Facebook is planning to make something awesome on cryptocurrency. The company is talking to dozens of financial and e-commerce companies, including Visa and MasterCard, about the cryptocurrency-based payment system it is developing. The scheme carries the codename Project Libra and involves a dollar-pegged virtual currency that could be used for payments between WhatsApp users. Facebook is apparently considering giving users small amounts of the cryptocurrency for looking at ads, Fortune Newsletter summarizes.
Facebook Inc. is recruiting dozens of financial firms and online merchants to help launch a cryptocurrency-based payments system on the back of its gigantic social network.
The effort, should it succeed, threatens to upend the traditional, lucrative plumbing of e-commerce and would likely be the most mainstream application yet of cryptocurrency. It comes as the social-media giant is under intense pressure from regulators, users and shareholders to address privacy shortcomings.
What Facebook plans to do has already been done by Microsoft which hires users to use its Bing search, and then give them points which they can redeem for different brand gift cards. But Microsoft is not issuing its own “currency” which can create payment disintermediation for banking institutions. Facebook may face real backlash not just from governments but financial institutions. But those concerns may not really matter – the social media giant will navigate them perfectly.
A Facebook cryptocurrency would mobilize not just startups but banking institutions against the social media giant. If it happens, it can be a currency which will be useful, not tethered to any real-money benchmark because Facebook is a huge continent of itself. Provided everything stays within its network, it can claim that it is simply a “mileage system”, or a “loyalty system” or at best a “transferable reward system” which is uncorrelated with any real currency. Then, it would add in its terms “You cannot exchange the Facebook coin for any other currency. It has no value outside Facebook”. Of course, people would go ahead and trade the coin even if it means swapping Facebook accounts.
People, this would be interesting and could happen. Yes, crazy things have happened in the past: a Facebook crypto could be dangerous to nearly every digital business in this world. That currency could be deployed across its platforms including Instagram.