Facebook is working on creating cryptocurrencies for money transfers within the network of WhatsApp messenger. WhatsApp is an application that allows users of mobile devices to communicate with each other using end-to-end encryption. The service assures that no one can read your messages except the addressee. According to sources close to the company, the project is primarily aimed at the Indian market.
The company is now engaged in a process of development of a stablecoin - a type of digital currency which has its value tied to the US dollar, which minimizes its volatility. Nevertheless, it might take some time for Facebook to finish this project. The news about this project leaked a while ago and was spread fast within the network. At the moment the company is working on a strategy, in particular, on a plan for the safekeeping of assets and the choice of currencies that will ensure the value of the new coin.
Facebook was expected to make a move in the field of blockchain and financial services. Back in 2014, David Marcus the PayPal’s former president was hired by Facebook on a position which included the responsibility of managing the Messenger application. Late on, he was reallocated to a different position and he became a head of all blockchain initiatives, however, this change in the company’s structure wasn’t made public for obvious reasons. A lot of people were interviewed and hired by Facebook in a short time, and from what we can see now there are about 40 people in the division of Facebook that is engaged in the blockchain development.
The new team is exploring various practical implementation scenarios. WhatsApp, the company's mobile messenger, is popular in India, where its client base numbers 200 million people. India also leads the ranking of countries actively using remittances. According to the World Bank, in 2017, 69 billion dollars were sent to the country. The future currency of FB significantly exceeds the potential currency of Telegram, the coins of the lesser-known messenger Signal and other competitors, with the exception of Chinese payment systems based on their regional messengers, but so far there is no direct confrontation in the largest markets between Chinese and Americans.
Last year, the stablecoin segment experienced a boom. According to the Stable.Report website, which tracks the “stable cryptocurrency” sphere, at some point the number of venture projects related to this type of digital assets reached 120. The essence of the stablecoin concept is to create digital cryptocurrencies that are more suitable for everyday use than volatile crypto actives like bitcoin. This is achieved by stabilizing the value of the asset.
In practice, it turned out to be quite difficult to implement this idea. Over the past few weeks, at least one major project has closed - a stablecoin called Basis ceased its work in the 8th month of its existence. According to representatives of The Hoboken, a company from New Jersey, a startup did not find an obvious way to avoid classifying an asset as a security, not a currency. And, probably, this led to a significant reduction in the number of potential buyers. Such an early completion of the activity occurred despite the fact that the startup managed to enlist the support of the well-known venture fund Andreessen Horowitz, as well as Kevin Schwartz, a former member of the governing council of the US Federal Reserve.
The largest to date stablecoin - project Tether also did not avoid problems. Although its creators claim that each token is provided with one US dollar, the company's refusal to conduct an audit made people seriously doubt the truth of these statements.Perhaps the company Facebook, which has a 2.5 billion user base, more than $ 40 billion in annual profits and a lot of experience with regulators, is actually more likely to create a reliable and sought-after stablecoin. If everything works out, Facebook will be the first technology company to launch such a project.
The company's reputation in India is going through hard times due to incidents of violence triggered by the spread of false news through WhatsApp. Nevertheless, Facebook sees tremendous growth opportunities in the country: in the number of Internet users (480 million), India is second only to China. According to Forrester Research analysts, by 2022 this figure will increase to 737 million people, which can become a serious opportunity for Facebook.