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Facebook is planning to launch its new cryptocurrency in the near future. In the initial stages, with this cryptocurrency unofficially dubbed “Facecoin,” Facebook will be targeting the remittances market in India. It is a widely shared view that Facecoin might be one of, if not the biggest challenger to the most famous cryptocurrency, Bitcoin.
However, CEO of Kik messaging app and Kin cryptocurrency, Ted Livingston, thinks that it’s not Bitcoin that Facebook is targeting with Facecoin but the US dollar. He shared his views in a recent blog post where he talked about the prospect of Facecoin replacing the dollar as the international reserve currency.
He argues that since Facebook has pegged their new cryptocurrency’s value to the US dollar, the social networking giant is simply implementing a stateless payment system which it plans to use to replace the dollar as the international reserve currency with the help of its already vast social media network. Livingston compared Facebook’s future plans to the action plan that WeChat, a messaging platform, executed to replace cash in China.
Livingston explained that WeChat implemented a three-step plan that Facebook could implement for their own cryptocurrency. In this plan the three steps involved are:
- Make it compelling for people to bring their money into the messenger
- Make it easy for them to move their money around
- Create more and more reasons for them to keep their money inside the messenger
Facebook’s cryptocurrency Facecoin would allow Indians who are working in foreign countries to be able to send their money back home free of any fees. This would be a game changer for millions of people. Currently, sending remittances back home is an expensive process; according to some estimates, it costs roughly $14 to send $200. That’s an insane amount of fees to pay just to move money. Facebook’s cryptocurrency would replace this older and slower system with something much more cost and time efficient with the help of blockchain.
“People in India could convert their Facecoins into cash, but Facebook could create more and more reasons to just spend Facecoins using Whatsapp,” Livingston said in his post. He stated that as people start using Facecoin as a way of moving cash, the more reasons Facebook can bring for people to keep their money within the company’s different social networking platforms, the more money the company will earn.
This is important as recent developments and a rise in public awareness regarding privacy issues has forced Facebook to turn to private communications instead of the old “public broadcast” idea. However, this is a new path for Facebook and they are going to have to come up with ways to earn money. Facecoin could be their best bet.