Facebook is edging closer to starting its own cryptocurrency, with an aim to launch as soon as next year, a report has claimed.
But how has the social media giant dealt with cryptocurrency until now?
In January 2018, Facebook announced a blanket ban on all ads related to bitcoin. It was a strong stance against the unregulated, so-called wild-west world of cryptocurrency, and some feared it was an attempt to silence the nascent space. But secretly, the social network was actually planning its own version of the virtual currency.
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Less than a year after the ban was lifted, details about what this cryptocurrency might look like have emerged. GlobalCoin, as it is reportedly called, may be about to upend the entire payments industry.
The social network, which is used by more than two billion people around the world, has sought advice from the Bank of England and US Treasury about how the virtual currency could integrate with existing payment systems.
Facebook CEO Mark Zuckerberg has even consulted old rivals Cameron and Tyler Winklevoss, 15 years after the twins sued him for allegedly stealing the idea for the social network.
Facebook declined to comment on the latest revelations about GlobalCoin, which come from a BBC report, though it has previously said it is interested in the underlying technology of bitcoin and other cryptocurrencies.
“Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology,” the firm told The Independent in December. “This new small team is exploring different applications.”
It remains unclear whether Facebook’s cryptocurrency will be decentralised like bitcoin. Industry experts have questioned whether the social network would launch a digital currency that was out of its control, despite advocates considering decentralisation a key tenet of cryptocurrency.
“Mark Zuckerberg doesn’t have an idea how to implement it where Facebook doesn’t own it,” Phil Chen, who masterminded the HTC Exodus blockchain smartphone, said in March.
“Cryptocurrencies are open, decentralised, censorship resistant and borderless – this is completely antithetical to the current business model of big technology companies, whose walled gardens mean they essentially own their customers.”
Facebook is also currently planning a merger of its other social media platforms, which include Instagram and WhatsApp, meaning GlobalCoin could be transferred between a variety of apps. Both the merger and the cryptocurrency launch are expected to take place at some point in 2020.
Rival messaging apps are also working on their own cryptocurrencies, with Telegram expected to launch its so-called GRAM cryptocurrency later this year.
Competing with China
One explanation to why Facebook feels the need to have its own currency lies in a country where Facebook and its various apps aren’t even allowed: China.
In order to compete on a global scale with the social networks and messaging apps spreading out of China, its own form of currency could give Facebook the upper hand.
Corporate lawyer and fintech expert Tim Bird, who has worked closely with Facebook in the past, said he believed GlobalCoin would give Facebook a new hold over advertising revenues thanks to the massive amounts of data it could generate.
“Ever since I spent a day working in Facebook HQ in Menlo Park, California, three years ago, it has been evident that they feel the need to challenge China,” Bird told The Independent.
“To do this, Facebook needs a currency or payment platform of its own.”
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