Published
4 years ago on
May 29, 2019
The launch of a truly global cryptocurrency such as that backed by Facebook is huge news for the cryptocurrency markets. The recently announced Globalcoin – Facebook’s own cryptocurrency is now causing a stir within the news headlines. Is this a good thing, is this a bad thing or is this something we should totally avoid altogether?
Facebook is one of the world’s biggest tech firms, responsible for the world’s biggest social network. There are currently around 2.38 billion users on Facebook, therefore any cryptocurrencies or tokens created by Facebook should be expected to see huge levels of adoption, Globalcoin is no exception to this. Now, we want to delve into some of the facts about Globalcoin in order to understand what it is and what it will do. Is this going to challenge Bitcoin and storm through the markets as a viable cryptocurrency, or, rather is Globalcoin a utility token, simply designed to make Facebook’s products; Facebook, Instagram and Whatsapp, a little better?
So, what’s the plan with Globalcoin? According to the BBC:
“Facebook is planning to set up a digital payments system in about a dozen countries by the first quarter of 2020. The social media giant wants to start testing its crypto-currency, which has been referred to internally as GlobalCoin, by the end of this year. Facebook is expected to outline plans in more detail this summer, and has already spoken to Bank of England governor Mark Carney.”
By exploring the legal side of this and by talking to high ranking officials within the financial world, it’s clear that Facebook’s plans are to create more than just a utility token here, they genuinely seem to want to create a cryptocurrency that can be adopted by the masses. Could Facebook’s 2.38 billion users be about to gain access to their very own cryptocurrency here?
This doesn’t just end with the Bank of England either:
“Founder Mark Zuckerberg met Mr Carney last month to discuss the opportunities and risks involved in launching a crypto-currency. Facebook has also sought advice on operational and regulatory issues from officials at the US Treasury. The firm is also in talks with money transfer firms including Western Union as it looks for cheaper and faster ways for people without a bank account to send and receive money.”
You could be forgiven for being a little bit worried about Globalcoin. If the reports are true, the design of Globalcoin could be one that challenges the efforts of major cryptocurrencies like Bitcoin and XRP. Indeed, this could prove to be an issue for your investments a little down the line, though if anything we should expect the opposite to happen. If Globalcoin does become a mainstream cryptocurrency, it should encourage more investment and thus, should allow a lot of new money to be pumped into the markets. Whilst Globalcoin could be seen as a threat to Bitcoin, it could also be seen as a good friend, a friend with some great benefits.
Of course, the concerns for Globalcoin don’t end here, many people on an institutional level wonder how this is going to affect normal users of Facebook. Cryptocurrency is a risky area, could Globalcoin eventually mislead its users into unsafe cryptocurrency investment? Furthermore, according to the BBC, some of these concerns don’t seem to have been addressed by Facebook as yet:
“Facebook has come under fire in recent years over its handling of users' personal data, and regulators are likely to examine the launch closely. Earlier this month, the US Senate and Banking committee wrote an open letter to Mr Zuckerberg questioning how the currency will work, what consumer protection will be offered and how data will be secured.”
The BBC report continues:
“Facebook has also discussed the process of identity checks and how to reduce money laundering risks with the US Treasury. It is believed that Facebook and its partners want to prevent wild swings in the coin's value by pegging it to a basket of established currencies, including the US dollar, euro and Japanese yen.”
Could this actually turn out to be a stable coin after all? Moreover, why have Facebook seemingly failed to address the data and privacy concerns aired earlier this year? To us, this seems like a storm that could be coming to a head – whatever Globalcoin turns out to be, it has to be a perfect product before it’s roll out, otherwise the whole integrity of Facebook could be on the line here.
So, will Globalcoin work? Depending on what Globalcoin is and what it aims to achieve, it could be a very fruitful project that has a very positive impact on the global cryptocurrency markets. As we have explored however, it seems that the plan for Globalcoin is currently a little disjointed, nobody really knows what is going on with it and nobody really know what the future holds for cryptocurrency within Facebook. The team at Facebook still have a lot to answer for with regards to the handling of user data in the past, if we can’t trust Facebook with their core social network, how can we trust them with a product as complex as cryptocurrency. David Gerard is one blockchain expert that seems to reflect this scepticism, according to the BBC report:
“Blockchain expert David Gerard said that Facebook would gain access to valuable spending data by creating its own payment system. However, he questioned why the social media giant needed to mint its own cryptocurrency to harvest that data. Instead, he said, Facebook could create a platform like PayPal, which allows users to transfer traditional currencies. Crypto-currencies are vulnerable to fluctuations in value, which Gerard said could create a barrier to the success of Facebook's so-called GlobalCoin.”
What do you think about Globalcoin? Is this truly the future for cryptocurrency adoption?
