Global currencies: Facebook coin as a simulation of a global borderless currency


One of my colleagues did a short write up about whatsapp and potential implications. Thought I would share here:

Bloomberg speculates that FB will be introducing a stablecoin based payment/remittance system pegged to a basket of currencies to leverage their 2.7billion userbase. What does this mean for the crypto space?

Scenario 1: FB releases stablecoin pegged to foreign fiat currencies with the intention of creating a cryptocurrency

Crypto impact - immense amount of attention and spotlight on Crypto community. Onboarding and offboarding lay users to crypto may suddenly become more accessible.

Challenges – FB will still need to overcome the challenges faced by existing cryptocurrencies re onboarding lay users to the ecosystem. FB may address this issue by integrating secure payment software into WhatsApp, by supporting the value of its cryptocurrency with Facebook’s own financial resources, and by policing the WhatsApp payment ecosystem for fraudulent activities. This then raises the question of adhering to govt. regulations respective to payment systems complicating the rollout.

They could potentially create a phased solution where the initial launch doesn’t look like a cryptocurrency solution at all but as the crypto space resolves issues, they could evolve to become a viable cryptocurrency.

Scenario 2: FB builds a digital currency similar to WeChat and it will be a payment platform such as PayPal. In the short term it may create downward price pressure on Cyrptos by providing a competitive convenient and cheaper alternative to existing payment systems. However in the long term the decentralised use case of cryptocurrencies should reassert themselves.

Scenario 3: Potential for a dual token stablecoin such as Maker Dao where the speculative coin will act as the collateral. However, this not what is being widely speculated as the option.

Scenario 4: A direct competitor to BTC with a fixed supply as a store of value banking on their large user base to compete on achieving stability over time. Potentially they would premine a lot of the supply, locking it up as a store of value for FB stakeholders. Again an unlikely scenario from whats being reported.

Implications for developers? There is a case to be had here, that this is similar to the introduction of FB or Apple store in which we saw many developers create user based apps and games that resonated with the audiences on those platforms. Millions were up for grabs. Similarly an “effectively” borderless fb coin for retail users could spur on new use cases, fb coin specific apps and games etc. A whole ecosystem will grow from it as people capitalise on the new users.

It also puts forth an argument for how crypto dapps could develop. Given that fb coin would be “borderless”, it some what simulates the end state of what blockchain aims to do with a global ecosystem. A DApp could simulate and effectively run their application leveraging whatsapp/fb users.

Of course the problem is that fb coin will most likely not be decentralised, lacking of course security, privacy, transparency and immutability. Thus in the long term principles of decentralisation will reassert itself as being required. But in the short term, could there be a case for leveraging fb coin as a simulator which eventually moves towards full decentralisation in the future. What better platform than one with billions of users from all around the world?