We have learnt in the last few days that Facebook is poised to launch its ‘Globalcoin’ in 2020. Currently, the media giant is consulting with US financial regulatory authorities, as well as those of 11 other countries about operational and regulatory issues. It is likely that the token will be tested before the end of 2019.
Apparently Facebook’s CEO Mark Zuckerberg has also been having lengthy discussions with Mark Carney, the governor of the Bank of England about the opportunities and risks involved in launching the company’s cryptocurrency. So, it seems likely that the UK will be one of the countries where Globalcoin will be available.
There are also ongoing meetings between Facebook and some of the world’s payment giants, such as Western Union and Paypal, as well as online merchants, as it looks for cheaper and faster ways for people without a bank account to send and receive money.
Facebook may dominate the payments sector
Because that is Facebook’s overall aim: to move into this valuable financial sector. According to International Business Times, “Facebook wants to develop GlobalCoin into a digital currency that provides affordable and secure ways of making payments. Facebook also wants to enable people to change dollars and other international currencies into its GlobalCoin with the minimum of fuss.”
How will it achieve this goal? It would appear that Facebook is going to issue Globalcoin as a ‘stablecoin’ pegged to the US dollar. This eliminates the volatility that is a challenging factor of the crypto market, at least for merchants and payment service providers.
Will lack of consumer trust damage Globalcoin?
Still, things may not be all plain sailing for Facebook. There is the matter of consumer trust for a start. In the last two years Facebook has been named in a mnumber of scandals concerning the sharing of user data with other parties; Cambridge Analytica being the most notable one. Zuckerberg has been forced to testify in front of both the US and UK governments regarding this, and Zuckerberg’s conduct in both cases gave rise to a feeling that the company has behaved with some arrogance and belief that it is untouchable. Therefore, Facebook users may not be rushing to use the new token: instead it is entirely possible that they many will walk away from it as a form of protest. On the other hand, if the token is seen to provide a useful service, it may do well. It has billions of users so a few protesters may not make much difference to its success.
Analysts say Facebook wants to disrupt existing banking networks by breaking down financial barriers and reducing consumer costs. However, Facebook will have to partner with banks and brokers to attain this aim. Plus, GlobalCoin will need to overcome numerous technical and regulatory hurdles before it can be launched.
There are countries where it may get a warm reception and others, like India, where there be no welcome at all. Significantly, it is rumoured that Facebook is particularly interested in launching in India, which makes sense when you think of the size of the population and the fact that there are many, many unbanked Indian citizens that own a smartphone. Facebook also hopes GlobalCoin will allow Indian workers abroad to remit money back home to their families using WhatsApp, which is another big market. However, as India has been fairly hostile to cryptocurrencies to date, this may prove to be a significant challenge.
It won’t be to long before we have a better idea of Facebook’s precise strategy, but given that it is one of the biggest players in social media, it seem unlikely that it will settle for being a small fish in the crypto sector.