It has been long been known that Facebook was working on a blockchain and crypto project. Most suspected that the new token would facilitate payments for Facebook’s 2.5 billion users on its social media platform. However, it turns out that Facebook’s maiden crypto project will focus on Whatsapp. According to sources familiar with the issue, Facebook will target the very lucrative Indian remittance market with the new token. The crypto will be a stablecoin pegged to the U.S dollar, the sources further revealed.
So, should Facebook’s foray into the crypto space bother the Bitcoin community? Some analysts have warned that a crypto token backed by Facebook could threaten Bitcoin. This is because it would have the backing of one of the world’s largest tech giants. However, looking beyond, this could also greatly benefit Bitcoin. One of its biggest challenges has been the lack of mainstream appeal. With two billion people gradually warming up to Facebook’s crypto, Bitcoin’s market could also widen significantly.
The Whatsapp Crypto
Facebook has always been at the forefront of emerging technology. It acquired Instagram to keep up with increased photo-sharing-based social media as well as Oculus to keep up with virtual reality. And now, crypto is on its radar.
As reported today by Bloomberg, Facebook is targeting the Indian remittance market with its new crypto. India is the biggest remittance market, with the country having received $70 billion in 2017 according to the World Bank. Whatsapp is also quite popular in India with more than 200 million users, making the country an ideal place to start.
Whatsapp’s crypto token is however still in its nascent stages, the sources revealed. With the current regulatory framework in India being hostile to cryptos, the company has quite a lot of ground to cover. Facebook is working on a plan for custody assets, ensuring that there exist enough dollars in reserve to back the stablecoin. This has been one of the controversies that have threatened to bring down Tether, the largest stablecoin currently.
In a statement, a spokesperson for Facebook stated:
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.
The company has been on a hiring spree, with its blockchain and crypto division now consisting of at least 40 employees. The division is headed by David Marcus, a former PayPal president and financial services guru. Marcus stepped down from his position on Coinbase’s board earlier this year. This was seen as a clear tell-tale sign that Facebook was accelerating its blockchain efforts.
Could Facebook Become a Major Player in the Cryptosphere?
Should the Whatsapp crypto become a reality, Facebook will be the first major company to make such a move. Reports indicate that Amazon has also been weighing a similar move, but nothing has come of it yet.
Such a move could be a blessing in disguise, and it might finally take Bitcoin to the masses. While initially it could pose a threat to the existing cryptos, it’s unlikely that it could unseat Bitcoin as the crypto king. For many, Bitcoin is more than just a currency. It signifies the ultimate breakaway from the control of centralized entities. With no single person in charge, the currency can’t be manipulated and depends on tested mathematics and programming principles.
The Whatsapp crypto, on the other hand, will be quite centralized. Facebook will control the supply, the network and many other factors. This could make it ideal for institutional use and could lead to massive uptake by financial institutions. However, for the ultimate crypto users, Bitcoin will retain its place as the crypto of choice, at least for the foreseeable future.