Will Telegram, Facebook and Twitter Effect the Cryptocurrency World in a Major Way?
If there's one word that we can use for social media companies like Facebook, it's ‘controversial.' And with a significant degree of power, being the fifth largest company according to market capitalization, and has become the single biggest social media network by a monumental margin.
But with this kind of influence and power, we should always follow up that kind of capitalization with a great deal of suspicion, and rightfully so. Ever since the emergence of the controversies surrounding Cambridge Analytica, the public have been increasingly wary of providing any kind of information to social media platforms like Facebook, with Cambridge Analytica being the latest reason for why people fear sharing information on the internet. Last year, in fact, the social hashtag #DeleteFacebook campaign gained a significant level of traction.
However, at the same time as this, these same social media applications have gained a great level of interest in the world of blockchain technology and cryptocurrency as a means of furthering their platforms.
If we are to expect mass adoption to be on the cards [theoretically] for blockchain and cryptocurrencies, then there will certainly need to be backing from major corporations. It's for this reason that Facebook's apparent desire to create and implement its own take on a cryptocurrency is a bitter kind of pill to take.
While we can all agree that, by having one of worlds largest companies championing the cause for cryptocurrencies and, by extension, blockchain technology will allow for it to be put on the map in the biggest way humanly possible. With that in mind, however, Facebook's reputation means that it's hard to get behind the Social media giant when they announce that they're creating their own cryptocurrency.
It is certainly hard to shake the creeping suspicion that the Facebook team behind Mark Zuckerberg will not be doing any favors for the crypto community as a whole, and will likely just create some kind of centralized hybrid to the decentralized currency that'll make it the worst of both worlds.
While it may be the case that Facebook, among the vast majority of social networking apps out there will not be creating the Bitcoin, Monero or Ethereum of the future, there is still every possibility that its associations with blockchain will make it a game changer, and lesson to learn from for the cryptocurrency world and other industries out there interested in the technology.
The world of finance, for example, could be altered in a truly unforeseeable way, as banks and financial institutions on a global scale take a leaf out of Facebook's potential book and make a concerted effort to accommodate the use of digital currencies in the same way. In a similar fashion, a new ecosystem of services oriented around cryptocurrencies and digital platforms could come to the forefront, as each seek to become one of the first to create a virtual, decentralized currency in the same way as Facebook or another Social media provider.
The Most Commonly Known Secret About Facebook, Telegram and Twitter
There have been an abundance of rumors circulating regarding Facebook, specifically about its own plans to create a new on-platform cryptocurrency. This particular kind of rumor has been in circulation since May of 2018, and were given a higher level of credence when allegedly inside and anonymous sources went on to speak to news outlets about the kind of seriousness that the social media behemoth attaches to the creation of this virtual currency.
While these rumors remained unconfirmed for a certain span of time, subsequent reports such as those from The New York Times, for examples, which published an article on February 2019 added to the now weighty claims that it was only a matter of time before the company revealed the coin it would be putting to use on the platform, and adding to coin exchanges.
Going further into the report by The Times, it serves to corroborate an accompanying piece developed by Bloomberg in December 2018, which cited a similar sounding set of supposed insiders, all of which served to affirm that Facebook's cryptocurrency would serve less as a decentralized virtual asset, and more as a fiat-backed stable coin in the same capacity as Tether or Gemini's GUSD.
It's with this kind of set-up in mind that Facebook may have its sights set on a similar function as that sought after by Whatsapp, which is specifically for remittances and money transfers between users of the site.
Whether or not this is the underlying utility of any prospective virtual currency, the fact remains that the evidence is stacking up to the extent where it is clear that Facebook is working on some kind of cryptocurrency or crypto related project for its social media platform, the only remaining question is how exactly it will weave it into its existing platform to obtain the highest possible number of users.
Around the same period of time that rumors began to fly about Facebook's supposed cryptocurrency project, it formed a blockchain group which was to be headed up by David Marcus, who had previously served as a one time member of the board for Coinbase in order to perform exploratory research on how to implement crypto into an already existing platform.
While it has been involved in the technical fringe of crypto implementation, it's really only a matter of time before the technical expertise of the entire Facebook team finally resolved itself to direct involvement in some way, shape, or form in the world of blockchain and cryptocurrency.
For those that are already working in the space, the inclusion of the vast resources and expertise of a company like Facebook would bring with it far more positives than negatives in the minds of those well versed and already in the space.
One of these thinkers, for example, is the CEO of the DeVere Group – Nigel Green – Who described that the adding of Facebook to the technical scales,
“would indicate that digital money, as a concept, is fully mainstream and inevitably the way the world is going. This is something we have been arguing for a long time now — despite protestations from the likes of Warren Buffett.”
Green goes on to state that Crypto's place has already been proven thanks to the likes of social media and messaging services like Kik, WhatsApp and now Facebook seeking to apply the technology to their already existing services. The fact that each have been exploring its potential uses for some time only add more credence to crypto's long term practicality.
One of the other social media companies out there that have been flirting with the application of blockchain and specifically cryptocurrency has been Twitter. This doesn't exactly come as a surprise considering the CEO of Stripe and Twitter has been a highly outspoken supporter of cryptocurrencies and specifically Bitcoin, which he makes a habit of consistently investing in. Jack Dorsey has gone so far as to make statements, such as one in February 2019, in which he stated that he believed that Bitcoin will become the ‘native currency' of the internet.
In addition to this, Twitter, as a whole has been outright in its support of a number of initiatives which are related to the newest addition to the Bitcoin ecosystem – The Lightning Network. These include initiatives like Lightning Torch, which was a project aimed at raising greater awareness of the Lightning Network, and giving users the power to test its capabilities.
Along with taking a pro-blockchain approach, as the CEO of Stripe, Dorsey has been ensuring that this same pro-Bitcoin support is illustrated through the payment service provider too. As a result of these strong advocate stances, it may, in fact, be an inevitability that Twitter will get itself embroiled in the world of crypto integration in the foreseeable future.
Among those that are getting involved in the crypto and blockchain world is the Russia-founded encrypted messaging platform – Telegram, which is expected to release its own take on a virtual currency, dubbed GRAM by October 2019, according to its speculative roadmap. This launch is in addition to the currently ongoing private testing of its dedicate blockchain solution called the Telegram Open Network (TON).
Through the testing and subsequent launch of both its blockchain and cryptocurrency, Telegram intends to outperform and rival the already established Ethereum and EOS blockchain solutions, through providing a rapid transaction speed, durable scalability solution as well as a seamless tool for the creation and deployment of dApps.
Telegram, of all the messaging services out there, is well positioned to make good on these kinds of statements. with an already existing user base of 200 million users (according to reports from 2018), it is very certain that a vast number of people are going to seize at the chance to use GRAM on a continued basis once it and the TON go live.
Will They be Centralized or Decentralized?
This is the kind of question that rings as highly relevant and essential for future users to know. It's especially true with the recent announcement from VKontakte that it has since launched its own virtual currency called the VK Coin. VKontakte, which serves as a social media platform within the Russian Federation, and is considered to be the third most popular website in the country.
When we combine this with the kind of activities we have seen from Facebook, Twitter and Telegram, we would effectively see the crypto industry consist of some of the multinational giants in a very short span of time, if not making them the uncontested giants and players of the space.
While this represents an immense shifting of resources and a monumental uptick in the amount of manpower, Green has pointed out that this dramatic shift should be a cause for concern for cryptocurrencies and blockchain platforms that are already in circulation.
“Facebook and Twitter have enormous influence, resources and reach, and it could be that they would take away some market share from existing cryptocurrencies.”
While it's pretty challenging to shake off the underlying feeling that social media outlets such as Twitter, Facebook and Telegram, while making some major inroads and working to break some serious ground in the cryptocurrency development, there is no clear indication as to what kind of cryptocurrency these outlets will go for. Whether these currencies would take on the shape of a decentralized peer to peer virtual currency, or a centralized currency controlled by the social media giant.
When we take into consideration the kind of business model, and subsequent controversies around Facebook and its control of data and information controlled by its billions of users, we can at least make an educated guess as to what kind of currency Facebook would be more inclined to create and implement.
Arthur Hayes, who works as both the CEO and Co-founder of the cryptocurrency exchange, BitMex, made his opinions clear, that,
“Facebook or Twitter coin is not a cryptocurrency.”
Hayes continued, arguing:
“These will be tokens that ride in their ecosystems. Users must trust these companies to operate the network in good faith and protect their privacy. The only thing any of these tokens will have in common with Bitcoin is that the word “coin” might possibly be used in their names. These will have little to no effect on Bitcoin and other similar cryptocurrencies that operate on a public peer-to-peer network.”
There's a lot of doubt surrounding the nature of these cryptocurrencies and blockchain applications by these major companies. One of the early negative signs we've seen regarding potential decentralization have been backed up by the reports that the VK coin does not make use of any kind of blockchain technology, raising further questions about what makes it a ‘cryptocurrency' exactly.
While the likes of the VK coin have served as conceivable blows against the notion of a decentralized cryptocurrency on a social media platform, there are still relatively mixed views among experts in the field, along with commentators about just how centralized a currency from the likes of Twitter, Facebook among others will be.
Working as the managing director for eToro in the United Kingdom, Iqbal Gandman asserts that any coin coming out of Facebook will be mostly or entirely centralized. But while this may be the case, it doesn't essentially disqualify in terms of being a credible cryptocurrency.
“Cryptocurrencies can be both centralized and decentralized,”
he told Cointelegraph.
“The sheer nature of platforms like Facebook and WhatsApp, means their cryptocurrencies will be centralized. Facebook and Whatsapp are like walled gardens, i.e. you have to login to access them, so I think people will probably only be able to use their coins within those platforms, rather than elsewhere.”
Lou Kerner, speaking on behalf of CryptoOracle, believes that any kind of virtual currency coming from Facebook or any other major social media outlet, will have a nuanced approach towards systems being centralized and decentralized.
“Facebook is likely to have decentralized elements and centralized elements, as Facebook is obviously centralized and there is no functional decentralized governance system,”
Kerner pointed out in an interview recently.
There are some other figures in the space that believe that this kind of skepticism is out of place, especially when we're considering the fact that Facebook is eagerly seeking to stitch up the tarnished image that it has for itself.
“As far as I can tell, these cryptocurrencies would be decentralized, as Facebook is seeking to capitalize on the phenomenon of crypto, and part of cryptocurrencies’ inherent appeal is the decentralized status,”
“After the recent Facebook furor regarding user privacy, I think we can expect them to double down in regard to this area as the scrutiny will be immense.”
While those looking on the outside of this debate, it's easy to delineate between criteria of decentralized and centralized, the reality is that the true meanings of these phrases remain quite murky, meaning that any kind of debate would last for a while. These kinds of debates would defeat the underlying purpose of implementing a cryptocurrency (instead of having some system of digital credits and / or vouchers), and this would stand in contradiction of initial claims that Facebook has been in communication with a number of crypto exchanges.
Hypothetically, were Facebook intending to place its virtual currency on a series of exchanges, then it ought to be comfortable with the prospect that its currency will be traded and put to use outside of it's central ecosystem.
Better User Experience Equals More Adoption
Apart from the prospect of decentralization, one of the other major questions that surrounds the notion of cryptocurrencies in the world of social media is if it will serve to streamline the user experience or add a greater level of unnecessary complication to the platform.
What makes social media outlets like Facebook, Twitter and Telegram so immensely popular with its users is the fact that they are incredibly easy to use. This brings an added weight to the integration of any kind of cryptocurrency to an already existing, and highly fluid social media platform. It would need to flow and operate in such a way as to not be complicated, and mesh very well with the existing ecosystem.
These kinds of fears may come off as superficially rational, but it's quite possible that they are unfounded concerns. Gandam points out that massive social media companies are already well tuned to the needs of an effective product, and how to create a very user friendly system.
“Companies like Facebook and Twitter are conscious that the key to a good product is a user-friendly interface,”
explains eTor’s managing director, Iqbal V. Gandam.
“Introducing their own cryptocurrencies should not make these platforms more complicated for users, it will simply be another service for them to use.”
This talking point appears to be one of the positions that is very much agreed upon by a broader range of commentators, many of which point out the storied history of social media platforms like Facebook and Twitter in creating seamless interfaces which are also incredibly easy to use.
“Anything Facebook or WhatsApp does will be drop dead simple,”
affirms Lou Kerner.
“That's why they're Facebook and WhatsApp.”
It is very likely, as a matter of fact, that the user experience related to the establishment of a Facebook or Twitter based virtual currency would actually be quite simple. And, rather than switching people off to either of these platforms, it will actually attract far more people than was previously imagined, making them come to the realization that cryptocurrencies aren't really that complicated.
“The impact of these platforms launching cryptoassets on the crypto industry will be much bigger,”
“It will help take the utilization of crypto by the public a step forward. Just as Paypal raised its awareness and usage by working with eBay.”
And while cryptocurrencies and blockchain are riding a steadily growing wave of mass adoption, it is quite possible that the two processes will converge in such a way as to create a highly positive ascending loop, allowing for the acceleration of overall adoption by users.
“More and more people are becoming used to cryptocurrencies and mass adoption is increasing momentum all the time, so I don’t think it will be an issue,”
argues Green, who firmly believes that crypto has the potential to,
“enhance the user experience”
for Facebook and other adoptive platforms.
The Rise of New Economies
There is a general consensus by commentators that Facebook, along with a range of other social media platforms, are aiming to launch their own array of virtual currencies, and that these kinds of currencies would serve as a net positive for the specific platforms concerned as well as for the underlying users that would try it out first hand. One of the other questions that comes up is this: What are the kinds of ramifications that a Facebook-based virtual currency, Twitter Coin or GRAM have overall?
It is very possible that these kinds of coins could rapidly serve as a catalyst for the worlds of personal banking and international finance. Especially if Facebook were to model its virtual currency after a USD based stablecoin which could also be tethered to a range of fiat currencies.
“All cryptocurrencies and wider fintech solutions are already taking business away from traditional banks,”
“They are filling a gap left by the traditional way of doing things as the world speeds up and becomes increasingly globalized and digitalized.”
At the same time, it's not exactly certain just how Facebook's coin will function. But if the rumors are true that its virtual currency would allow for users to conduct money transfers, then this will showcase one way in which Facebook will be competing directly with financial institutions and multinational banks.
Having its virtual token being based off a fiat backed stable coin would require a great degree of centralization from Facebook, along with having it need to hold a greater volume of USD, would require it to enter two industries simultaneously. And, much like Coinbase, it would force it to operate in the same way as a bank, in that it would need to hold cash reserves in order to allow these peer to peer payments to take place.
This would make for a dramatic game changer, not just for the world of crypto, but it would transform the very way in which Facebook would operate day to day. Overall, the implications would be monumental, and depending on the number of users that would make direct use of this virtual currency, could result in a sensational application of crypto in a very short span of time.
Boasting approximately 2 billion users on a monthly basis, the social network would be able to provide a source of finance for a vast number of unbanked individuals on a global scale. Ultimately, what this means is that, depending on the success of its project, Facebook could succeed where a large number of corporations and institutions have failed to accomplish. But while this is a prospective history-making moment for the social media outlet, there are experts out there that are still unsure of just how Facebook, among other social media networks would actually apply these virtual currencies.
There are experts that believe the inclusion of financialization into the social media world is one of the truly logical end-points for them.
“Social media companies with large active user bases will displace traditional banks in the distribution of financial products,”
“They own the attention of the younger generation and have a deep understanding of their behavior from the data they collect. This makes social media companies best placed to sell loans, credit cards, and investment products. They need not actually become a chartered bank, rather they can use a traditional bank’s regulated pipes and create a revenue stream from large origination fees.”
In spite of these kinds of prospects that social-media virtual currencies, commentators aren't under any allusion that these currencies will replace banks or financial institutions anytime soon, and will just help those interested in it directly as its own service.
“As with every evolutionary stage in money, the stage prior to that never disappears,”
“With the onset of digital banking, cash hasn’t disappeared. In the same way, I don’t see crypto replacing fiat. Banking also provides other services aside from transferring and storing money.”
Even if cryptocurrencies applied through social media don't result in the erosion and disappearance of conventional banking and finance, they will have a profound influence on a range of other areas. One of them, for example is that they will inevitably create a whole new ecosystem and range of digital services and products, all made possible as a means of capitalizing on an appearance of this new economic system. They also have the potential to monetize various services within the social media system.
“Ads are not the final frontier for Facebook and social networks,”
the CEO of Monfex, Max Tsaryk has his own opinions about the kind of influence social media crypto would have.
“A native cryptocurrency has the power to create a whole new economy where users can store value and pay for paid content or subscription services. We believe that Facebook and Telegram are going to show to the world that cryptocurrencies allow to embrace an entirely new monetization model, radically different from the current status quo.”
A brand new ecosystem which may very well be created by a GRAM, or Facebook coin among any range of new cryptocurrency would be the other side of the coin when it comes to adoption. If Facebook's virtual currency were to succeed in obtaining a mass adoption in terms of application and use, companies would be hard pressed to provide a range of services and products which people can directly engage with by using these new kinds of cryptocurrencies.
If these companies don't act to provide utility for these new kinds of social media based cryptocurrencies, then these same cryptos will remain limited in utility and siloed. As a result, while initial interest will be peaked from amongst the community, this would steadily result in diminishing levels of users over time.
Another one of the factors that is also likely is that these social media services, were they to find broad success with their new virtual currencies, other social media platforms may face the increasing pressure to offer the same kind of services. Green argues very much the same kind of thing, stating that a kind of network effect will take place with social media platforms
“It is highly likely that where the likes of Facebook lead, other social networks will follow,”
says Green, who's not alone in his predictions.
“Everyone will have their own cryptocurrency,”
Kerner adds his own insight in agreement with Green.
“It's just frequent flier miles for the most part. Other than the few actually trying to be currencies.”
Whether or not a majority of those virtual currencies launched by the likes of Facebook, among other social media and messaging services are actually cryptocurrencies or not, the likes of Kerner believe that their introduction to the crypto world would be a net positive for the crypto space overall. This is agreed upon by Gandam as well, who goes further on to point out that they will likely not compete directly with cryptocurrencies that are already in existence.
“Any ‘traditional' and well-known company, such as Facebook and Twitter, becoming involved in the crypto industry is a good thing,”
“It not only increases awareness and appetite for people to explore other cryptoassets, but also adds credibility to the industry. This should have a positive impact on Bitcoin, especially if the FB coin is only for use on the Facebook platform, vs Bitcoin being used on all other platforms.”