The Facebook Globalcoin: All You Need To Know
Facebook has made the headlines around the globe once again, this time because of its Globalcoin project.
It’s a project that surprised no one. During 2018, after the cryptocurrency craze that saw Bitcoin’s
price soar and then crash, reports indicated that Facebook will veer into cryptocurrencies.
Since the massive company has stakes in far too many tech projects, you could say the rumors were expected. Over time, Facebook often announces involvement in projects that got nowhere, nobody expected this to be any different.
However, over this last month news items have appeared confirming the project – and giving us a small peek at what it might be.
A cryptocurrency? Or just yet another weird “token” system for payments?
Once again, due to the lack of any official information, this is mostly hearsay. Many of the reports come from insiders who should harbor some knowledge, but it’s impossible to tell what to trust.
Still, most reports point towards Facebook coin being an actual cryptocurrency, although of the stablecoins kind. For those who don’t know the term, a stablecoin is a cryptocurrency whose value is directly tied to that of a fiat currency. For example, if Facebook says a Globalcoin is worth $0.10, then that would be its permanent value. It wouldn’t rise or lower.
This has a handful of advantages, although they might be difficult to notice by people outside the community. Since stablecoins maintain their value, they aren’t considered risky. Sure, you can’t actually “invest” in them, but you also can’t lose money with them. Since many people mistrust cryptocurrencies due to their volatility, this helps make Facebook's offering seem stronger.
Now, it’s difficult to tell this effort apart from the weird “token” system we’ve seen in many online ventures. It does look at first like Facebook is selling monopoly money for real money, with said monopoly money being the only way to pay on the platform.
And it would be like that, except… there are other details about it.
Cryptoexchanges might be in on it
This is the one variable that would make or break Facebook’s coin. If the attempt at a cryptocurrency can’t be exchanged for other cryptocurrencies or fiat, it’s doomed to fail. No matter how much infrastructure is behind it or what tech and marketing geniuses are around, currencies you can only use in walled gardens don’t work.
However, there are reports that Facebook might be trying to get the coin listed in crypto exchanges. If that’s the case, and said exchanges agree, then they might have something good to offer.
Just having crypto exchanges work with it would change the game for several reasons.
First, allowing Facebook’s potential monopoly money to be freely exchanged for other currencies gives it actual value. People won’t mind having their assets in Facebook coin if they can easily trade it.
There’s more, though. Crypto exchanges operate under lots of pressure. The cryptocurrency and blockchain communities are notoriously fickle, turning against actors or companies easily.
In this case, the often overtly delicate, quick -to- throw fits community is a good thing. Facebook is known for being, how shall we put it… rather carefree about user privacy, security, hacking, data handling, data selling, data leaking, and so on. People in the community who thought you couldn’t do worse than Microsoft were proven wrong by Mr. Zuckerberg’s uncanny ability to mishandle private data.
In order for any big crypto exchange to list Facebook Coins, however, it’ll need to be proven reliable first. All big exchanges know any deals with Facebook will be considered red lights. Listing the cryptocurrency will come with a blowback unless they can ensure that the currency is secure. Therefore, it’s quite likely that crypto exchanges will have a list of demands for Facebook to comply with in exchange for their support.
It’s always possible that smaller exchanges might jump in, hoping to attract Facebook users. However, this would still be a huge risk for them. Just a small suspicion that Facebook Coins are not secure would start a scandal, after all.
Facebook has been able to soldier on so far because people don’t care much about the Chinese government stealing their private pictures and data. Mess with their money, however, and they’ll run riot.
A scandal would immediately destroy Facebook’s cryptocurrency efforts and any crypto exchange backing them in tow. As such, it’s unlikely any half-decent exchange sites would partner here without first making sure that the security is up to standards for cryptocurrencies.
There are reasons why this might work…
Facebook has a terrible reputation among developers. We all know it. It has an inkling for poor monetization and running things into the ground. The only Facebook-related projects that have ever worked other than the social network have been acquired, is yet to be created.
However, reports state Facebook is looking for up to $1 billion in investments for this project. Among the entities contacted by the social media giant are VISA and Mastercard. Moreover, Facebook execs related to the project have met with Tim Draper, and at least an MIT professor is reportedly working with them.
In other words, Facebook seems to be sparing no expenses when it comes to attracting both talent and investors. As they should, since a $1 billion failure would greatly hit the company. Facebook has always been bad at handling projects, but this is the kind of failure that could doom the company to bankruptcy.
Will it work? Will it not?
We still can’t tell what the future might bring. Facebook’s horrible track record means that its crypto project has already gathered mixed reactions at best. However, all we know so far is hearsay, rumors. Some of them are quite likely to be correct, but some might not be.
While speculating is fine, we should wait until we get the facts before openly criticizing or supporting this project. People are right to mistrust this, but we still don’t even know what the project will be about.
There are lots of people involved, which means it might be a serious thing, but who knows? There’s still a chance this is just some publicity stunt with no semblance to the blockchain.
Either way, we can only wait.