10 Things We Know About Facebook’s GlobalCoin Launching Next Week

10 Things We Know About Facebook’s GlobalCoin Launching Next Week

by June 10, 2019
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Following the wind-down of the bull market of 2017, crypto is still undergoing some fascinating developments. A key one that grabbed even mainstream headlines? Facebook’s announcement that they too, want to foray into issuing coins.

The crypto, part of something Facebook calls Project Libra, and is slated to launch on June 18.

Facebook has a rumoured 50 engineers working on this project, according to some sources familiar with the project if flurry of job listings is any sign.

Facebook is not alone in this, as messaging platform Telegram and Signal have announced intentions to roll out cryptocurrencies over the next year too.

This time around, Facebook is keeping its cards so close to its chest that it’s said that even employees working in the same building don’t know what’s going on—the team in-the-know about the blockchain project has a separate key-card access.

Despite its hush-hush nature, there has been quite a bit of information that’s trickled out about the Facebook coin, such as:

 

1. A Stablecoin Named GlobalCoin

facebook cryptocurrency stablecoin whatsapp (1)It’s official: Facebook’s coin will be called GlobalCoin.

While ostensibly a crypto, the upcoming coin will veer quite far from Bitcoin’s modus operandi. It’s a stablecoin; a type of cryptocurrency pegged to a real-world asset. Stablecoins have gotten more in vogue lately as a response to the high volatility that plagued the crypto scene since its  inception.

2. No, it Won’t be Tied to the USD

facebook stablecoin globalcoin basket currency

Contrary to earlier rumours though, GlobalCoin won’t be tied to any one fiat currency, but a basket of currencies as a way to minimise risks of currency fluctuations.

Some existing examples of currency baskets include the US dollar index (USDX), a basket of six currencies – the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc. Asia is also in the midst of developing a basket, which would include currencies from China, Japan, South Korea, Indonesia, Malaysia, and Singapore.

GlobalCoin has been compared to internal blockchain-based payments systems like JP Morgan’s JPM Coin, Signature Bank’s Signet system, and the Blockchain World Wire program by IBM—some of these operating in the same field as:

3. The Crypto is Likely To Be Used For Money Transfer

facebook globalcoin multi currency

According to Bloomberg, Facebook is working on creating a cryptocurrency that will let users transfer money on the Facebook-owned WhatsApp messaging app, focusing firstly on tackling the remittance market in India.

WhatsApp is a valuable market for the messaging platform. As of February last year, India recorded 200 million active users on the platform, and for a while, was the only recipient to the WhatsApp Business function.

India also leads the world in remittances, with its diaspora sending a staggering US$80 billion back home last year.

The idea would be that users could send money to friends and family instantly using the crypto instead, though for now, and considering that it’s in the midst of discussions with some regulators, it seems like Facebook intends to offer cashout options, (which would put it under some regulatory jurisdictions that have precluded many incumbents from offering the same).

It’s been said that Facebook may face difficulties selling this concept to India, as the government is gung ho about banning cryptocurrencies. However, there may be a possibility for Facebook to sell the concept to the nation’s regulators, if it is able to make a strong case for the overall service as a remittance service—diminishing its association to the cryptocurrency world.

4. A Potential for Cross-App Transfers in Facebook’s Messaging Platforms

facebook cryptocurrency whatsapp instagram messenger

The crypto is designed to operate within the company’s existing messaging infrastructure, which includes Instagram Facebook Messenger as well with potential for cross-platform transfers.

The company is in the midst of a year-long overhaul of its messaging infrastructure to connect three of its properties—Messenger, WhatsApp and Instagram.

5. There’s Talk of Facebook Becoming a Bank

facebook stablecoin cryptocurrency globalcoin bank

Right now, Mark Zuckerberg and team have been meeting with financial regulators, including those in the USA and the UK as well as Western Union to discuss operational and regulatory issues relating to GlobalCoin—and understand how to comply since they are not a bank. Yet?

There’s been talk about Facebook potentially becoming a bank, as value for the coin will probably be stored in Facebook’s bank accounts.

Whether this is in Facebook’s plans will remain to be seen, but we can safely say that if successful, Facebook will be storing tonnes of money—more than it does currently.

6. It Wants Funding From VC to Help It Build Credibility
facebook cryptocurrency vc funding billion tim draper

Venture Capitalist Tim Draper (Image Credit: JD Lasica)

Facebook is not poor by any means, and is likely able to finance the production of the coin in-house out of their own pocket, and yet the social media network is famously seeking to raise as much as US$1 billion for the initiative.

Instead, Facebook seeks VCs more for their influence; their involvement in the project could help Facebook present the coin project as more decentralised, and less like Facebook is in total control.

Venture Capitalist Tim Draper has at least expressed interest in hearing Facebook out, according to Bloomberg. Hedge funds, VCs and other wealthy individuals are likely to invest as well.

7. Not Facebook’s First Virtual Currency Foray
facebook cryptocurrency stablecoin credits

Image Credit: Wikimedia Commons

Astute followers of Facebook’s progress will probably recall the company’s 2011 effort to launch a digital currency—Facebook Credits.

It’s said that the profitability of this early scheme had been questionable, which ultimately led to the project’s sunset two years later. Cynics also bring up the Facebook Gifts scheme launched in 2012 and put down two years after that. 

According to TechCrunch’s Editor-at-Large, Josh Constine, “Facebook never found a way solve distance and localization problems to make Gifts work internationally.”

Facebook Messenger also has its own version of Payments, launched in the USA in 2015 and expanded into Europe later.

Therefore to many, this new try by Facebook runs the risk of hitting the same brick walls. While this new project may incorporate the latest tech darling, blockchain, its results may not stray too far from its track record so far.

8. It Will Be Ran by Former PayPal President
facebook cryptocurrency paypal david marcus finance blockchain

Image Credit: Loic Le Meur

The cryptocurrency is currently spearheaded by David Marcus, formerly president of PayPal. In fact, observers into the space had been waiting for Facebook to move into finance when David Marcus had been tapped to run the Messenger app in 2014.

David became the head of Facebook’s blockchain initiatives, though the team is keeping mum about what that may entail.

Some other high-profile hires for what has been called Project Libra include MIT’s Christian Catalini as “chief economist“, and Swiss-based foundation manager Sunita Parasuraman, who leads the token project.

Facebook also earlier acqu-hired a British blockchain company, Chainspace, opting to absorb its team into the company without actually buying its technology.

9. Facebook Could Be Charging US$10 Mil Licensing Fees to Third Parties

facebook 10 million cryptocurrency globalcoin node

Facebook is discussing levying a US$10 million licensing fee for the priviledge of operating a node. The social media giant reportedly reached out to dozens of tech companies and financial institutions to create an independent foundation that would operate GlobalCoin, and if they take the offer, each node operator will be given a slot for one representative at the foundation.

GlobalCoin plans to launch 100 nodes, which is probably the logic behind the US$1 billion value offered to investors. It’s likely that the fees will be used to back the digital asset, rather than pure revenue.

Facebook may also be setting up physical portals for people to purchase GlobalCoin.

10. Globalcoin Helped Zuck and The Winklevoss Twins Make Up
winklevoss facebook globalcoin gemini cryptocurrency stablecoin

Image Credit: SXSW

 

In February, it was reported that Facebook was reaching out to cryptocurrency exchanges about selling the Facebook coin, and one of the exchanges that could begin listing GlobalCoin is Gemini—owned by the Winklevoss twins.

Thanks to the movie, “The Social Media”, the feud and subsequent falling out between Mark Zuckerberg and the Winklevoss Twins is well-known. However, Zuckerberg and the Winklevoss twins are in meetings to potentially put Facebook’s crypto into Gemini’s network.

According to Forbes, Facebook needs GlobalCoin to be tradeable in and out of their positions, which the Winklevoss’ exchange, Gemini, could cater standing as one of “the most stringent and compliant operations in the world”—and an in with global regulators is cherry on top for Facebook.

Meanwhile the sheer size of GlobalCoin is probably a big pull for Gemini, and could help boost the platform’s position in the market amidst stiff competition.

Editor’s Note: This piece was first written on 11th April 2019 and has been updated on 10th June 2019 to reflect some new information that has come to light. This piece will be updated as more information comes out. 

 

Featured Image Credit: Via Wikimedia

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