Cryptocurrency News: Internet and social media giant Facebook is reportedly seeking investment of up to $1 billion for its cryptocurrency project, a reporter for The New York Times has said.
On Tuesday, April 9, Nathaniel Popper, a technology reporter for The New York Times revealed that Facebook was seeking out venture capitals to finance its FaceCoin project.
“Update on Facebook’s cryptocurrency: Sources tell me that Facebook is now looking to get VC firms to invest in the Facebook cryptocurrency project we reported on earlier this year. I hear they are targeting big sums — as much as $1b.”
Facebook Lacks an Actual Blockchain or Cryptocurrency Product
From veiled hints of decentralization to announcing its Blockchain division last year and reports of a stablecoin in the making and multiple Blockchain-related openings, what’s left for Facebook is launching an actual Blockchain or cryptocurrency feature. Speculations are rife now followings today’s cryptocurrency news.
The closest Facebook has gotten to creating a cryptocurrency feature is rumors of a FaceCoin, a stablecoin it is reportedly creating to be used for WhatsApp and which may be extended to other platforms owned by Facebook.
Why Facebook is seeking Funds From External Sources?
Given the size of Facebook and the resources at its disposal, one would assume Facebook is capable of sponsoring its cryptocurrency project—and they are. Why then will Facebook seek outside investors for FaceCoin?
Popper suggested that the approach has to do with the decentralized nature of cryptocurrency. To appeal to the cryptocurrency community, Facebook’s cryptocurrency must appear to follow the tenets of decentralization.
“Given that one of the big allures of blockchain projects is the decentralization, getting outside investors could help Facebook present the project as more decentralized and less controlled by Facebook,” he explained.
Earlier this month, Facebook hinted that its Blockchain division will operate like a “startup” working on Blockchain solutions even those outside Facebook’s core business. Raising funds for its cryptocurrency will make it more independent of Facebook and can be easily spun off as a separate venture.
The journalist, in a threat of tweets, explained that Facebook will use the money received from investors will be used as collateral for the cryptocurrency. Stablecoins—cryptocurrencies pegged to the value of a fiat currency—are usually maintained by holding a fiat equivalent of the coin’s market cap in a bank. In the case of Facebook’s cryptocurrency, the coin will be pegged to a “basket of foreign currencies held in bank accounts”.
How Will the Cryptocurrency Community React to FaceCoin?
At this time the cryptocurrency community is divided about the introduction of a Facebook cryptocurrency. While some sections of the community see the interest and subsequent launch of a FaceCoin and validation of cryptocurrency sector, proponents of pure decentralization are not impressed.
As we say with the announcement of JP Morgan coin earlier this year, FaceCoin when launched—if it’s launched—will buoy cryptocurrency market. Prices are will more likely go up even if it is short-lived. However, Facebook has not confirmed the comments.
If it does receive funding from VCs for its stablecoin, Facebook will not be the first world-acclaimed social media firm to seek external funds for cryptocurrency project. As Smartereum reported, Telegram raised about $1.2 billion in private token sales for its Telegram Open Network. The messaging giant suspended plans for a public ICO.