On Dec. 20th, EWN reported on the development that Facebook, the world’s largest social media platform with over 2 billion active users, is in the process of creating a new cryptocurrency to be used for WhatsApp transfers.
While the company has yet to make an official announcement, early details are reporting that the currency will fall in the class of stablecoins, with the initial focus on targeting the remittance market in India–a sphere of influence Ripple, with the XRP coin, boasted of holding a near 50 percent market share earlier in the year. Facebook had previously been tied to rumors of a partnership with Stellar XLM, which was subsequently denied in an official statement released by the company. The newest expansion of a stablecoin is presumed to be designed in-house by Facebook’s established blockchain division, a sector of the company that former PayPal president David Marcus has been head of since May (Marcus previously ran Facebook’s Messenger app since being hired in 2014).
It comes as little surprise that Facebook’s first foray into the cryptocurrency arena will be in the development of a stablecoin, given the popularity and growth of the subset throughout 2018. With the falling price of Bitcoin and the altcoin market, price volatility has been the overwhelming concern for both merchants and established platforms looking to integrate cryptocurrency into their business model. According to Bloomberg, the sources familiar with the stablecoin development, who chose to remain anonymous, claimed that the company’s goal is to “minimize volatility”, with the project being far from a release date as a strategy is developed to “protect the value of the stablecoin.”
The news of Facebook potentially propping up the cryptocurrency industry, albeit in an alternative model that does not include the price-appreciative asset model that most have come to know in Bitcoin, comes at a time when market prices are testing new lows. While the industry has managed a brief recovery over the last several days, some price analysts are pointing to the phenomenon of a “dead cat bounce” as being to blame.
At the beginning of the month, EWN reported on a conference call update by billionaire crypto advocate Mike Novogratz, who lamented the state of 2018’s declining market value,
“It’s been a horrible bear market in tokens. There’s plenty of reason to be depressed.”
However, Novogratz followed his remark with a generally optimistic outlook for the industry over the next several years, citing the inverse relationship crypto’s valuation has started to exhibit with growing adoption.
“I fundamentally think you’re going to see big adaption in 2019, 2020. Lots of the items in the digital world, the e-gaming space, are low value items so I think people will be more comfortable participating in blockchain. We’re making big investments in that area.”
While it would be ironic to pin the hopes of the industry on Facebook, a company which imposed a sweeping ban on cryptocurrency advertising–since retracted–which helped fuel the fire of the bear market, the social media giant could provide the type of appeal and attention needed to get Main Street adoption moving towards the space. Among many hurdles to overcome, education for cryptocurrency and blockchain is still a paramount issue for the average internet user to surmount in order to transact with Bitcoin.
Stablecoins provide a more consumer-friendly landscape for digital transactions, as opposed to the investment-focused asset classification of Bitcoin and other popular currencies. With Facebook appearing all in on the creation of a cryptocurrency, it seems only a matter of time before other large-scale internet companies follow suit.