Crypto trends: Facebook to take the plunge into crypto?

crypto trends



With a whopping 2.3 billion monthly active users on just its platform, Facebook is undoubtedly one of the most influential and powerful tech companies the world. And the company is stepping into the crypto space! According to a New York Times reporter, Facebook is reaching out to VC firms to invest in the company's cryptocurrency project (source). Facebook is allegedly seeking as much as $1 billion for its stable coin project and is likely to use this capital as collateral to back its token.

So is facebook taking the plunge? It seems so! As this isn't the first time Facebook has made inroads into crypto.

Facebook had announced last year that it planned on releasing a stablecoin on its messenger platform WhatsApp, which has over 1.5 billion active users. According to a Bloomberg report, the company’s new stable coin could enable cross-border transactions between WhatsApp users.

The aim?

To target the Indian remittances market. Non-resident Indians sent home a whopping $69 billion in the year 2017 alone. The challenge? the current process of cross-border payments is slow and quite complex, Facebook hopes to solve this by leveraging blockchain technology. According to the sources at the New York Times, Facebook plans on listing its stable coin in cryptocurrency exchanges by as early as the first half of 2019.

This development might have some interesting ramification. Like for example, while Facebook is a household name, cryptocurrencies aren’t. Crypto is often attributed to negative elements like scams albeit with some truth to it. But what if a crypto token gets integrated with one of the largest messenger platforms in the world? The day when cryptocurrencies become as common and ubiquitous as fiat money might not be too far into the future.


Facebook acqui-hires Chainspace

Developing a stable coin might be a relatively easy task but developing one that is fast, efficient and much more convenient than current money transfer methods is the challenge. But if anyone can build such a platform, it’s Facebook!

The company has over $44 billion in cash and equivalents as of 2018. So Facebook has definitely got the resources to take on such a gargantuan challenge. But what it lacks is the bright minds to design such tech. Or what it did lack, before acqui-hiring chainspace in February of 2019 (source).

Chainspace is a London based startup that aims to augment blockchain technology beyond its current applications. Founded by a team of University College of London researchers, the company has been working on a method known as “Sharded smart contracts”. This advanced application of blockchain technology is specifically designed to enable speed, scalability, and privacy.


But why release a stable coin?


Partly why cryptocurrencies have gained significant recognition among the masses, if it has any, is due to the extreme price volatility of cryptocurrencies which observed people becoming millionaires and bankrupt concurrently.

But a stable coin is different.

A stablecoin is a cryptocurrency who’s price is pegged to something of value like the US dollar or in Facebook’s case, Institutional capital. Being pegged to a real-world commodity means the price volatility is minimized, which would be critical for a remittances platform.


Competition brewing!

Although Facebook garners all the attention of traditional new media outlets, as it takes gradual steps into the crypto space, it is hardly the most prominent player. There are several other players on and off the blockchain that are leaps and bounds ahead of Facebook in terms of technical expertise and partnerships.

For example, Ripple founded in 2013, is arguably the most prominent player in this space. Ripple’s platform is an open-source protocol, created with the aim of enabling cheaper and faster financial transactions. The company created Ripplenet which is a network of institutional payment providers such as banks that use Ripple’s platform to enable frictionless transactions. The company has notably signed agreements with over 200 financial institutions around the world.   

Funds raised by ICOs ($MM), sector-wise

Crypto trends

Source


Financial Services companies similar to Ripple within the blockchain-crypto space have raised a whopping $2.5 billion till February 2019. On top of the stiff competition Facebook is facing from blockchain companies, tech giants like IBM are also developing stablecoin based solution for cross-border payments.

In March of 2019, IBM launched a global payments network using Stellar’s cryptocurrency (source). The new network will allegedly enable seamless cross-border transactions and foreign exchange in more than 50 countries. Monikered as the “IBM World Wire”, the network leverages Stellar’s protocol to accelerate remittances, foreign exchange and cross-border payments.