A New Era of Money — Facebook Coin
The Social Media Giant Is Set to Introduce Its Own Cryptocurrency That Could Change the Way the World Transacts
If the widely accepted and stable US dollar, and the revolutionary but volatile Bitcoin gave birth to a new currency, it would most likely be the one Facebook plans to introduce later this year.
The details on this secret cryptocurrency project are still scarce but here’s what we know: the digital currency will be a stablecoin and will be first made available for foreign remittances on WhatsApp. We do not yet know how much control Facebook is going to have over this currency and how does it plan on overcoming the regulatory and technological hurdles. We also do not have an official name, so I will refer to it as “Coin” for simplicity.
How is Coin different from Bitcoin and other cryptocurrencies?
Let’s start with reach. Bitcoin currently has 23 million distinct wallet addresses and Ether has 60 million, but a single user usually has multiple addresses. With Facebook’s plan to integrate its three messaging services — Messenger, WhatsApp and Instagram Direct — the potential reach of 2.7 billion users dwarfs the competitors. Even if Facebook manages to get 5 percent (135 million) of its users on-board, it will be far greater than all cryptocurrencies’ combined.
The next difference, the biggest one, is that Facebook’s product will be a stablecoin pegged to the US dollar or a basket of foreign currencies. This solves one of the main problems of Bitcoin and other major cryptocurrencies — the volatility.
In 2012, when Bitcoin first gained traction, the BTC/USD price fluctuated between $5.27 and $13.30. Then in 2013, the price hit an astonishing $770, but by the end of 2014, it fell to $314. It rose back to $434 in 2015 and closed at $998 at the end of 2016. In 2017, Bitcoin jumped over 1000 percent to hit an all-time high of $20,000! But by the end of 2018, it lost 81 percent of this value and settled at $3,747. The price is currently hovering below the $4,000 mark. Because Bitcoin was highly erratic, it was rational for people to hold…