Ross Sandler, the internet analyst at Barclays, predicts in a client note that if the rumoured plans of Facebook launching its very own cryptocurrency are true, then the social media giant could potentially generate additional revenue worth of $19 billion by 2021.
Amidst a series of high-profile scandals last year, Facebook has had lost a significant amount of its share price, as per Sandler, the same could be recovered by the aid of cryptocurrency and blockchain technology. According to a CNBC report on March 11 that features Sandler’s prediction, the crypto-based revenue option is something “sorely needed at this stage of the company’s narrative,”
Sandler stressed that any advertising-free revenue streams are likely to be well-perceived by Facebook’s shareholders. Putting a number to his assumptions, Sandler states a conservative revenue estimate for the new coin as $3 billion.
The Facebook Coin
The analyst further cited Facebook’s original payment project which happened to be quite similar to what cryptocurrencies are today. Dubbed as “Facebook credits”, the said project was developed by California-based firm The Menlo Park in 2010. It was a virtual currency that could be pre-bought by domestic currencies and could be later used for in-app-purchases.
Sandler sharply notes that Facebook will have to bear the exchange cost between fiat and their possible new cryptocurrency, making a sharp dent in their profit margins from the said business. He further cited the analysis from Barclays, that the initial versions of “Facebook Coin”m in most probability will be a single purpose coin to be used for micro-payments and domestic peer-to-peer (p2p) money transfer. Notably, bearing a strong resemblance “to the original credits from 2010.”
As per Sandler, the scope of the current project would be larger than previous ambitions of Facebook. To bring his point home, he pointed out the employment of David Marcus, former president of payment operator PayPal, as the leader of Facebook’s blockchain and crypto team. In addition to Marcus, Facebook’s recent hiring spree also included a number of employees from blockchain startup Chainspace.
Following a Bloomberg that Facebook is developing a cryptocurrency for Whatsapp transfers, that will purportedly target Indian markets, the New York Times (NYT) published another that alleges that Facebook “hoping to succeed where Bitcoin failed” with its highly secretive crypto project. As per NYT, the stablecoin is being developed by around 50 employees and would incorporate the platforms’ three fully-owned apps — WhatsApp, Facebook Messenger, and Instagram.