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Recently, Lance Ng has published an article on Medium talking about Facebook’s plans to become the world’s central bank. The issue mainly relates to the New York Times publication that informed about the authentic Facebook cryptocurrency creation in the near future. The implementation of the project is happening under a thick layer of confidentiality and this is not a surprise as the potential integration of cryptocurrencies on social media and messaging platforms could result into shifts in the dynamics of the global economy. Presumably, Facebook is currently developing a coin that users of Facebook-owned WhatsApp will be able to instantly send to any other app user. There has also been information that the company has held negotiations on potential selling of the Facebook coin to consumers on cryptocurrency exchange platforms.
More than 50 engineers are involved in this project, which proves the legitimacy of Facebook’s plans. It is important to consider the fact that collectively, Messenger, WhatsApp and Instagram, which are owned by Facebook, have about 2.7 billion users. This means that the company could indeed become the world’s biggest central bank if it was to back the value of the digital coin with a variety of foreign currencies. As any other central bank, it would also issue its own currency, backed by the foreign currency reserves and this would not just mark a fundamental shift in the global economy, but create a threat to the existing big actors of the finance industry.
In any case, there is no need to panic, as the NYT suggests that messaging companies will be subject to the same regulatory and technical constraints that have prevented Bitcoin from entering the daily lives of billions of users. The absence of a central authority controlling cryptocurrencies has made them a perfect tool for criminals and fraudsters, while the technology behind them has made it complicated to process a large number of transactions.
Experts have different views on the matter, but many say that the project could potentially be successful as a transactional system. Users might find it very convenient to exchange money worldwide via via WhatsApp, Instagram and Messenger for an attractive price, which will make the service popular and widely-accepted. At the same time, this will be a true threat to such traditional money remittance companies as Western Union and Transferwise. As a store of value, though, the project might not become as successful due to trust issues primarily connected to customer privacy abuse that has been discovered and discussed in various media.
For skeptics, who are fed up with fake news publishing, the project is nothin more than a PR affair aimed at rising Facebook’s share price. The market model that Facebook utilizes will always be a problem, as its main business is manipulating customer data to increase sales. This is the reason for a rise in negative attitudes towards the company and its handling of user data. The latter has caused a decline of Facebook’s influence, as now it accounts for 44.6% of time spent on social media, as compared to 53% in 2016. The regulatory concerns that have been surrounding the company may become a serious obstacle towards the creation of Facebook’s digital currency transaction engine and its further integration into messaging apps.