Facebook’s cryptocurrency plans sound promising and are seen to benefit the site in four ways.
The Wall Street Journal reported that Facebook is planning to build a cryptocurrency payment platform codenamed ‘Project Libra’. This will enable users to use digital coins when purchasing on the social network and third-party sites.
The social media giant is banking on the unification of three biggest messaging platforms – Instagram, Messenger, and WhatsApp to enable crypto payments across these platforms.
Four things to know about Facebook’s Cryptocurrency plans
- It would reduce price volatility
According to reports, Facebook will use “stablecoins” or cryptocurrencies pegged to a stable asset to reduce the volatility common to other cryptocurrencies. When the price volatility is attractive to traders then it brings inconvenience in conventional payments.
- It could disrupt the market for online payments.
The ‘Facebook coin’ could theoretically become the world’s most widely used currency with over 2 billion monthly active users. It is, therefore, has the potential to challenge payment platforms such as PayPal, Apple, Google Play, Amazon Pay, and Square.
- It could help push other Facebook’s e-commerce ambitions.
Facebook’s crypto plan could complement its e-commerce and payment efforts, including the Craigslist-like Facebook Marketplace, interactive live videos enabling merchants to sell their products, in-app checkouts for purchases on Instagram, and Messenger’s peer-to-peer payments. These services are currently being offered in selected markets which could be further expanded to all users worldwide when the single currency is launched.
The social network giant can likewise boost its payment service by charging additional fees on coin purchases and other transactions. It could thereby reduce dependence on ads as a result.
- It will enable Facebook to reward users and merchants.
Media reports said that Facebook users will be rewarded with either crypto coins or loyalty points for viewing ads, making purchases across its platforms and interacting with content.
Merchants, on the other hand, would be rewarded for accepting Facebook’s cryptocurrency. They can, for instance, use Facebook coins generated from completed transactions from users to purchase ads at a discount.
Bonus: Facebook’s cryptocurrency could forge a good deal with Mastercard and Visa
While Facebook’s cryptocurrency ambitions could challenge the status quo of credit card firms such as Mastercard and Visa, there are reports that Facebook is actually in talks with both of them for potential collaboration.
It actually makes sense considering that the social network will be needing a physical debit card partner to grow into brick-and-mortar stores.