The secretive Blockchain project of Facebook is apparently no longer a secret. While the social media giant has refrained from making any comments on the issue. The blockchain team currently employed is proof enough of its ‘future projects.’ Facebook’s blockchain efforts are evident in their hiring of former PayPal President, David Marcus, who is also the lead manager of the blockchain project at Facebook.
One thing that is almost certain is that Facebook cryptocurrency would be a ‘stable coin’. In all probability, it will be pegged to the ‘US Dollar.‘
Facebook’s Second Attempt At Releasing ‘Facebook Credits’ Could Turn Fruitful This Time
The vision of a customized separate currency within the platform is not new. Reportedly in 2010, Facebook had released ‘Facebook Credit’ which was a token designed to act as fuel for the paid features and services on Facebook. However, the associated cost of conversion from FIAT to ‘Facebook Credit’ was high due to banking charges and the associated cost of handling a centralized system.
Almost a decade down the line, Facebook today has more than 1.7 billion active users. Its subsidiary WhatsApp has 1.5 billion users. Hence, the metrics today are in favor of Facebook. If it ever releases its own cryptocurrency, it already has a user base of 1.5 billion to create a crypto-community. Furthermore, the favorable niche built by the cryptocurrency market makes it easier to implement and enact Blockchain on its platform.
“Based on our checks, the first version of Facebook Coin may be a single purpose coin for micro-payments and domestic p2p money transfer (in-country), very similar to the original credits from 2010 and Venmo today,” according to Barclay’s analyst Ross Sandler.
Expected Increase in Revenue
An independent analysis of the implementation of a ‘stable coin’ by Facebook by Ross Sandler with Barclays reveals that the expected increase in revenue annually for Facebook by 2021 alone could be $19 billion.
Facebook has a total market capitalization of around $500 billion. Therefore, a surplus revenue of $19 billion implies that the market capitalization of Facebook could theoretically increase to $600 billion by 2025 (it will be much larger if cumulative growth and economies of scale are taken into consideration).
Moreover, the revenue of Facebook reported in 2018 was 55.8 billion dollars. Hence, a $19 increase in revenue would imply a 34% increase in revenue. At current prices, the stock price of Facebook with cryptocurrency implementation could leap to 250 USD with increased market sentiment and revenue.
Despite, privacy breach confirmations and hearings at the US Council, the user base and stock price of Facebook have been growing exponentially. Facebook stock is trading 30% since the beginning of the year. Hence, implementation of the privacy feature with added security and transparency of records with Blockchain would only restore investor and user confidence in Facebook.
“Any attempt to build out revenue streams outside of advertising, especially those that don’t abuse user privacy are likely to be well-received by Facebook’s shareholders,” Sandler said.
Sunil is a serial entrepreneur and has been working in blockchain and cryptocurrency space for 2 years now. Previously he co-founded Govt. of India supported startup InThinks and is currently Chief Editor at Coingape and CEO at SquadX, a fintech startup. He has published more than 100 articles on cryptocurrency and blockchain and has assisted a number of ICO’s in their success. He has co-designed blockchain development industrial training and has hosted many interviews in past. Follow him on Twitter at @sharmasunil8114 and reach out to him at sunil (at) coingape.com