For the second time in a couple of months, rumours that social media giants, Facebook are looking to launch a cryptocurrency to enable Whatsapp users to send money across borders has resurfaced.
This time, though, it seems that the project is shaping up nicely and according to the New York Times, could launch as soon as the first half of this year.
Facebook’s crypto team has purportedly stayed underground to ensure that the launch date is met and are already contacting some crypto exchanges to discuss a possible listing of the soon-to-launch coin.
Then comes the big question — does the FacebookCoin endanger Bitcoin’s future?
In this article, we put both cryptocurrencies into perspective and consider what possibilities lie ahead. Also, while Facebook is yet to name their cryptocurrency, we used FacebookCoin for comparisons.
Does the FacebookCoin Endanger Bitcoin’s future?
Understandably, pitting Facebook’s soon-to-launch cryptocurrency against Bitcoin would never be a sound argument if not for the range of audience that the social media giants already boast.
Across WhatsApp, Facebook and Instagram, Mark Zuckerberg’s company has some 2.7 billion users who could get instant access to their cryptocurrency while it would only require a well-crafted sales video and a couple of text ads to convince users to start sending and receiving payments with it.
Sadly, major cryptocurrency, Bitcoin does not boast this kind of reach, at least not yet, despite being around for a little over a decade.
Since there are currently over 5 million Bitcoin users globally, it is safe to believe that it will likely take more time to push the cryptocurrency to the mainstream.
Verdict — FacebookCoin would win the race for global adoption faster than Bitcoin.
Navigating Regulatory Barriers
A primary reason for the delayed adoption of Bitcoin is different regulatory approaches adopted by authorities in different countries. While some regions such as Malta, Switzerland and Belarus has welcomed it with open arms, more populous nations like China and India are restricting their citizen’s exposure to it.
Will Facebook’s purported cryptocurrency meet the same regulatory challenges? Not likely. Mainly because of the presence of a centralized entity behind it.
However, Bitcoin would still have an edge given that in the next few years, more countries are likely going to have no other option than to legalize its usage. The mainstream cryptocurrency has had a lot of breakthrough in some seemingly harsh countries within the last few years and should continue to do so.
Meanwhile, Facebook still has a lot of regulatory hurdles facing its service especially with the WhatsApp platform banned in some of the countries where Bitcoin has already penetrated. A new payment system, especially in Asia would face stiff competition for messaging giants such as Line and Kakao which are already popular with people in these countries.
In the end, the race for regulatory acceptance should be a close call with both cryptocurrencies standing a chance.
Verdict — Even chances for both cryptocurrencies.
At this point, it is still unclear whether Facebook’s cryptocurrency will be decentralized or go the other way round, thereby giving the social media giants full control over the management of the cryptocurrency.
Whatever, the case though, it would take some effort for Facebook (a centralized entity) to replicate the highly decentralized nature embedded into the Bitcoin network (a fully decentralized entity) whose founder has remained anonymous till date.
In simpler terms, FacebookCoin would always be tied to Facebook Inc. while no such reference could go to the Bitcoin network.
The Bitcoin whitepaper primarily proposed to take people away from centralized entities such as banks and possibly companies like Facebook that could misuse public funds (not saying they would).
Bitcoin places such trust with uncompromisable technology —blockchain— and this could be the major reason while people will stick with Bitcoin rather than FacebookCoin.
Verdict — Bitcoin has already won the race for decentralization even before the still rumoured creation of FacebookCoin.
It is likely that Facebook’s cryptocurrency will be a stablecoin pegged to the U.S dollar and some other fiat currencies held in the company’s bank reserves. For this reason, the coin would over a more stable price for payment purposes, solving one of the significant challenges to Bitcoin’s adoption as a payment tool — volatility.
So there’s a bigger chance that people would prefer to transact with a coin that has a stable value than one whose prices could fluctuate heavily within a few minutes.
Verdict — FacebookCoin wins the stability battle and possibly could become the preferred option for payments.
As An Asset Class
Although Bitcoin was primarily invented as a payment tool and a decentralized version of money, it has already metamorphosed into a speculative tool for investors because of its fluctuating prices.
It has also been the best performing asset class in the last decade with over 300% gains despite the bear market in 2018.
Facebook’s cryptocurrency would be devoid of this feature because of its stable nature while Bitcoin will as the year’s go by, become a more viable investment option for traders and long-term holders.
Verdict — Bitcoin wins
As we’ve highlighted so far, it is clear to see that both the cryptocurrency proposed by Facebook and the existing Bitcoin have different features that will allow them to co-exist and compliment each other in the long run.
Therefore, the arrival of Facebook’s cryptocurrency does not in any way endanger Bitcoin’s future.
Instead, the cryptocurrency will likely be another piece that shows how these new payment tools can achieve their potential — moving money across borders in split seconds!
Subscribe to our Telegram channel to stay up to date on the latest STO and crypto regulations news