We have a few more drips of information about Facebook’s alleged cryptocurrency, and the media has duly gone nuts.
There’s still no answer, though, to the one big question — why do this as a crypto?
Talking to exchanges, Libra Networks
The New York Times mentioned in February that “the social networking giant has held conversations with cryptocurrency exchanges about selling the Facebook coin to consumers” — and the Financial Times reveals today that the exchanges are Coinbase and Gemini. Facebook has also spoken to high-frequency trading firms Jump and DRW about market-making for a prospective coin.
Facebook incorporated a company in Switzerland called Libra Networks. The Central Business Name Index entry says it’s for investment, payments, financing, identity management, data analysis, big data, and blockchain. And other technologies.
The plan is for Libra to launch a pegged stablecoin, to be called GlobalCoin. They’re aiming for a 2020 launch.
Payment systems that exist and do things
We know Facebook wants to do a payments system — Paypal-but-on-Facebook, as I put it in March. CEO Mark Zuckerberg finally publicly announced that they were working on … something … at their F8 Conference in April:
Payments is one of the areas where we have an opportunity to make it a lot easier. I believe it should be as easy to send money to someone as it is to send a photo.
Facebook subsidiary WhatsApp has been trialling WhatsApp Pay in India since January this year, though it may not go fully live until the end of the year — it turns out that all the hard part is regulatory compliance.
Facebook are looking at how to integrate something like WhatsApp Pay into Facebook and Instagram.
It’s important to remember that the three social networks are quite separate systems — even as they’re all owned by Facebook. A WhatsApp developer told me how WhatsApp is hardly integrated with the rest of Facebook at all, even less than Instagram is.
If Facebook acts as a money transmitter, it’ll have to be a completely regulated activity. Facebook already has multiple governments upset at it. So you bet it’ll be wonderfully compliant. Zuckerberg has been talking to regulators in the US and UK.
A payment system makes a lot of sense as a business for Facebook, because they make money from using your personal data to show you advertisements. And direct evidence of spending habits is fabulously valuable data. So the US Senate Banking Committee has asked Zuckerberg just how Facebook plans to protect that data, and how it interacts and plans to interact with credit reporting agencies.
The big question that still hasn’t been answered is — why on earth would you do this as a crypto? Nothing about doing this as a crypto makes sense. No-one’s even put forward a plausible hypothetical reason.
What does a cryptocurrency let a regulated company do that PayPal doesn’t do already? Do they want to tout GlobalCoin as a “fintech innovation” that regulators should give a special pass to?
Facebook hardly need the hype — Facebook doing anything turns into a news story. I can’t see Cambridge Analytica, but on the blockchain being a public relations win.
Or is it really just too many geeks with an unhealthy love of cryptos, being given too much rope?
Mining GlobalCoin pic.twitter.com/G4fuSq956f
— cryptograffiti (@cryptograffiti) May 24, 2019
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