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.
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