Mark Zuckerberg, chief executive officer and founder of Facebook Inc., waits to begin a joint hearing of the Senate Judiciary and Commerce Committees in Washington, D.C., U.S., on Tuesday, April 10, 2018. Photographer: Andrew Harrer/Bloomberg
The tech giant Facebook has set to develop it’s own crypto currency named ‘Global Coin’ and it’s planning to launch in several countries by 2020.
These coins can be used to shop or to transfer money. This operation is called Project Libra and lets users transfer money using WhatsApp. Facebook is also looking to pay users fraction of a coin for activities such as viewing advertisements and interacting with shopping and purchasing through e-commerce websites much like loyalty points. This venture let’s users pay and transfer money even without a bank account and helps Facebook in diversifying it’s revenue away from advertisements.
Is there risk involved like other crypto currencies?
Unlike other cryptocurrencies like Bitcoin and ethereum which has high volatility and fluctuations, Global coin will be pegged to stable assets like the US Dollars or gold to minimize the volatility and fluctuations in value, making it ideal to be used in traditional payments. This would mean that it is not ideal for trading.
The CEO Mark Zuckerberg met the governor of Bank of England Mark Carney to discuss the opportunities and risks involved in this venture. Mark quoted “I believe it should be as easy to send money to someone as it is to send a photo”.Facebook sought advice on operational and regulator issues from US Treasury officials.
Usage of Global coin – Where and how to use it?
Facebook is seeking an investment of $1 billion from companies like VISA, MasterCard and other online merchants. This could potentially eliminate credit card fees and other payment gateway charges. FB currently has a user base of 1.5 billion active users who can transfer money to one another with ease. This already gives Facebook’s cryptocurrency a potential to be most widely used currency in the world.
The consequences of this action could challenge PayPal, Apple, Google, Amazon and other tech giants. This could also disrupt traditional credit card companies but Facebook plans to overcome this challenge by making the credit card companies as investors or partners.
Facebook has hired a 40 member crypto experts most of whom were previously employed by PayPal. This block chain specialist team is led by David Marcus, a French entrepreneur who is currently head of FB block chain systems and a member of coin base board of directors.
This operation might seem a little difficult given the poor track record of Facebook on data privacy.
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