Facebook’s relationship with the crypto space has caused a lot of controversies recently. It is one of the biggest tech companies in the world and therefore commands the level of firepower that could either make or break concepts that attracts its attention. While Facebook has done tremendously well in facilitating a conducive environment for budding technologies, yet it remains skeptical of the viability of cryptocurrency.
However, this is all about to change as recent news suggest that the tech giant is looking to use its technical know-how to introduce a stable coin that would help facilitate transactions on its Whatsapp platform. Although the company is yet to corroborate this report, the crypto space believes that Facebook’s rekindled interest in crypto could stem from last year’s revelation that the company’s co-founder, Mark Zuckerberg, was particularly inclined to explore the technology.
In addition to this, news outlets divulged interesting information that connected the acquisition of a crypto research firm in the UK to Facebook. In the aftermath of this acquisition, experts have explained that this might just mean that Facebook is planning on expanding its crypto team and we all know that the easiest way to recruit crypto experts is to acquire an existing crypto firm along with its workforce.
Furthermore, in a statement that neither disproved or confirmed its interest in introducing a stable coin, a spokesperson for the company told Bloomberg:
“Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology… This new small team is exploring many different applications. We don’t have anything further to share.”
This unimpressive statement has not, however, done enough to quench the already raging topic on the implications of Facebook’s foray into the crypto space. While some enthusiasts have welcomed the development, some have downplayed it has an insignificant contribution from one of the most formidable brands on the planet. Also, it is important that we compare this development with JP Morgan’s stable coin project. Both are leading companies in their respective industry and both have built their empire on a structure that is quite opposite to the decentralization that governs crypto.
The question is: are these companies really fascinated and interested in crypto or is the major motivation money?
More likely than not, the latter always trumps the goodwill that some enthusiasts argue is the main motivator. How many times have we seen big corporations embark on new challenges without factoring in the financial benefits that come with it? Already, experts are corroborating this notion and they estimate that Facebook stands to gain as much as $19 billion on its FBcoin by 2021 and $3 billion in the worst case scenario
Barclays’ Ross Sandler who contributed this research stated that:
“Merely establishing this revenue stream starts to change the story for Facebook shares in our view… Any attempt to build out revenue streams outside of advertising, especially those that don’t abuse user privacy are likely to be well-received by Facebook’s shareholders. ”
Now that we have considered the probable impact of FBcoin on Facebook’s earnings, let’s take a look at its impact on the crypto space.
What Effect Will It Have On The Crypto Space?
The more traditional and astute believer of the decentralized world that crypto introduced have ridiculed the project as a cheap attempt by Facebook to make money from centralized cryptocurrency. They believe that it would have little or no effect on the budding crypto space since it does not comply with the consensus structure that governs cryptocurrencies like bitcoin.
On the other hand, leading personalities in the crypto space like Changpeng Zhao has come out to confront the notion while arguing that centralized crypto adoption is better than no adoption. Similar to this, Ari Paul of BlockTower Capital made a compelling argument that the introduction FBcoin could, in fact, go a long way to expose traditional cryptocurrencies to Whatsapp users.
According to Paul, if 10% of the projected 300 million FBcoin users decide to adopt more cryptocurrencies, then it means that the crypto space would have an additional 30 million people actively partaking in the crypto market.
To an extent, these arguments are compelling enough to eliminate any lingering doubt that Facebook’s interest in crypto could endanger decentralization. Simply put, a project that would give 300 million people a glimpse of the benefits of using crypto is a win for the crypto space. And although it goes against the core structure of cryptocurrency itself, yet a broader look at the situation projects that decentralized cryptocurrencies will eventually become beneficiaries of this development.
Also, if the project is as successful as we expect, chances are that Facebook and other tech giants would become more confident in exploring other opportunities within the crypto space, which will ultimately lead to an uptrend in the crypto market.