Since the inception of digital currency, many brands and platforms have been trying to create their own unique form of cryptocurrencies with the sole aim of making financial transactions more comfortable than what it is today.
In this light, Facebook is also planning to launch its own digital currency in early 2020, and if you think this is some sort of a joke, you will be amazed to know that Zuckerberg intends to create a digital currency that allows users to engage in cryptocurrency trading in as many as dozen countries. With its over 2 billion monthly users, Facebook intends to solve a global problem with this crypto innovation. The currency, which is dubbed 'GlobalCoin,' would allow Facebook's 2.4 billion monthly users to change Pounds, Dollars, Euro, and other international currencies into its digital coins. The coins would then be used to purchase things online, in stores, shops, and other outlets, or to transfer money without the need for a bank account.
How far has the proposed 'GlobalCoin' gone?
According to the BBC, the founder and CEO of Facebook, Mark Zuckerberg, met with the Governor of the Bank of England in April 2019, Mark Carney, to discuss the proposed crypto plans. To further bolster the feasibility of GlobalCoin, Zuckerberg also discussed the proposal with the US Treasury officials and is already in discussion with several money transfer firms, like Western Union, to develop safe, cheap ways for users to send and receive money. In fact, there was a report making the rounds last year about how Facebook is planning to let users transfer money using WhatsApp, its encrypted mobile-messaging app.
"Payment is one of the areas where we have an opportunity to make it a lot easier," Zuckerberg told the company's developer conference last month. "I believe it should be as easy to send money to someone as it is to send a photo." In an attempt to stabilize the currency, Facebook is planning to peg the value of GlobalCoin to a basket of established currencies, including the Japanese Yen, US Dollar, and the euro.
What is the catch for users?
As part of the plans to make GlobalCoin a world-renowned currency, Facebook is planning to pay users fractions of a coin for activities such as viewing ads and interacting with content related to online shipping, similar to loyalty schemes run by most retailers. With GlobalCoin, it's expected that users would still be able to perform their regular monetary activities, work with crypto brokers, stake, purchase goods, and perform any other conventional financial transactions, albeit, in grand style.
What are the hurdles?
Experts believe that regulatory issues, as well as Facebook's poor track record on data privacy, are likely to be the biggest hurdles to GlobalCoin becoming a success. "Facebook is not regulated in the same way as banks are, and the cryptocurrency industry is, by definition, unregulated," said Rebecca Harding, chief executive of banking trade data analytics firm Coriolis Technologies. "In the UK, for example, there are no formal laws that govern this market because cryptocurrencies are not legal tender. Facebook has also had issues with protecting users' data in the past few years, and this may well be an issue for it as it tries to provide guarantees to users that their financial information is safe. Following an online investigation in 2018, it was discovered that the data of up to 87 million Facebook users had been used illegally by Cambridge Analytica in the 2016 US presidential election to target ads for Donald Trump.
Societal Reaction
Back in May 2019, the US Senate committee on banking wrote an open letter to the CEO of Facebook, Mark Zuckerberg, asking how GlobalCoin would work, what user protection would be offered and how consumer data would be secured. It has also been reported that the idea of GlobalCoin has caught the attention of several dignitaries in the society including billionaire Winklevoss twins, Cameron and Tyler. A report which emerged in April stated that Facebook was looking for funding in the region of $1bn to support the project, and has held talks with major payment platforms including Mastercard and Visa.
Who runs Facebook's Crypto initiative?
Facebook's involvement in the financial industry has long been anticipated having hired the former PayPal president David Marcus to run its messaging app in 2014. Marcus, a board member of crypto exchange Coinbase, runs Facebook's blockchain initiatives, the technology on which cryptocurrencies run.
