Bloomberg.com, that the company is developing a stablecoin, a type of cryptocurrency pegged with the U.S. Dollar, in order to minimize volatility. Quite far from a release, Facebook is still evolving strategies including plans about custody assets or regular currencies that will be pegged to the value of the stablecoin.
Speculations about Facebook jumping the wagon of financial services started when in 2014, they hired former PayPal president David Marcus to run their Messenger app. In May, Marcus became the head of the company’s blockchain initiatives, since then the platform has been on a hiring spree, specifically to blockchain related positions.
According to employee titles on LinkedIn, Facebook now has about 40 people in its blockchain group. A company spokesman said in a statement
“Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology. This new small team is exploring many different applications. We don’t have anything further to share.”
According to the people, the company’s first focus is the remittances market in India. With over 200 million users in the country, WhatsApp, the company’s encrypted mobile-messaging app, is quite popular. Additionally, it is also a leading market of remittances, around $69 billion was sent back home in India in 2017, according to the World Bank report.
The concept of stablecoins holds merit, as such digital coins can be far easier to use on daily purchases due to its comparative stability than that of other cryptocurrencies like Bitcoin. According to Stable.Report, a website that tracks stable tokens, there was a point last year when over 120 stable coin ventures were in the pipeline.
However, it is easier said than done in real life, just recently a stablecoin known as Basis was closed just after eight months. When its well-known backers like Andreessen Horowitz and Kevin Warsh, a former governor of the U.S. Federal Reserve backed out, the collapse was inevitable. The Hoboken, New Jersey-based company attributed this to the assets being classified as security as opposed to currency, leading to a significant reduction in potential buyers.
The most high-profile stablecoin to date, Tether, which is also often surrounded by controversies. While the company boasts that one Tether is backed by one U.S. dollar, their refusal to be audited raises a number of questions about its credibility.
Naturally, a company like Facebook, which 2.5 billion global users, more than $40 billion in annual revenue needs to study the concept in depth, and hence the delay. The company’s relationship with India hasn’t been that smooth majorly due to some instances of fake news being spread via Whatsapp, that has led to violence in the country. However, with around 480 million internet users, second only to China, and when the number is expected to grow to 737 million by 2022, according to Forrester Research Inc., the country is one of the best playground for Facebook.
Read more: Indian Government’s Crypto Panel Submits Draft For Cryptocurrencies Regulations
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