Facebook has reportedly held discussions with major crypto exchanges in order to have its cryptocurrency listed. Rumors started swirling last year following a revealing Bloomberg report.
It divulged that the social media giant was working on a stablecoin targeting Indian WhatsApp users. A desire to enter the country’s burgeoning remittance market was cited as the main reason behind the move.
New York Times reporters Nathaniel Popper and Mike Isaac broke news of the latest development on Thursday. According to their post, Facebook has been working on a cryptocurrency that they plan to incorporate into WhatsApp. The WhatsApp messaging app boasts over 1.5 billion users while Facebook’s user base exceeds 2 billion. This is according to statistics from Statista.
This gives the two platforms an unrivaled reach advantage over mainstream crypto transfer competitors. Should the company officially launch its crypto project, new demographics will undoubtedly be carved out and uncharted markets opened up.
The New York Times report discloses that Facebook currently has over 50 engineers working on the “Basketcoin.” Staff working on the project are apparently situated in a separate section of the company where only members with a key-card are allowed access.
This revelation accentuates the level of importance and secrecy surrounding the project. As opposed to a stablecoin, a basketcoin’s value is not pegged to just one fiat currency but simultaneously connected to an assortment of other related assets. In this case, there is speculation that Facebook’s coin will have its value attached to the Japanese Yen, the U.S. Dollar, and the Euro.
The main advantage that stablecoins and basketcoins have over conventional cryptocurrencies such as Bitcoin is that their value does not fluctuate as wildly. This is an important element that helps relieve price movement fears among consumers.
At the moment, Facebook seems to be targeting the consumer market, which is bound to use cryptocurrencies as a medium of exchange and not as a store of value. Apart from developing a cryptocurrency, the company has been looking into ways to integrate blockchain into its applications.
In a recent video posted about a week ago by CEO Mark Zuckerberg, he mentioned that blockchain technology could potentially provide the company and its users greater convenience. This is by enabling the latter to store login credentials on the blockchain. Such a feature would allow users to securely log in from different locations without having to provide their information to a third party.
He talked about some of the major challenges facing app developers right now and one of those was being forced to use intermediaries such as Google Play or the Apple Store. In his view, blockchain seems like a viable solution.
Other Social Media Networks Developing Their Own Cryptocurrencies
Besides Facebook, other major social networking platforms have recently expressed a desire to move into the crypto segment and Telegram is one of them.
Founded by two Russian brothers, Nikolai and Pavel Durov, Telegram has a user base of about 300 million. It has striking similarities to WhatsApp but has a more robust encryption system. According to a past study published by Global Web Index, BBM, Telegram, and WeChat members are far more likely to appreciate a money transfer feature than those on networks like Snapchat and Facebook.
According to the report, about 89 percent of Telegram users would be happy to see a money transfer integration. On the other hand, only 46 percent of all Facebook users are likely to prefer such a service.
That said, the much anticipated crypto Telegram Open Network (TON) project is reportedly about 90 percent complete. This is according to recently leaked documents. The highly secretive project raised a mind-boggling $1.7 billion through its ICO last year.
The documents highlight that project developers have already contacted major Asian exchanges for a listing once the testnet is live. Other messaging and networking companies that are reportedly working on their own coins include South Korea’s Kakao and Japan’s Line.
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Major Challenges Ahead
Because of the decentralized nature of cryptocurrencies, companies looking to launch them will most likely face significant headwinds, especially related to national regulations. Some jurisdictions, such as Saudi Arabia, have already banned crypto trading. There is also the question of abuse.
Most major cryptocurrency platforms have had to deal with a host of security issues and hackers have proven relentless in their pursuit to undermine the most stellar of countermeasures. How companies such as Facebook plan to deal with these issues is still unknown.
It will be interesting to see how the duel of social media platforms will conclude in reality. While major social media platforms such as Facebook have significant reach, the notion of cryptocurrencies is still relatively new, especially to those in developing countries. And convincing this demographic to join in is likely to be a significant hurdle.
(Featured Image via CNBC)
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