Why Facebook Wants To Launch Its Own Currency

Opportunity from ecommerce and payments is huge

If any company can take a cryptocurrency mainstream, it is Facebook.

More than two billion people log into its family of apps and increasingly they want to buy things and send each other money.

Facebook’s answer, according to several people familiar with its secretive “Libra” project, will be to try to launch a “stable coin”, a digital currency pegged to the dollar.

If successful, the Facebook coin could not only allow payments and transfers within the Facebook empire but could also be stored on digital wallets and spent in shops or exchanged into traditional currencies.

“Facebook has all the prospects to propel crypto into everyday lives…in the next three to five years,” said one well-known payments veteran, who spoke on the condition of anonymity.

But “there are headaches to be worked out,” the executive added, questioning how small businesses that end up with a stockpile of the currency would be able to account for it on their books, for example.

Facebook declined to comment.

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How the digital currency would be backed is as yet unclear, as stable-coins can normally be purchased and redeemed for dollars at a fixed 1:1 ratio. It is also not clear how the coin will be issued, stored or transferred, and what role blockchain technology will play.

Many interpret the move as a bid to follow in the footsteps of so-called “super apps” such as China’s WeChat, that allows users to send money, shop, order taxis and play games without ever having to leave the one platform.

According to an earlier report by the Wall Street Journal, Facebook may encourage transactions by rewarding its users with the currency if they view ads on the platform, in a similar way to the collection of loyalty points.