After the recent talk of Facebook taking steps towards developing a cryptocurrency, the rumors were confirmed with the news that its messaging subsidiary, WhatsApp, is looking to create a new digital payments system.
It was reported that Facebook is working on creating a cryptocurrency that will allow users to transfer money on its WhatsApp, which operates under Facebook’s umbrella. The initial focus is on the remittance market in India, where there are over 200 million users. According to statistics from the World Bank, India leads globally in remittances, with people sending $69 billion home to India in 2017.
However, the relationship between India and Facebook’s Whatsapp has been uneasy. After a wave of mob violence over the past few months, the Indian government wants to hold Facebook accountable for facilitating the spread of fake news. Rumors about people coming into a small village to kidnap children spread on social media, especially WhatsApp, resulting in many incidents of violence, and the deaths of 33 people. Nonetheless, Facebook sees great potential for growth in the country.
It was revealed this would be a stable coin, pegged to the US dollar. Bloomberg reports that the company is working on a long-term strategy, including “a plan for custody assets, or regular currencies that would be held to protect the value of the stablecoin.” The idea is that a digital currency would make daily purchases easier, and it would be less volatile than non-pegged cryptocurrencies.
“Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology,” revealed a company spokesman. “This new small team is exploring many different applications. We don’t have anything further to share.”
Alex El-Nemer, director of blockchain enterprise Nexus, explains the new role of cryptocurrencies in the giant social media companies:
“Cryptocurrency is already recognised as a digital alternative used by millions for the safe and secure transfer of funds online, so enabling it to be used on platforms like Facebook and WhatsApp is the next logical step in its progression. This would provide users with the ability to purchase products, goods and services at the touch of the button, including making charitable donations and supporting good causes. Forward-thinking industries and organisations should acknowledge this as the beginning of a new era for alternate digital currencies, and plan ahead to integrate services for the inevitable mass adoption which will follow.”
This news is not a great surprise, considering the past affairs involving Facebook and crypto. The previous events that took place are described in a recent article. Since 2017, there have been a number of progressions that took place preparing us for some upcoming collaboration. Facebook began its first exploration of blockchain technology halfway through 2016 when the company tasked a corporate development member of staff to research blockchain technology.
Since then, Facebook has continued researching and exploring the possibilities of a blockchain powered platform and digital currency. With over 2 billion users on this social medium and another 1.5 billion users on Whatsapp (overlap not taken into account), we may be looking at the first truly mainstream cryptocurrency. The existing infrastructure of these companies is massive, and would easily facilitate the mass adoption of cryptocurrency.