05/28/19 10:55 AM 2019-05-28 10:55:27 2019-05-28 11:12:26
If you’ve been living under a rock for the last year, Facebook was all over the news for their potential creation of a cryptocurrency to go along with their existing services and now It is planning to set up this digital payment system that allows users to make transactions in about a dozen countries by the first quarter of 2020.
Like with all its previous services, Facebook will start testing the product by rolling it out to targeted users of specific countries. This new cryptocurrency which has been referred to internally as GlobalCoin will be made available for their intended target users to test by the end of this year.
Facebook is very much keen on doing this cautiously as they already have a negative image in the public following its numerous privacy woes. This led Facebook’s creator Founder Mark Zuckerberg to discuss the opportunities and risks involved in launching a crypto-currency with Mark Carney, The Bank of England governor. They are seeking advice on operational and regulatory issues from officials working at the US Treasury along with money transfer firms like Western Union to improve the transaction quality of its upcoming digital asset.
The creation of Facebook’s Global Coin, previously Nicknamed Project Libra, was first reported from sources going back last December.
Facebook, with the acquisition of Whatsapp and Instagram, have always made sure that it stays at the top. This new digital currency is created with an aim to provide affordable and secure ways of making payments on all of Facebook’s services including WhatsApp and Instagram. They are looking to disrupt existing networks by breaking down barriers set by the financial sector and banks.
The project will see Facebook working hand to hand with banks and brokers to make currency conversion hassle-free between Global Coin and real-world currencies.
Facebook also looks to bring in numerous online merchants to accept the currency as payment in return for lower transaction fees. A Swiss-based association is also said to be announced in the coming weeks.
Facebook has been under the fire for the past few years for the way they handled the privacy of users and their personal data. The US Senate and Banking committee had written an open letter to Mark Zuckerberg questioning the functionality and security of the currency. Facebook seems to stay away from all the legal issues by working with the US Treasury to ensure proper identification of users and making sure to take measures to prevent the currency being used for money laundering purposes.
This is not Facebook’s first shot at digital currencies. They had tried and failed with Facebook Credits, a virtual currency designed for in-app purchases in Facebook apps. They had to shut it down after being ignored by users worldwide. This was back when cryptocurrencies were not as well-known as they are today.
A major obstacle for the company will be the regulations set on cryptocurrencies by nations like India. However, this is nothing compared to the task of regaining the trust of millions of users following all their recent controversies.
The biggest attraction of digital currencies to banks and big firms is the technology behind its working, Blockchain. Blockchain technology can help slash the time and cost of sending money across borders and add an extra layer of transparency in an age dominated by the internet while minimizing the involvement of third parties.
Many are skeptical about Facebook’s new move. Blockchain expert David Gerard questioned the need for Facebook to create its own payment system rather than using already existing ones. Even with all the data they have, they still are hungry for more as with its own cryptocurrency, Facebook can have more access to behavioral patterns of its users. He also added that the volatile nature of cryptocurrencies will not encourage normal users to accept Facebook’s new currency.
However, Garrick Hileman, a researcher at the London School of Economics, is hopeful and believes that Global Coin could be the first mainstream cryptocurrency. Facebook looks to make a turnaround and gain back the trust from its users with the help of blockchain and cryptocurrencies. Facebook currently has 2.4 billion monthly users and the release of Global Coin would be nothing but a huge landmark for the Crypto Industry.
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