Rumors of Facebook’s new coin have yet again resurfaced. This time, the coin is being reported to be launching this month. So, it’s safe to say that it’s no longer a rumor that Facebook may actually be launching the ‘project Libra’ cryptocurrency and which will be available to its users on suite platforms.
Merchants with accounts on the platform could transact in crypto with other customers who have accounts. Online purchases and the purchases for goods and services could be made more efficient and convenient through the Facebook currency.
The social media giant announced plans to give additional details of the cryptocurrency within the month. Although much remains hidden, what is known at the moment is that the cryptocurrency will be a stable coin and its value will be tied to a handful of fiat currencies.
This piece is a collection of official Facebook’s statements and what has been alleged about the project by anonymous voices working on the said project. According to Forbes’ Caitlyn Long, here what Facebook coin will actually mean;
Interests To Crypto Holders
Long predicts that the social media giant will pay interest to the users of its cryptocurrency because assets backing the crypto will generate interest income. If Facebook decides not to share the interest spoils with users, a swarm of critics will be waiting to publicize the amounts of money Facebook has pocketed together with the partners.
Long also added an additional side benefit- the magnitude of the corporate welfare at the heart of the US banking system. There is a 2.35% interest rate that the feds pay member banks for interest on excess reserves. This year, the amount reached over $35 billion, and this amount equals to the amount spent on the food stamps program. It would be a field day for critics if such an amount went into the pockets of Facebook and its partners
Developing Nations
According to Long, another characteristic of the currency is its power in the developing countries, where Facebook intends to develop the cryptocurrency.
Central banks in developing worlds are notorious for their lack of discipline. They tend to be reckless in their attempt to maintain the value of their fiat and can often lose a lot of purchasing power. Venezuela is a classic example of the same. The country is now experiencing hyper-inflation, rumored to be worse than that of Germany after the 1st world war.
Facebook’s global coin fills in the gap and provides third world citizens the access to a store of value, and a more reliable government-backed currency. The global coin would exert fiscal and monetary discipline, a duty that the local central banks failed to deliver. Lives would thereby improve drastically.
The Capital Markets
Facebook may have to hang up political control of its project to an independent foundation. It gives the company defense against antitrust allegations and helps reduce the degree of centralization.
Whichever the case, the project seems to be a win-win for both the consumer, the company, and blockchain adoption.