We’ve already heard of Facebook’s plans to launch its own crypto-currency. This currency will be called GlobalCoin, and it could be launched by early 2020. Facebook’s plan to launch a crypto-currency was first reported in December. Facebook CEO, Mark Zuckerberg, has reportedly met with the governor of the Bank of England as well as US Treasury officials and officials from other money transfer firms.
Facebook calls this venture Project Libra. They claim that they are aiming to create a cheap and safe way for people to transfer money. Facebook will also be using GlobalCoin as a form of loyalty incentive. Facebook will award users a small fraction of a coin for viewing or interacting with ads.
Here’s how CEO Zuckerberg summarized the project during a developer conference at Facebook last month:
“Payments is one of the areas where we have an opportunity to make it a lot easier. I believe it should be as easy to send money to someone as it is to send a photo.”
Would it be a success?
The most important part of any currency is its stability. And in order to maintain the stability of its crypto-currency, Facebook is reportedly trying to peg its value with a few stable currencies across the world. These include the US dollar, the Japanese yen and the euro.
But according to experts, Facebook’s history of poor data privacy and protection could also hamper the success of the GlobalCoin. Since Facebook has compromised user data in the past, there is no viable guarantee that Facebook can offer users regarding the privacy of their financial information.
One problem is that Facebook is not regulated the same way banks are. This could be a deal breaker for Facebook, as users are always more scrupulous about their financials than they are about things like their search history or click data.
If successful however, Facebook’s GlobalCoin could potentially disrupt existing financial networks by offering transaction cheaper than that offered by banks. Facebook has a user base of 2.4 billion people. And it also owns two other massively popular applications, Instagram and WhatsApp.
What is a crypto-currency?
Most of us make digital payments all the time. Funds are transferred from one account to another by changing numbers in a digital registry. But in the traditional system, there is a central entity regulating all this. This could be Mastercard, PayPal or your bank. This is traditional book keeping.
Crypto-currencies operate on a technology known as blockchain. With blockchain technology, unlike with traditional book-keeping, there is no central regulatory entity keeping track of all transactions and user accounts. All such information are instead saved across a ledger of blocks that are stored in a distributed manner across a network of computers.
Blockchain technology offers two distinct advantages to traditional central banking. The information is spread across a network. This makes it less prone to hacking and more secure. Also, all information such as accounts and transaction are anonymous, as there is no central entity keeping track of everything.
There are several popular crypto currencies, some stable, some not. BitCoin is possibly the most popular. There is also an interesting twist in this story. Gemini Dollar is one of the more stable cryptos out their. And guess who owns it? The Winklevoss twins! The story of how Zuckerberg allegedly stole the idea of Facebook from the twins when they were all students at Harvard has been immortalized in the film the Social Network. It has been reported that Zuckerberg has met with the Winklevoss twins to discuss the possibility of a collaboration.