this might turn out to be an association cryptocurrency might not want after all.
When is a Blockchain Not a blockchain?
The question of whether a Facebook coin will be a ‘true’ cryptocurrency is something that will surely stir up debate in the months to come. Much depends on whether Facebook will design and run their own blockchain, and unless the talk in August of using Stellar’s blockchain comes through, it must be assumed that the social network is indeed designing its own blockchain. This would partly explain the explosion in blockchain-related positions it has been trying to fill recently.
Noted Bitcoin advocate Andreas Antonopoulos has previously stated that a ‘true’ blockchain must be three things – open, borderless and censorship-resistant. Bitcoin is an example of this because it is not owned by any single entity and, in theory at least, anyone in the world can create it, use it, and see all transactions made on the chain. From what we know about Facebook’s crypto project, which is very little, and what we know about Facebook as an entity, which is much more, we can assume the following:
Open: Facebook will, presumably, own all aspects of their cryptocurrency. It will be centralized on their servers and will not require decentralized third parties to verify transactions. It is also highly unlikely that they will make all transactions freely available to be viewed by anyone who wishes to do so. FAIL.
Borderless: The Facebook coin will be restricted to platforms and geo-locations as dictated by Facebook. This is exemplified by their desire to start with one platform, WhatsApp, and one location, India. FAIL.
Censorship resistant: Try the opposite. Facebook will nose and pry into every aspect of their cryptocurrency usage, harvesting data and potentially selling it on to third parties as they have done with so much on the platform that users assumed was private. This is not the coin to use if you value your privacy. But then neither is Facebook. FAIL.
The Silver Lining
Of course, we don’t yet know the specifics of Facebook’s cryptocurrency. They could surprise us by launching a genuinely anonymous, decentralized coin that can be used not just on the platform, but for a multitude of internet purchases…but it’s doubtful. Whatever happens, it will showcase the benefits of cryptocurrency over other remittance payment methods, so we should be grateful for small mercies.