If the name “Project Libra” does not sound familiar to you, do not worry: it should not. This is the code name that a Facebook team decided to use more than a year ago for the secret project regarding the creation of a cryptocurrency. To be more precise, Facebook is aiming at launching in the following years a “stablecoin”, a type of cryptocurrency pegged to the US dollar which could reduce the volatility normally seen in virtual assets. The main goal of a future “FaceCoin” or “FBCoin” (the name still stays locked-in) is to facilitate the transfer of money among the users of the Facebook ecosystem, primarily through the messaging app WhatsApp. This, and other important initiatives, are at the heart of what is in the head of Facebook founder Mark Zuckerberg, to finally move away from the turbulent period following the Cambridge Analytica scandal.
Facebook: a social network today, a central bank (maybe) tomorrow
The first to report the news was Bloomberg in December, when it wrote that Facebook, together with many other companies, was exploring initiatives to use the blockchain technology. In the past couple of years, many firms have developed ways to enter the financial services field, with Amazon and Apple being two of the biggest examples. The latter in particular, is well involved in payment systems, both through Apple Pay and through a service that allows the users of iMessage to exchange easily real money. Many other small and medium companies have tried to increase their connection with cryptoassets, with the explosion of ICOs last year and big players such as Disney considering buying stakes in major cryptocurrency exchanges. Facebook is, on its side, trying to combine both the aspects: the Zuckerberg’s company wants to create a stable virtual coin that can be exchanged among users and that can be used to make e-commerce payments. Cryptocurrencies have failed in their attempt to substitute traditional payment methods in daily operations, both because of a general skepticism and because there is no precise regulation for them (the distinction between asset and currency in this case is very blurred). Facebook, however, might have several advantages. The first one is that it can count on a unique user base, with roughly 1/3 of the world’s population making at least one access per month on the platform; the second one is that, thanks to its predominant and established position, it is in talks with major financial companies such as Visa and MasterCard and with payment processor FirstData, to have a stable coin that does not fluctuate too much; the third advantage, again thanks to the bargaining power of Facebook, is that it is trying to reach agreements with major e-commerce platforms (whose names remain unrevealed), to allow the currency to complete purchases. According to people familiar with the matter, Facebook is also planning to give the users a reward, in terms if such currency, for the time spent on its platforms.
The burdens are very high. Facebook is already fighting a battle to show US authorities and users themselves that the privacy of the accounts is a key priority, and adding a virtual coin could mean that the company will have to increase even more its efforts. Moreover, as already mentioned, cryptocurrencies have proven to be ineffective in their aim to be used as daily payment systems, and nowadays people might be even more reluctant given the instability of the most famous cryptoasset, Bitcoin. However, the potential rewards are tremendous: Zuckerberg is already working a lot to integrate all the platforms, and such a currency could boost this goal. Imagine that your friend has just seen a lovely jacket on Facebook: she sends you the ads via WhatsApp, you receive it and get directed to the Instagram page of the producer. After few minutes, you decide that you like another jacket seen on that Instagram page, so directly from Instagram you make the purchase; but you remember that you do not have money available. So, you ask your friend to send you some “Facebook coins” via WhatsApp, and few moments later you complete the purchase with the virtual money that you have just received. This kind of process resembles what is already happening in China with apps like WeChat: a “super-app” for everything you need in your daily life.
Additional developments
Some other important events are surrounding the company. First, several days ago, in the traditional meeting held in California, Zuckerberg announced one of the most important renovations for the Facebook layout: say farewell to the iconic blue search bar, and welcome a new lighter, wither bar. Moreover, the company is working on making interactions among people the core aspect of the platform, by making group recommendations more tailor-made. Facebook, however, is still engaged in the battle against fake news and violent content, and this could be an important step away from such direction, thanks to a re-orientation of users from news to interactions among themselves. Related to this, lately the social network app has banned extremists account, to reduce the amount of hate speech circulating on the platform. More specifically, Alex Jones and Milo Yiannopoulos have been expelled from Facebook, but this has increased the accusations claiming that Facebook is using a conservative behavior. Still related to similar aspects, Facebook has confirmed its continuous collaboration with the Federal Trade Commission for the privacy matters for which it was investigated several months ago, demonstrating once again its total availability to cooperate.
Two relevant notices still come from the last Californian meeting. The first concerns the delays that Facebook is experiencing in creating and releasing an integrated messaging app that would unify WhatsApp, Facebook Messenger and Instagram Direct. Such platform was expected for 2020, but it seems that due to the large efforts more years will be required. The second is related to the Facebook’s dating service, already available in several Latin America countries, and soon released in other 14 countries: the company has developed a new feature, called “Secret Crush”, that, similarly to other dating apps, matches two individuals expressing an initially anonymous interest for each other.
Giuseppe Murgo
Facebook: a social network today, a central bank (maybe) tomorrow
The first to report the news was Bloomberg in December, when it wrote that Facebook, together with many other companies, was exploring initiatives to use the blockchain technology. In the past couple of years, many firms have developed ways to enter the financial services field, with Amazon and Apple being two of the biggest examples. The latter in particular, is well involved in payment systems, both through Apple Pay and through a service that allows the users of iMessage to exchange easily real money. Many other small and medium companies have tried to increase their connection with cryptoassets, with the explosion of ICOs last year and big players such as Disney considering buying stakes in major cryptocurrency exchanges. Facebook is, on its side, trying to combine both the aspects: the Zuckerberg’s company wants to create a stable virtual coin that can be exchanged among users and that can be used to make e-commerce payments. Cryptocurrencies have failed in their attempt to substitute traditional payment methods in daily operations, both because of a general skepticism and because there is no precise regulation for them (the distinction between asset and currency in this case is very blurred). Facebook, however, might have several advantages. The first one is that it can count on a unique user base, with roughly 1/3 of the world’s population making at least one access per month on the platform; the second one is that, thanks to its predominant and established position, it is in talks with major financial companies such as Visa and MasterCard and with payment processor FirstData, to have a stable coin that does not fluctuate too much; the third advantage, again thanks to the bargaining power of Facebook, is that it is trying to reach agreements with major e-commerce platforms (whose names remain unrevealed), to allow the currency to complete purchases. According to people familiar with the matter, Facebook is also planning to give the users a reward, in terms if such currency, for the time spent on its platforms.
The burdens are very high. Facebook is already fighting a battle to show US authorities and users themselves that the privacy of the accounts is a key priority, and adding a virtual coin could mean that the company will have to increase even more its efforts. Moreover, as already mentioned, cryptocurrencies have proven to be ineffective in their aim to be used as daily payment systems, and nowadays people might be even more reluctant given the instability of the most famous cryptoasset, Bitcoin. However, the potential rewards are tremendous: Zuckerberg is already working a lot to integrate all the platforms, and such a currency could boost this goal. Imagine that your friend has just seen a lovely jacket on Facebook: she sends you the ads via WhatsApp, you receive it and get directed to the Instagram page of the producer. After few minutes, you decide that you like another jacket seen on that Instagram page, so directly from Instagram you make the purchase; but you remember that you do not have money available. So, you ask your friend to send you some “Facebook coins” via WhatsApp, and few moments later you complete the purchase with the virtual money that you have just received. This kind of process resembles what is already happening in China with apps like WeChat: a “super-app” for everything you need in your daily life.
Additional developments
Some other important events are surrounding the company. First, several days ago, in the traditional meeting held in California, Zuckerberg announced one of the most important renovations for the Facebook layout: say farewell to the iconic blue search bar, and welcome a new lighter, wither bar. Moreover, the company is working on making interactions among people the core aspect of the platform, by making group recommendations more tailor-made. Facebook, however, is still engaged in the battle against fake news and violent content, and this could be an important step away from such direction, thanks to a re-orientation of users from news to interactions among themselves. Related to this, lately the social network app has banned extremists account, to reduce the amount of hate speech circulating on the platform. More specifically, Alex Jones and Milo Yiannopoulos have been expelled from Facebook, but this has increased the accusations claiming that Facebook is using a conservative behavior. Still related to similar aspects, Facebook has confirmed its continuous collaboration with the Federal Trade Commission for the privacy matters for which it was investigated several months ago, demonstrating once again its total availability to cooperate.
Two relevant notices still come from the last Californian meeting. The first concerns the delays that Facebook is experiencing in creating and releasing an integrated messaging app that would unify WhatsApp, Facebook Messenger and Instagram Direct. Such platform was expected for 2020, but it seems that due to the large efforts more years will be required. The second is related to the Facebook’s dating service, already available in several Latin America countries, and soon released in other 14 countries: the company has developed a new feature, called “Secret Crush”, that, similarly to other dating apps, matches two individuals expressing an initially anonymous interest for each other.
Giuseppe Murgo