It seems that the social media giant is finally finishing plans to launch its own crypto-currency. From Facebook, they announced that they are planning to set up a digital payments system, that will be available in 12 countries, by the first quarter of 2020.
The company said they want to start testing its crypto-currency, internally known by the name of GlobalCoin, by the end of this year. The plans should be detailed this summer and the company is allegedly in talks with Bank of England governor Mark Carney.
Facebook’s Founder Mark Zuckerberg already met with Carney last month to discuss the opportunities and risks involved in launching a crypto-currency. It is presumed that Zuckerberg sought advice on operational and regulatory issues from officials at the US Treasury.
Just for reminder, the US Senate and Banking Committee wrote an open letter to Facebook CEO asking the details of their digital currency projects. Their concerns surround the fact that, if Facebook releases a digital currency, people around the world will transact in it.
The Committee also expressed concerns regarding the privacy issue on Facebook. The firm must also take appropriate security measures to safeguard the funds from cyber-attacks.
Researcher at the London School of Economics, Garrick Hileman, claims that GlobalCoin would be one of the significant events in the history of cryptocurrencies. According to his estimates, 30 million people use cryptocurrencies compared to Facebook’s 2.4 billion users.
GlobalCoin will probably be established as a stablecoin, pegged to the dollar or local currencies in the countries that will be allowed to use it. It is also likely to run on a private, centralized blockchain, owned and controlled by the company. Based on this fact, it can not be perceived as a direct competition to Bitcoin or other peer to peer decentralized digital currencies.
However, it Bitcoin-inspired cryptocurrency and reportedly has plans to launch some potential shockwaves throughout the burgeoning bitcoin and cryptocurrency sector.
The company 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. Also they are negotiating with Visa, and Mastercard, to back and fund its planned fiat-based cryptocurrency.
If we consider overall debacle Facebook went through recently with security breaches and wide-scale data abuse, the question that everyone is asking is: Can Facebook be trusted with other people’s money?
Two weeks ago we have witnessed the company’s co-founder Chris Hughes slamming both the Facebook and its CEO, saying that Zuckerberg’s ownership of the majority of Facebook’s shares means that there’s no internal check on his power, and there’s no government agency dedicated to overseeing a company like Facebook.
For a long time, Facebook has been expected to make a move in financial services especially after they hired former PayPal’s president David Marcus to run their messenger app in 2014. In May Markus became the head of company’s blockchain division and they also registered a crypto company called Libra Networks in Geneva, Switzerland.
Spencer Bogart, a partner at venture capital firm Blockchain Capital, said:
“Once [Facebook users] own [Facebook’s GlobalCoin], it will be like being on the internet so people can spin-out and start owning Bitcoin or Ethereum. Bitcoin has gone from zero users ten years ago to somewhere between 30 million to 100 million–the estimates are tough. And Facebook has billions of users.”
According to two people familiar with the matter, Facebook has already held talks with at least two cryptocurrency exchanges, Coinbase and Gemini, through which users could store their coins safely or could convert the Facebook coin into other cryptocurrencies or fiat currencies such as the dollar. Both exchanges declined to comment.
The world’s biggest social media company may soon have its own virtual currency, but following accusations of privacy violations, security breaches, censorship, and fake news dissemination, it remains to be seen how many people will actually use and trust it.