{"id":13429,"date":"2019-05-24T20:16:10","date_gmt":"2019-05-24T20:16:10","guid":{"rendered":"https:\/\/davidgerard.co.uk\/blockchain\/?p=13429"},"modified":"2019-05-27T18:18:55","modified_gmt":"2019-05-27T18:18:55","slug":"facebooks-globalcoin-why-are-they-doing-it-as-a-cryptocurrency","status":"publish","type":"post","link":"https:\/\/davidgerard.co.uk\/blockchain\/2019\/05\/24\/facebooks-globalcoin-why-are-they-doing-it-as-a-cryptocurrency\/","title":{"rendered":"Facebook’s GlobalCoin \u2014 why are they doing it as a cryptocurrency?"},"content":{"rendered":"

We have a few more drips of information about Facebook’s alleged cryptocurrency,<\/a> and the media has duly gone nuts.<\/p>\n

There’s still no answer, though, to the one big question \u2014 why do this as a crypto?<\/p>\n

Talking to exchanges, Libra Networks<\/h3>\n

The New York Times mentioned in February<\/a> that “the social networking giant has held conversations with cryptocurrency exchanges about selling the Facebook coin to consumers” \u2014 and the Financial Times<\/a> 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.<\/p>\n

Facebook incorporated a company in Switzerland called Libra Networks.<\/a> The Central Business Name Index entry<\/a> says it’s for investment, payments, financing,<\/span> identity management, data analysis, big data, and blockchain. And other technologies.<\/span><\/span><\/p>\n

The plan is for Libra to launch a pegged stablecoin, to be called GlobalCoin.<\/a> They’re aiming for a 2020 launch.<\/p>\n

Payment systems that exist and do things<\/h3>\n

We know Facebook wants to do a payments system \u2014 Paypal-but-on-Facebook, as I put it in March.<\/a> CEO Mark Zuckerberg finally publicly announced<\/a> that they were working on … something … at their F8 Conference<\/a> in April:<\/p>\n

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.<\/p><\/blockquote>\n

Facebook subsidiary WhatsApp has been trialling WhatsApp Pay in India since January this year,<\/a> though it may not go fully live until the end of the year<\/a> \u2014 it turns out that all the hard part is regulatory compliance.<\/p>\n

Facebook are looking at how to integrate something like WhatsApp Pay into Facebook and Instagram.<\/p>\n

It’s important to remember that the three social networks are quite separate systems \u2014 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.<\/p>\n

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<\/a> in the US and UK.<\/p>\n

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<\/em> valuable data. So the US Senate Banking Committee has asked Zuckerberg<\/a> just how Facebook plans to protect that data, and how it interacts and plans to interact with credit reporting agencies.<\/p>\n

Why blockchain?<\/h3>\n

The big question that still hasn’t been answered is \u2014 why on earth<\/i> 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.<\/p>\n

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?<\/p>\n

Facebook hardly need the hype \u2014 Facebook doing anything<\/i> turns into a news story. I can’t see Cambridge Analytica, but on the blockchain<\/a> being a public relations win.<\/p>\n

Or is it really just too many geeks with an unhealthy love of cryptos, being given too much rope?<\/p>\n

 <\/p>\n

 <\/p>\n

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Mining GlobalCoin pic.twitter.com\/G4fuSq956f<\/a><\/p>\n

— cryptograffiti (@cryptograffiti) May 24, 2019<\/a><\/p><\/blockquote>\n