The persistent belief is that the coin will work as a global payment initiative that will be backed by the U.S. dollar and will be tied to their popular WhatsApp messenger.
As a result, financial veterans are perceiving the news as a constructive development that could cushion the company's share price that slinked on a flurry of high-profile scandals during the past couple of months. Moreover, when he isn't writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.
The company's option to create a stablecoin can be used to solve one of the major problems in the crypto market: it would not be so volatile as Bitcoin is. The credits are also similar to virtual currencies, and before its use, customers will have to buy them using their debit or credit card. Mark Zuckerberg's company saw British political consulting firm Cambridge Analytica collect the data of over 50 million of its users without their permission, unleashing a chain of events that ultimately saw Facebook (NASDAQ: FB) drop on stock exchanges.
"Any attempt to build out revenue streams outside of advertising, especially those that don't abuse user privacy are likely to be well-received by Facebook's shareholders", Barclays' note stated. Sandler also believes that Facebook's share prices will also take a turn for good with within this timeline.
As such, Sandler notes that a cryptocurrency-based revenue stream is, therefore, "sorely needed at this stage of the company's narrative" as it struggles to ease its woes.
However, the analysis hinges on whether "Facebook Coin proves successful in reinvigorating FB's micro-payment strategy for digital content distribution", Sandler wrote.
Interestingly enough, this is not Facebook's first foray into digital currency as back in 2010, they unsuccessfully tried to launch Facebook credits, in which users would pay for virtual currency with fiat currency and spend it in-app. Presently, Google Play generates $6 in "net" revenue per user.
You may not know, but Facebook is already interested in entering the payment industry for years now.
According to Sandler, Facebook's original payment plan looked a lot like the cryptocurrency of today. Facebook Credits did not gear itself toward the concept of sharing. Sandler pointed hat the initiative failed mostly because the social media platform had to bear the currency interchange cost. The company brought in David Marcus, a former president of PayPal, to oversee the blockchain and crypto project. For some people, Facebook is becoming synonymous with shady privacy practices that seek to benefit advertisers more than users, something which is damaging Facebook's reputation.
Crypto diehards may not be a fan of the idea as it will not be very decentralized, probably, but innovation will come and we can do nothing but to watch it happen and decide whether or not to participate.