By
Steve Muchoki
April 25th, 2024
In a blog post, Kik Ceo Ted Livingston explained how Facebook’s coin may replace the US dollar as the global reserve currency.
Facebook, the social network giant that got down to getting involved in the crypto sphere at the end of last year, seems to provide competition not only to Bitcoin. As Ted Livingston, CEO of messaging platform Kik, has stated, Facebook’s stablecoin is going to replace the U.S. dollar.
Everyone should read this. @ted_livingston has been ahead of many trends in social media and messaging over the last decade.
Bold thoughts here.https://t.co/RCji3mHaOF
— Pomp 🌪 (@APompliano) March 20, 2019
The first report of Facebook planning to launch its own digital currency emerged in December 2018. However, the giant did not provide any comments on the announcement at that time. In March this year, it was revealed that Facebook was holding talks with exchanges to sell its crypto token.
According to the internal sources, the new Facebook coin will be fiat pegged stablecoin. It is notable that its value shall be tied to not just one, but three different national currencies. It is also known that the company will probably integrate cryptocurrency payments across its messaging services.
This includes three of Facebook’s wholly owned apps – Messenger, WhatsApp, and Instagram. Thus over 2.7 billion users can benefit from using Facebook’s new cryptocurrency.
As soon as the news about Facebook’s plans had appeared, crypto experts and outstanding players started making predictions on what to expect from the upcoming launch. For example, Barclays internet analyst Ross Sandler believes that launching its own cryptocurrency is a part of a multibillion-dollar revenue opportunity.
Moreover, Sandler forecasted as much as $19 billion in additional revenue by 2021 from Facebook’s coin. As he further added, the giant will bear the brunt of interchange costs between fiat currencies and its possible new cryptocurrency, which could cut into the profitability of the business.
Ted Livingston, known for being a leader in making predictions, has also made some guesses based on Facebook’s previous activities and experience in messaging and crypto. In a blog post, Livingston described how Facebook’s coin may replace the US dollar as the global reserve currency. He wrote:
“We now know that Facebook is going to launch their own cryptocurrency too. But instead of creating a currency for the digital world, it looks like Facebook is going after something much bigger. It looks like they are going to create a currency for the physical world. And they have a proven playbook to get people to use it.”
Livingston’s explanation begins with WeChat, a Chinese messaging social media and mobile payment app, which made the way to success pretty quickly and replaced cash in China. As Livingston put it, Facebook’s upcoming stablecoin project is a ‘WeChat aspirant’.
Like WeChat, Facebook was trying to move the US Dollar into a private online payment system. And WeChat-based system could make it easier for people to transfer money cheaply and persuade them to keep their money inside the messenger system.
Livingston said:
“WeChat allowed people to take their money out at any time, but they also added more and more reasons for people to keep their money inside: paying hydro bills, buying food, booking vacations, and more. Soon no one was taking their money out.”
Further, the cryptoanalyst said that Facebook is about to have all the pieces needed to execute the three-step WeChat playbook. These steps are the compelling need, moving money, and keeping money inside the system.
The first stage includes helping those working outside their home countries get their earnings back home with remittances. As Livingston stated, ‘if Facebook could offer people a way to send money home for free, it would be a game changer for tens of millions of people.’
Moving money and keeping track of the money will be possible through the blockchain, which means Facebook will permit payments in apps without becoming a bank:
“Facebook will be able to roll out a global financial system without needing to go through the time intensive process of working with banking regulators country by country.”
Finally, the platform used to keep money inside the system will be built in such a way that Facebook makes money off of its efforts to help people.
“By adding the ability to remit money inside their apps, and by using the blockchain to power those remittances, Facebook can quickly roll out a ten times cheaper solution to a problem experienced by tens of millions of people.”
At the end of the post, Livingston wrote:
“Not that long ago the world’s reserve currency was gold, where the value of a dollar was pegged to the value of gold. But then one day the US decided to unpeg the dollar from gold, paving the way for the dollar to replace gold as the world’s reserve currency. So here is my question: what will stop Facebook from doing the same?”
For sure, there is nothing that can prevent the giant from doing that. Recently, the company was in hot water as it was revealed they stored millions of user passwords improperly for years. But this is unlikely to dent Facebook’s reputation, especially now, at the threshold of launching a currency that has all the chances to change the financial world.