Always one for the headlines, Facebook has acquired cryptocurrency startup
What is a stablecoin, you ask? Great question. In the wake of the cryptocurrency frenzy that has gripped investors of varying wallet sizes in recent years, stablecoin offers a fresh take: a cryptocurrency pegged to a global currency to ensure steady value, like the US dollar. There have been few acquisitions of blockchain firms of a similar nature by major tech players, suggesting this may just be the first deal of its kind.
For all intents and purposes, this is a so-called “acqui-hire”, or talent acquisition. Indeed, the founding researchers of Chainspace will be absorbed by Facebook’s blockchain group to work on their expansionary project. Chainspace appears to have focused on developing sharding technology, a potential method of allowing blockchains to accommodate a large number of transactions in order to facilitate decentralisation. Indeed, nothing would need to scale as fast, or as far, as a Facebook Coin. So what, then, would such a currency look like?
3% off with FaceCoin
Facebook stands to build a cryptocurrency wallet with a unique token that consumers could use in transactions with partnered businesses, including those discovered through Facebook ads. Thanks to blockchain allowing for relatively cheap, or even free, transactions, Facebook and its partners will be able to avoid the usual credit card processing fees. If this were passed on to consumers, potential users of FaceCoin might be reeled in with a “3% off purchases made with FaceCoin” or a similar promotion.
P2P and micropayments
Friends are already able to send and receive money via Facebook Messenger, but only with a connected debit card of PayPal account. By offering cryptocurrency-based payments between friends, Facebook will be able to allow a wider range of users settle debts for shared dinners, taxis, and other expenditures via Messenger. In practice, users might top up their Facebook Crypto wallet with a one-off payment, possibly attracting a one-time transaction fee, from which point they could send and receive tokens for free. If blockchain became the backbone of peer-to-peer payments, this would surely only increase engagement with Messenger for the app’s whopping 1.3 billion users.
A major issue for blockchain apps is the ability for users to bring their identity with them, whereby securely connecting the strings between your wallet, biographical information and online goods and services is nothing short of a laborious process. Facebook is in a unique position, where it could use its expertise in hosting a widely used identity platform to ease access to such services. Yes, using an overtly centralized identity system to connect with decentralized apps may seem counterintuitive, but Facebook could deliver the convenient user experience necessary to unlock the next chapter of blockchain utility.
As such, the Chainspace deal is game changing news for the future of blockchain and cryptocurrency as a commercial tool, with an acquisition by a major player such as Facebook sure to set off a spiral of similar investments, with venture capital opening up to future acquisitions and competitors hunting for similar targets. Still, for those holding on to the ideals of decentralisation, mass empowerment and privacy- ideals that drove the creation of cryptocurrency in the first place- this latest marriage in the tech world might not be welcome news.
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