Over the past few months, Facebook has begun to show an active interest in cryptocurrencies and blockchain technology. The company even set up a blockchain division and appointed former VP of Messenger, David Marcus to lead it. Reports then started making a round that Facebook also plans to launch its own cryptocurrency. Barclays Analyst Ross Sandler has now claimed that if a Facebook cryptocurrency is launched, it has the potential to raise Billions!
Sandler made this comment in a note to investors which was obtained by CNBC. In that report, Sandler claims that this Facebook cryptocurrency has the potential to raise anywhere between $3 to $19 Billion over the next two years. To put things into perspective, Facebook made total revenue of $40.6 Billion in 2017 where $39.9 Billion came via advertising. This additional cryptocurrency revenue could help provide a much-needed boost to the company.
Sandler, however, notes that the key factor here and the success of the Facebook cryptocurrency depends on whether:
“Facebook Coin proves successful in reinvigorating FB’s micro-payment strategy for digital content distribution.”
Problems That Facebook Might Face
While Sandler predicted revenue between $3 Billion to $19 Billion, he said that Facebook is likely to face two major problems. The first of this is pitching the value proposition of using a Facebook Coin cryptocurrency - why should consumers use that instead of regular payment options. The second major hurdle that Facebook is likely to face is, in Sandler’s words, overcoming the “trust issues after 2018’s problems.”
By ‘2018’s problems’, Sandler is referring to the slump in crypto-prices. 2018, which is generally referred to as ‘the crypto winter’, was a year where cryptocurrency prices were on a constant decline. Bitcoin, which reached an all-time high of over $19,000 in late 2017 hit rock-bottom in 2018 when it reached $3000s. Since then, the currency has been struggling to recover, with the past few weeks finally showing some sustainable positive growth.
Remembering Facebook Credits
Sandler also pointed out that Facebook had tried out something like this back in 2010 in the name of ‘Facebook Credits’. That got fizzled out over the next two years, as the Facebook Credits feature was shut down in 2012. This was Facebook’s first attempt at creating a virtual currency. The company has learnt from its mistakes since then. Also, those were the early days of Facebook and the company is a much more established name now, compared to what it was back when the decade started. Sandler added:
“Facebook coin may simply be [looking] to process micro-transactions and re-invigorate the original business model that was in place in 2010-2012 under Facebook Credits[…]However, the scope of the project could be much larger, especially considering David Marcus (former CEO of PayPal) is heading up the project.”
It will be interesting to see where Facebook’s cryptocurrency ambitions lead the company. Recent reports have pointed out that Facebook is considering to develop a stablecoin which can be used for a WhatsApp-based payments system. Stay tuned with us at Cryptoground for more news updates and stories from the world of cryptocurrencies and the blockchain technology!