Back in 2009, no one probably had an idea that Bitcoin is going to make such a colossal impact. Ever since its inception, Bitcoin, the world’s first cryptocurrency, has remained a hot topic of discussion. In fact, it’s due to the popularity of this digital coin that several other cryptocurrencies were launched. And now the social media giant Facebook is also delving into the crypto world.
According to reports, the world’s largest social networking company, Facebook is set to launch its own cryptocurrency. Facebook will start testing its crypto-currency, which has been referred to internally as GlobalCoin and is possibly going to make the announcement this month. This currency would allow users to make digital payments in a dozen countries by the first quarter of 2020.
Bitcoin is experiencing a bearish market for the past several months which has caught the attention of numerous companies including Facebook. Possibly, this led Facebook founder Mark Zuckerberg to enter the blockchain space with its own cryptocurrency.
Now you might be wondering what this cryptocurrency is, how will it work, and what will be its limitations. So, here we’ll try to find out everything you need to know about GlobalCoin.
What is GlobalCoin?
Facebook is the leading social media site with billions of active users. According to reports, Facebook acquired the “Libra” trademark in May 2019 for its secretive project. The company has been in touch with financial institutions and firms to develop its own cryptocurrency and that project has the codename Libra.
In 2018, the company appointed David Marcus, a former PayPal executive, to begin exploring blockchain and cryptocurrency, across its social network platform. The social media giant may also allow its digital coin to be exchanged for fiat currencies using existing apps like WhatsApp and Facebook Messenger.
David Marcus has been actively involved in the crypto world. He was on the Board of Directors of Coinbase, the world’s largest and most popular cryptocurrency exchange. Moreover, he is given credit for making Facebook Messenger the most widely used chat apps in the world. With about 1.5 billion active WhatsApp users and around 1.3 billion Facebook Messenger users globally, GlobalCoin is expected to become the world’s first mainstream digital currency.
Facebook is also in contact with some money transfer firms to accept its coin as payment. Reportedly, the company is in talks with payments giants like Visa and Mastercard to enable cheaper and faster money transfer and for $1 billion funding to support the project. There are also reports of a meeting between Mark Zuckerberg, the founder, and chief executive of Facebook, and the governor of the Bank of England, Mark Carney. The meeting was intended to discuss the opportunities and risks involved in launching GlobalCoin. Furthermore, the company is in touch with officials at the US Treasury to look at the operational and regulatory issues.
How Will It Work?
Facebook, which owns WhatsApp and Instagram, is coming up with its own cryptocurrency to make payments more affordable and secure. With the launch of GlobalCoin, it will become easy for users to make payments within Facebook, WhatsApp, and Messenger, as well as undertake payments outside the Facebook ecosystem. As a “global” system, the network will allow users to pay and transfer money even without the need of a bank account. In this way, GlobalCoin will compete with banks to break down the existing financial barriers and thus reduce consumer costs. This project would also help Facebook in diversifying its revenue away from advertisements.
Unlike other cryptocurrencies, GlobalCoin will be pegged to a basket of established currencies, such as the US dollar, the euro and the Japanese yen. This will stabilize the value of this digital currency and minimize volatility.
Considering the reach and popularity of Facebook, possibly the ICO for the GlobalCoin could surpass the Telegram’s 1.2 billion dollars. The technical details have not yet officially announced but likely users will have to register to use the coin. However, the company will make sure that wallets and transactions remain completely anonymous.
What are the Concerns?
Lately, Facebook caught public attention when it came to light that the company sold the personal information of more than 50 million of its users to a political data analysis firm called Cambridge Analytica. Soon after the scandal became public, millions of users boycotted facebook by shutting down their profiles. And this resulted in collapsing the market capitalization of Facebook from 538 to 464 billion dollars. In view of the growing concerns over Facebook’s handling of users’ personal data, it remains a question that how the company will ensure consumer protection and how data will be secured.
Also, in contrast to cryptos like Bitcoin and Ethereum which have high volatility and fluctuations, Global coin will be pegged to stable assets. This will make the coin ideal for making traditional payments. However, this will also mean that it is not intended for trading.