Why Facebook is developing a cryptocurrency for WhatsApp users
The social media company has long been expected to make a move into blockchain.
- Facebook is reportedly developing a stablecoin for WhatsApp users in India.
- A stablecoin is a class of cryptocurrency that's pegged to a stable asset like fiat currency or gold.
- India currently has more than 200 million WhatsApp users, and it sees more than $60 billion in global remittances every year.
Facebook is reportedly developing a cryptocurrency that would facilitate financial transactions on its WhatsApp messaging service, according to a new report from Bloomberg.
The social media platform has long eyed a move into blockchain. Facebook CEO Mark Zuckerberg wrote in his New Year goals for 2017 that he planned to study encryption and blockchain to "see how best to use them in our services." In May, Facebook appointed David Marcus, the former president of PayPal, to head the company's blockchain initiatives division, which currently employees about 40 people.
"Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology," a company spokesman said in a statement. "This new small team is exploring many different applications. We don't have anything further to share."
The company will reportedly first focus on India's massive remittances market, estimated to be worth more than $60 billion. In early 2018, WhatsApp rolled out a beta version of its Payments system that enabled users in India to make peer-to-peer transactions, however the government put that program on hold, partly due to regulatory concerns stemming from Facebook's Cambridge Analytica scandal.
It's possible that WhatsApp could expand its Payments service to include the ability for users to make transactions with businesses, which might pay the company a fee to reach consumers.
The main benefit of stablecoins is—you guessed it—stability. Unlike cryptocurrencies such as Bitcoin and Ethereum, whose values can fluctuate by more than 10 percent in a single day, the value of stablecoins is unlikely to see wild swings, making it a much more practical choice for use in daily transactions.
Currently, the biggest stablecoin cryptocurrency is Tether, which has a market cap of about $2 billion. Tether is pegged to the U.S. dollar and it's designed to always have a value of $1, though it's swung to $.80 and $1.10 in the past.
Despite its popularity and seemingly sound technology, critics have suspected that the project's founders don't actually have the cash to back up its supposedly dollar-backed cryptocurrency. A recent Bloomberg report suggested Tether actually does have the cash.
In any case, a stablecoin makes it easier for WhatsApp users around the world to send remittances to India, where more than 200 million people already use the messaging app. What remains unclear is whether those users will be willing to use a cryptocurrency financial service under the umbrella of Facebook, which continues to be hit by privacy-related scandals.
- Facebook's blockchain unit building WhatsApp cryptocurrency: report ›
- Facebook Reportedly Busy Making Stablecoin for WhatsApp ... ›
- Facebook Is Said to Develop Stablecoin for WhatsApp Transfers ... ›
Jonathan Zimmerman explains why teachers should invite, not censor, tough classroom debates.
- During times of war or national crisis in the U.S., school boards and officials are much more wary about allowing teachers and kids to say what they think.
- If our teachers avoid controversial questions in the classroom, kids won't get the experience they need to know how to engage with difficult questions and with criticism.
- Jonathan Zimmerman argues that controversial issues should be taught in schools as they naturally arise. Otherwise kids will learn from TV news what politics looks like – which is more often a rant than a healthy debate.
Controversial map names CEOs of 100 companies producing 71 percent of the world's greenhouse gas emissions.
- Just 100 companies produce 71 percent of the world's greenhouse gases.
- This map lists their names and locations, and their CEOs.
- The climate crisis may be too complex for these 100 people to solve, but naming and shaming them is a good start.
It marks another milestone in SpaceX's long-standing effort to make spaceflight cheaper.
- SpaceX launched Falcon Heavy into space early Tuesday morning.
- A part of its nosecone – known as a fairing – descended back to Earth using special parachutes.
- A net-outfitted boat in the Atlantic Ocean successfully caught the reusable fairing, likely saving the company millions of dollars.
SMARTER FASTER trademarks owned by The Big Think, Inc. All rights reserved.