Facebook is venturing into the cryptocurrency space for the second time and at least one major Wall
Street firm sees substantial upside if the company is able to monetize a cryptocurrency via the social
media giant. Facebook has been developing a cryptocurrency that could be part of a multibillion-dollar
revenue opportunity, according to the financial giant Barclays.
Huge Revenue Opportunity
While is is not clear exactly how Facebook will monetize a FaceCoin, Barclays is forecasting an additional
$19-billion in revenues by 2021. The cryptocurrency is being developed on a blockchain platform that
will be used for global payments. The company reportedly is planning to use its WhatsApp platform to
allow users to send payments instantaneously using the Messenger app. Facebook has not publicly
commented on the reports. One of the big differences between the FaceCoin and other
cryptocurrencies is that the digital Facebook currency would be a stable coin, tied to the value of fiat
currency such as the dollar. This would weed out speculators as there would not be the likelihood of the
price diverting from a fixed level.
Facebook is looking to monetize some of its assets, as target marketing to users on its platform has
come under fire. Expanding into payments could give Facebook another way to generate revenue.
Barclays bases its Facebook revenue estimates off of Google’s digital distribution service, which is also
the official app store for Android’s operating system. Google Play, generates $6 in revenue per user
now. A Facebook virtual currency would allow for more premium content to find its way back to
Facebook, according to Barclays, as companies re-establish themselves on the social network as a
Issues With Payments in the Past
Facebook attempted a digital coin in 2010 that failed. Facebook credits were developed to be similar to a cryptocurrency. Users would prepay for these virtual coins using fiat currencies, and then use those
credits for purchases of apps. The company required a user to pay using a debit or credit card upfront.
The issue was that Facebook had to incur the changing fee from fiat currency to a cryptocurrency which
negatively impacted the value of the coins and the company’s ability to generate a profit. In the last
decade, the company has become much larger and has many apps and additional social media
platforms, which would provide a better chance of success.
According to Barclays, the size and scale of the FaceCoin project are much bigger than most expect. The
leader of Facebook’s blockchain and cryptocurrency efforts is former PayPal President David Marcus.
Facebook has been steadily building out its blockchain team.
There are still many challenges. Facebook has to relay to users the value of its cryptocurrency. Users will
need to see the benefit of using Facebook related to other payment methods that are established and
currently available. If the coin is successful, Facebook will likely be able to execute according to Barclays.