Internet giant Facebook is developing its own cryptocurrency for its instant messaging service WhatsApp, according to a report on Bloomberg published on Friday, Dec. 21. According to the report, “people familiar with the matter” revealed that the social media company was planning a dollar-pegged cryptocurrency otherwise known as stablecoin to be used on WhatsApp. Facebook had acquired WhatsApp in 2014 and has constantly added more features to the app since then. A payment transfer feature will be the most pronounced change but it will not come as a sudden move. The company had hired David Marcus a former PayPal president in 2014. Earlier in the year, Marcus moved from his role in the Messenger app to head a newly form Blockchain Division. He later resigned his role at Coinbase cryptocurrency exchange to avoid conflict of interest. As Smartereum reported, the move raised rumors that Facebook were planning a cryptocurrency product; the rumor was intensified when Facebook appointed a senior engineer Evan Cheng as its first blockchain engineering director and put out openings for blockchain developers. Apart from this, Facebook has kept its blockchain activities well-guarded from the public. A company spokesperson said in May:
“Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology […] this new small [blockchain] team is exploring many different applications. We don’t have anything further to share.”According to Bloomberg’s sources, the rollout of Facebook’s cryptocurrency will begin in India where WhatsApp has over 200 million monthly active users. India has a huge market for remittances. World Bank data show that the country had the second largest remittances ($69 billion) in 2017. Though they didn’t give a definite timeframe for the launch, the sources said it is still in a planning stage. “Facebook is far from releasing the coin, because it’s still working on the strategy, including a plan for custody assets, or regular currencies that would be held to protect the value of the stablecoin,” the people were quoted as saying.
The Era of StablecoinsStablecoins have become the talk of the time in cryptocurrency circles though they have been controversy around some of the major issuers like Tether. To issue a stablecoin, the issuer normally holds a fiat equivalent in a financial institution to ensure the stablecoin is backed against price fluctuations. The controversy comes when this supposed deposit cannot be verified. Issuers like Circle now use independent auditors to verify this while Gemini is regulated by the New York Department of Financial Services (NYDFS). If Facebook proceeds to build a stablecoin—or any cryptocurrency—it would most likely become one of the biggest given the number of users Facebook has. Popular crypto analyst Anthony Pompliano noted that a Facebook crypto product will quickly become the most used product in the crypto space.
Blockchain for Instant MessagingWhatsApp will join a host of other messaging apps which have made efforts around blockchain and cryptocurrency. As Smartereum reported, LINE messaging app launched its own cryptocurrency known as LINK in August. The Japan-based firm launched the cryptocurrency on its own blockchain—the LINK Chain–that enables decentralized applications (DApps) to be deployed to the LINE messaging platform. But Facebook has not always been pro-crypto. The company, earlier this year, banned all crypto-related ads on its platform, though it later reversed the blanket ban to allow some ads on the platform.
Solomon Sunny is the market reporter for Smartereum, one of the global leaders in Ethereum, blockchain and currency news. He produces technical price updates on digital currencies and writes recent developments about blockchain.