- By Pierre-Alexandre
June 14th, 2019
Here’s our complete take on Facebook launching its GlobalCoin cryptocurrency, the latest developments as well as market reactions.
- Recent Development With Facebook’s GlobalCoin
- GlobalCoin - Backed by Global Currencies
- GlobalCoin to Generate A Lot of Interest for Blockchain and Crypto tech
- GlobalCoin - A Competition to the Crypto World?
- Cracking the Crypto Regulatory Nut
1. Recent Development With Facebook’s GlobalCoin
It’s no more a news to the crypto community that social media giant Facebook is prepping up for the launch of its own native cryptocurrency called GlobalCoin. Although Facebook hasn’t been much vocal about it, several credible news agencies have shown that the company has accelerated its crypto plans under the codename of Project Libra.
Check out this Video where Mark Zuckerberg shares his vision about Privacy, Data Management and Blockchain:
When Will Facebook Launch Globalcoin?
However, Facebook has said that the company will release the technical whitepaper for GlobalCoin ahead this month on June 18. After this, the GlobalCoin cryptocurrency will begin trading in beta mode. But a report from the BBC notes that the full-fledged launch of GlobalCoin will happen in the first quarter of 2020.
Besides, it is certain that Facebook’s GlobalCoin will be a stablecoin trying to be more like a consistent asset, unlike other traditional cryptocurrencies which are volatile in nature.
During a recent interview with the German business magazine, Facebook's head of financial services and payment partnerships for Northern Europe, Laura McCracken, confirmed that the company’s upcoming cryptocurrency will be a stablecoin.
2. GlobalCoin - Backed by Global Currencies
Unlike other stablecoins which are usually tied to a single fiat currency, the GlobalCoin will be tied to a basket of currencies. Thus, not linking to any particular monetary system will help the GlobalCoin to further stabilize its value. To ensure enough liquidity, Facebook’s crypto team led by Marcus David plans to gather $1 billion in assets.
Over the last year, Facebook has been having a really tough time dealing with issues pertaining to user privacy and centralisation. Facebook's answer is inviting third-party institutions to handle the nodes of its GlobalCoin blockchain and become validators while paying a massive amount of $10 million upfront.
And before you think this is too much to pay for a single node, Facebook’s Project Libra is already getting huge backers like MasterCard, PayPal, Visa, and Uber, according to the latest report by WSJ on Thursday, June 13.
Last month, Facebook has also set up its new FinTech startup in Geneva, Switzerland called the Libra Networks which will be completely looking after the development of its crypto project. Besides, using the GlobalCoin across its suite of applications - Messenger, Instagram, and WhatsApp - the social media giant is also having talks with major online retails and payment gateways.
While the arrival of Facebook’s upcoming cryptocurrency has certainly caused a huge buzz in the market, it has received somewhat mixed responses from crypto industry experts.
While some of them believe that the GlobalCoin will have a massive impact and spur crypto adoption, others are very critical and definitely think it otherwise.
3. GlobalCoin to Generate A Lot of Interest for Blockchain and Crypto tech
One major reason to believe that Facebook’s GlobalCoin will be a huge success is Facebook’s dominance over the online digital media space. Offering services to over 2.3 billion monthly users, the launch of GlobalCoin can give a major boost to cryptocurrency adoption.
Moreover, during this year’s developer conference, CEO Mark Zuckerberg said that the payments industry will be a major focus for the company going forward.
In a note to clients last month, ING economists Carlo Cocuzzo and Teunis Brosens wrote: “The scale that a coin on Facebook’s platform could achieve is something to reckon with. Banks may find themselves disintermediated, with business suppliers increasingly bound to Facebook’s platform”.
Co-founder of crypto exchange ShapeShift - Erik Voorhese - said: “Anything that gets people thinking in terms of financial units that are not just dollars or not just at a bank opens people’s minds to new things”.
Speaking to Yahoo Finance UK, TD Ameritrade’s VP for trading, Steve Quirk, said: “Everyone of those headlines helps because it just spurs more interest in the space. I’m not saying Facebook announcing this is going to necessarily create a pop in the digital asset space, but it’s going to create interest.”
Note that this is not the first time that Facebook is experimenting with the payments integration on its messaging applications. The company launched the payments feature in Messenger a few years back but didn’t succeed enough to attract more users.
Speaking to Yahoo Finance UK, TradeShift co-founder and CEO Christian Lanng said: “How on earth are they going to succeed with crypto when they already launched payments for the Messenger platform and that went nowhere? “You’re essentially taking a business proposition that you’ve already failed at and adding cryptocurrency. You’re just adding complexity and something users don’t understand. I don’t exactly see that as a recipe for success.”
On the other hand, we have experts from the crypto industry who have been praising Facebook’s entry in the crypto space. Mike Novogratz, a Wall Street veteran and the founder of cryptocurrency merchants bank, is quite bullish on the arrival of GlobalCoin and notes that it can improve the health of the overall cryptocurrency market.
4. GlobalCoin - A Competition to the Crypto World?
While some assume that Facebook will dominate the overall crypto industry overwhelmingly while rendering other digital currencies obsolete, others just completely snub-off these claims denying to recognize the GlobalCoin even as a “crypto”.
Popular Bitcoin advocate Andreas Antonopoulos explains that the GlobalCoin doesn’t have any of the five fundamental characteristics of being a cryptocurrency. He says that GlobalCoin is neither decentralized/open or public. Moreover, it’s neither neutral as well to all of its users. It is governed by a centralized organization governed by a specific jurisdiction and thus it is neither borderless.
U.S.-based financial research firm Weiss Ratings notes that Facebook’s GlobalCoin launch is just an attempt to clone the success of its Chinese rivals - Tencent and Alibaba. They say that the GlobalCoin is no competition to real cryptocurrencies.
#Facebook will reportedly announce its #GlobalCoin this month, allowing employees to take it as salary. This isn’t about #crypto. It’s about cloning #Alibaba and #Tencent success in China. GlobalCoin and payment processing apps can’t compete with real cryptos. #BTC #Bitcoin— Weiss Ratings (@WeissRatings) June 6, 2019
Another seemingly enough valid point put forward by Twitter user Maya Zehavi notes that banks co-operating with Facebook’s GlobalCoin will be majorly compromising on their identity.
Banks who co-operate with GlobalCoin & Zuck are essentially giving up on identity as a core business driver. Giving him complete access to the transactional graph, and UX layer of their client is akin to suicide— Maya Zehavi (@mayazi) June 6, 2019
Besides, citing Facebook’s dented reputation with handling customer data, one user also suggests that Facebook could be selling crucial data to its validators.
Reportedly in order run a GlobalCoin node you have to pay $10M, but you earn zero fee.— Qiao Wang (@QWQiao) June 6, 2019
If that's true, the only sensible explanation for why anyone would pay $10M to run a GlobalCoin is to be able to collect user personal and transaction data.
On the other hand, Bitcoin expert Max Keiser notes that the launch of GlobalCoin will annihilate the competitions for altcoins like XRP and Litecoin whose key features speed and low-cost transactions.
The $FB global stable coin... FaceCoin obviates need for hundreds of alt-cons including XRP. The alt-coin apocalypse is nigh. This will drive Bitcoin higher, as BTC competes with Gold, not fiat. (Also, crypto ‘payments’ companies likely to wiped out). https://t.co/w38jmtn7RN— Max Keiser, tweet poet. (@maxkeiser) June 7, 2019
However, Keiser notes that GlobalCoin launch will in no way be able to compete with Bitcoin as Bitcoin itself competes with Gold and not fiat. Even eToro’s senior market analyst Mati Greenspan shares a similar view.
Facebook coin isn't a competitor to Bitcoin, it's a competitor to the Dollar.— Mati Greenspan (@MatiGreenspan) June 9, 2019
5. Cracking the Crypto Regulatory Nut
While new entrants in the crypto space have been having a tough time dealing with regulators, experts think that Facebook won’t have to go through it.
Facebook has the power of influence over government organizations and with backers like Visa and MasterCard by its sides, it won’t have a tough time convincing the regulatory authorities. In fact, Facebook’s entry in the crypto space is likely to put the crypto regulations on fast-track thereby bringing a clear regulatory picture to the front.
Although nothing can be said at this point in time, but we will certainly get a clearer picture next week and things will unfold ahead for Facebook’s GlobalCoin.
Facebook integrates GlobalCoin.— ParabolicTrav (@parabolictrav) June 6, 2019
Twitter implements Bitcoin?
The Cashapp onramp is already built.
Twitter integrate with Cashapp?
Do it @jack!
Facebook will control GlobalCoin, and the US government will control Facebook.— Stephen Cole (@sthenc) June 14, 2019
For anything meaningfully different, there's Bitcoin.