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According to Wall Street Journal, Facebook has recently sealed a deal with Uber and Payment giants like Visa, Mastercard and Paypal for the coin. The news alleged said that these firms whose businesses extend across finance, e-commerce, telecom and venture capital are going to invest around $10 million in a consortium that will govern the forthcoming digital token. The whitepaper elaborating the concept and possible applications of the token will be released on June 18th.
For the last one and half year, it was brewing that Facebook is soon going to roll out its own cryptocurrency. The project codenamed as ‘Libra’ could begin a new era of commerce and payments for the social media giant. When launched, Facebook coin is going to allow the users to send money to friends and relatives from its messaging platform, Whatsapp. Also, the coin will be pegged to a couple of currencies including US dollar rather than a single to counter price fluctuations.
The coin could also be used to make international payments or to transfer remittance pay to family by the migrant workers. As of now the bank charges for remittance pay are quite high, this forces people to use illegal methods to send money back home. Moreover, it takes quite a lot of time for the money to reach its receiver. Facebook’s coin is speculated to resolve both these issues: instant transfer with low or no fee payments.
How will Facebook coin work?
Facebook’s coin will essentially operate in the WhatsApp ecosystem however; the tech giant has plans to form association with merchants to accept the coin as payment. Facebook is also planning to install physical ATMs so that the coin can be exchanged for local currencies.
According to The Information, Facebook aims to license out the right to operate nodes on its cryptocurrency network. Each company will initially be charged $10 million for the rights. Facebook will launch the network with about 100 nodes thereby generating a sum of $1 billion through licensing fees. The money generated will then be reused to back the coin with multiple fiat currencies as well as low-risk securities.
How will Global coin affect Visa and MasterCard?
The two biggest players in the credit card industry offer the people at large to transact without physical cash. On monthly basis, those transactions are settled with the banks. In case more and more people across the world began to deal in Facebook’s digital currency, there is a chance that the need for credit cards will diminish. The incentive being users no longer will have to pay the fees levied on credit card transactions. Moreover, so many applications as well as e-commerce store offer the option of social sign-up via Facebook, for them payment will be just another step away. For every purchase done online or even offline, one would be easily able to pay with Facebook coins.
Facebook Coin and E-commerce
E-commerce with Facebook coin could rise to an entire new level. The social media giant allowing the online merchants to sell merchandise directly into its apps will also increase movement for the Facebook coin. There will no longer be a need to type the credit/debit card information and pay directly with the coin. Online shopping will become a simple two-step process with Facebook coin.
I scroll, I like, I click buy, I hit confirm and the payment will be made instantly; all within one app!
There was no better integration of social platforms, instant messaging and e-commerce. A much larger version of WeChat wallet and Alipay in China. Moreover, an easy accessibility to who buys what could be a lot beneficial for Facebook in ad management, ranking, and targeting to amplify its core business.
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