Explosive Growth: Facebook Coin Could “Triple” Crypto Users
Changing Stable Coins: Bye Tether, hello Facebook and J.P. Morgan Coin
According to investment firm Blockchain Capital, the Facebook join could cause a worldwide explosion of the crypto sector. This could double or even triple the number of users worldwide. Above all, however, the development of the payment system by the social media giant is building up dramatic pressure on the FinTech industry. With a view to its blockchain adaptation, it now has to free itself from the waiting rigidity and follow suit. (I get commissions for purchases made through links in this post.)
It’s probably the most ambitious crypto project in a long time: the social media giant Facebook is currently expected to invest no less than one billion US dollars in the development of its supposed stable coin. According to rumors, almost 2.32 billion users will then be able to use it for online payments in the future.
Industry experts see the company’s push for the crypto sector as a decisive moment of upheaval. In an interview with Bloomberg, Spencer Bogart, partner at Blockchain Capital, a leading company for distributed ledger investments, estimates this Wednesday, May 8, that the Facebook join could lead to explosive growth in the industry:
Facebook is of global importance. Even if only a small percentage of its users turn to crypto currencies, this would double, even triple, their global usage.
At the same time, the Facebook coin would make a large part of the world’s population familiar with cryptocurrencies. Bitcoin & Co. could also benefit from this pull:
It is a stepping stone […]. People can look around and invest in Bitcoin or Ether.
A look at the figures shows that Bogart could be right with his estimates.
According to current estimates, around 2.7 billion people worldwide currently use either Facebook or its subsidiaries Instagram, WhatsApp or Facebook Messenger. With almost 2.1 billion people, the services are even said to be used daily.
On the other hand, there is no exact estimate of current crypto usage. In view of just under 32 million Bitcoin wallets, however, this figure is likely to be negligible in contrast to Facebook’s record figures.
“Dramatic catalyst” for the FinTech sector
In addition, according to Bogart, the Facebook coin could become a “dramatic catalyst” for the entire FinTech industry. Most of it has remained stuck on the sidelines until now and now has to follow suit in view of the crypto adaptation. The example of the major investors Fidelity, who had announced this week that they wanted to offer crypto trading to institutional investors, shows that this pressure is representative.
Facebook is now making the industry take action sooner rather than later.
Meanwhile, Facebook seems to continue to work diligently on the development of its supposed stable coin. After it became known that the company was currently recruiting partners in the institutional financial world and, among other things, had won MIT professor Christian Catalini for its purposes, the company announced a surprising decision this week. Despite the continuing smoldering Brexit, Facebook is reportedly planning to locate its headquarters for mobile payments in London. From here, the department will focus on India as the most important market for the Messenger WhatsApp. It is certain that the Facebook coin will play a role in this. There are also rumors, that Bitpanda will feature the new Facebook coin.
Discontinued model national currencies?
While German Facebook users pay in Euros, British in Pounds and American in US Dollars, in the future the majority of all payments will only be processed via a cryptocurrency, maybe a security token. The creation of a global private-sector crypto-currency union is making currency management increasingly obsolete. Platforms and companies with a stable coin can also integrate additional functions into their token economy that are actually known from utility tokens. For example, those who pay with the platform’s own stable coin can benefit from better conditions. For example, J.P. Morgan can automatically pass on the transaction cost savings to its business customers so that both sides benefit.
Because stable coins do not necessarily have to represent a single asset, more complex constructions can be represented. For example, if Facebook does not want to rely solely on the stability of the US dollar, it can issue a stable coin based on a basket of currencies. A stable coin whose value is made up of different currencies can theoretically guarantee greater independence from the underlying asset. There are no limits to your imagination.
For the old Stable Coin generation, it will be narrow
However, this development also shows that it will be difficult for the first asset-backed generation of stable coins, ergo tether or pax, to assert themselves in the long term. While they offer practically no advantages in terms of decentralization, they are clearly inferior to players such as Facebook or J.P. Morgan. The majority of investors and traders will trust a regulated, established and much higher capitalized company such as Facebook or J.P. Morgan to provide the coverage and value stability of a stable coin rather than a scandal crypto start-up like Tether.
It would, therefore, come as no surprise if stable coins from established banks and companies were to assert themselves against stable coin crypto start-ups in the future.
The niches and cooperations are what count
The situation is different for stable coins, which are not based on centrally managed coverage of deposits. Decentralized stable coin concepts such as the MakerDAO certainly have a chance of finding their niche in the crypto ecosystem in the future. Strategic partnerships with renowned service providers can also help to find use cases for stable coins. This is no longer just a matter of trading functions for active stockbrokers.
For example, the US dollar-covered stable coin of the well-known Winklevoss twins, Gemini Dollar (GUSD), is supported by the payment service provider Flexa. Flexa, on the other hand, allows a number of service providers to accept cryptocurrencies such as Bitcoin, Ether or Stable Coin GUSD with immediate effect. As became known in this week, also the well-known coffee house chain Starbucks ranks among the customers. For the time being, only in the USA Starbucks customers can pay so their coffee with a crypto-US dollar. There is no shortage of incentives for companies. After all, these crypto payment options allow them to significantly reduce their transaction fees.
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