A Bloomberg news report states that Facecoin is in developer labs of Facebook Inc, and will be linked to the US Dollar. Plans for this yet-to-be-released stablecoin include the setting up of custody assets and if necessary, holding fiats in order to protect the stablecoin’s value. The most likely use of Facecoins will be in the transfer of money via WhatsApp, the messaging app backed by Facebook.
Facecoin for money transfer by Indian diaspora
There are over 200 million Indian WhatsApp users. Every year huge amounts of money are remitted back to the country by the Indian diaspora using multiple cashless products such as Xoom, WorldRemit and even Western Union. In 2017, money transfer was nearly $69 billion by this highly-skilled community. And it appears that Zuckerberg has found a monetization product for the massive number of users on WhatsApp by allowing cross-border transfers. However, there would not be any fiat transfers here but only Facebook’s own cryptocurrency, the Facecoin, where each coin will be backed by one Dollar.
But the use of cryptocurrencies in India is not yet accepted by its central bank and it needs to be seen how Zuckerberg will be able to work around the current ban on using cryptocurrencies in India.
Locking In Users
As with every Facebook feature and service, analysts and market researchers predict Facecoin could well become the golden key to lock-in users to the social networking platform. If the plans for Facecoin were to materialize then it is evident that more users will be confined to the platform because of the user of the “in-house currency.”
Unfortunately for FB, its biggest controlling collateral is the data it holds of its users. Hence, the opportunity for use of a stablecoin as a medium for money-transfer is ingenious. It is in-line with other products and services FB generally offers. It allows the company to do what it does best – control data flow.
It appears that FB users will soon have a service which will be served on a customized blockchain. And contrary to the very tenets on which blockchain evolved from – decentralized ledger technology – users of Facebook will be tethered to the overpowering protocols of the platform. Besides they will be falsely-lulled by the privacy-keeping promises that the company advocates from time to time. The goal for the networking giant is to match shareholder demand for blockchain technology but the bottom line remains that this would only add to the monopolistic powers of FB.