The Intelligent Game of Facebook: Sizing Up the $19 Billion in Revenue of Cryptographic Ambitions
Those on Wall Street have an ability to ignore the obvious. And in the case of Facebook Inc., that meant really digging below the daily headlines.
On Wall Street they have worried about the problems of the social media giant with regulators and politicians for the repression of user privacy violations on Facebook.
To be sure, the firm anticipates losses of up to $ 3 billion due to possible fines from the Federal Trade Commission.
However, recently a merger was made that significantly increases its movement towards a new hot field that could easily generate more than six times that amount, in less than three years. That is why the news that was published on February 4 is so important to understand the true ambitions of Facebook cryptocurrency.
The firm quietly started a blockchain project about a year ago. But with the recent purchase in February of Chainspace's boot chain, Facebook is looking for the kind of scale that Big Money means.
Crypto Ambitions of Facebook
Now, to be fair, a purchase like Chainspace would not attract many headlines. After all, this was not a blockbuster. Facebook has not revealed the purchase price, but buying a company with only a few dozen workers was a pittance.
But do not be wrong. Facebook bought Chainspace because I wanted to hire the group of blockchain geniuses of the startup. The main objective of the young company was to make the blockchain technology more scalable.
The blockchain technology in your native state simply can not scale to handle the billions of transactions you see in payment firms such as Visa Inc., Mastercard Inc. or PayPal Holdings Inc.
And that's why Chainspace is Facebook's secret weapon. With something like 2 billion monthly active users, Facebook has created one of the largest technology platforms in history.
In other words, the new crypto of the firm, nicknamed “Facecoin“, could be a gold mine.
Barclays' Internet analyst, Ross Sandler, told CNBC he believed a “Facebook Currency” could generate up to $ 19 billion in additional revenue by 2021 for the social media platform. The idea is that, like Google, Facebook could generate revenue by charging users of the company a small fee for the use of that service.
That is a new group of potential income for a company that seeks to move to a business model more focused on privacy.
‘Facecoin' will be used for payments
Facebook has been working on its crypto project, which it calls “Project Libra,” for more than a year, and has been recruiting dozens of financial firms and online merchants to help with its launch, according to the Wall Street Journal.
From the reports we have so far, Facecoin would be a type of cryptocurrency known as a stable digital currency that would allow people to send themselves from one place to another, or buy things on Facebook and all over the Internet.
And Facebook has been trying to raise billions of dollars from signatures like Visa and MasterCard to back the currency and thus avoid the ups and downs that the regular cryptography market could have. A key feature of stable currencies is that they are often backed, one by one, with fiat currencies such as the US dollar, which provides more stability.
Now, as exciting as this development for the world of cryptographic investment is, I do not think that buying Facecoin when it's available is the way to take advantage of this opportunity. After all, the main objective of this currency is to maintain the same price over time, according to its founder Mark Zuckerberg.