As cryptocurrencies completed a decade this October, most major tech firms continue to maintain a safe distance from them. While blockchain has been widely accepted as the future of technology by many in tech, cryptocurrencies are still looked at with some scepticism owing to their unpredictable nature and possibility for manipulations. Facebook, however, seems to have a different opinion. The social media giant is reportedly working on developing a stablecoin cryptocurrency which would help WhatsApp users transfer funds with ease.
Reports from Bloomberg point out that Facebook is developing this stablecoin which would help the users transfer funds over WhatsApp. The first country which is likely to get this feature is expected to be India. While the plans are being set, the company is still far from actually releasing this technology. A stablecoin is a cryptocurrency which is pegged to a stable asset - such as the US dollar, ensuring that the price of stablecoin remains stable. Facebook is still working on the strategy for developing this - including setting up of custody assets where the pegged asset (mostly likely a currency) will be stored.
In 2018, Facebook seemed to develop quite a strong interest in blockchain and cryptocurrency technology. The company reassigned David Marcus to head this newly created blockchain division. Marcus, a former PayPal President, was hired by Facebook as their VP of Messenger, who had been handling the division since 2014. Marcus was also a member on the board of Coinbase, but he has since stepped down from the position. Facebook has close to 40 people working in their blockchain division at their moment.
Following the creation of this blockchain division by Facebook, several speculation have emerged, including those on a potential acquisition of Coinbase as well as a plan to launch their own cryptocurrency. While the former has since been dismissed, it now appears that Facebook is indeed working towards creating this stablecoin for WhatsApp payments.
This is not even the first time Facebook is experimenting with virtual currencies, or with payments on WhatsApp. Facebook first experimented with virtual currencies called ‘Facebook Credits’ where users could buy virtual coins to purchase gifts or in-game elements. However, this feature didn’t work out in the long run and the company pulled it down in 2011. Earlier this year, the company had introduced UPI-based payments on WhatsApp for the users in India. UPI, which stands for Unified Payments Interface, is an Indian platform which allows easy transfer of money using just a virtual private address.
Now, Facebook plans to merge the two ideas together - with the help of stablecoins. Stablecoins have been booming of late, as the cryptocurrency markets get unstable and unpredictable, people prefer investing in stablecoins because that ensures that their holdings (in USD) remain safe. A number of stablecoin projects started off this year, with big names such as Circle and Gemini and Coinbase becoming a part of this.
India seems to be the perfect market to start off with, as the country has over 200 Million users of WhatsApp. India also leads the charts when it comes to international remittance transfer - as World Bank statistics point out that India sent over $69 Billion home in 2017. However, the challenge for Facebook, if the company puts this plan in action, would be that of regulations in India - as the country has been rather hostile towards cryptocurrencies in the recent past.
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