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Facebook and Telegram hope to succeed where Bitcoin has failed



SAN FRANCISCO – Some of the world's largest Internet messaging companies are hoping to succeed where cryptocurrency start-ups have failed by bringing mainstream consumers into the alternative world of digital parts.

Internet groups, including Facebook, Telegram and Signal, plan to roll out new crypto-currencies over the next year to allow users to send money to contacts on their mobile phone systems. messaging, like Venmo or PayPal, that can cross international borders.

The most anticipated but secret project is ongoing on Facebook. The company is currently working on a piece that WhatsApp users, which Facebook is the owner, could instantly send to their friends and family, said five people informed of the initiative who had requested anonymity because of 39, confidentiality agreements.

The Facebook project is advanced enough that the social media giant has had discussions with crypto-currency exchanges on the sale of the Facebook coin to consumers, said four people informed of the negotiations.

Telegram, which has about 300 million users worldwide, is also working on a digital coin. Signal, an encrypted email service popular with technologists and privacy advocates, has its own piece at stake. And so make the biggest messaging apps in Korea and Japan, Kakao and Line.

Courier companies have a reach that far exceeds the authors of previous crypto-currencies. Facebook and Telegram can put digital wallets used for cryptocurrencies at the reach of hundreds of millions of users in an instant.

All new projects are targeting a market that has already proven itself to consumers. Venmo took off in the United States by facilitating the sending of payments over the phone. And in China, many consumers are using the payment system that runs in the popular WeChat messaging system.

"That's about all the best crypto stuff right now," said Eric Meltzer, co-founder of Primitive Ventures, a cryptocurrency-focused venture capital firm. "They each have their advantage in this battle and it will be foolish to watch it fall."

Companies have all refused to comment on their plans for coins. Most of them seem to work on digital parts that can exist on a decentralized computer network, independent to some extent of the companies that created them.

Like Bitcoin, the new cryptocurrencies would facilitate the transfer of money between countries, especially in developing countries, where it is difficult for ordinary citizens to open bank accounts and to buy items online. The current designs that are being discussed typically eliminate the highly energy-intensive mining process that Bitcoin relies on.

But courier companies are likely to face many regulatory and technological hurdles that have prevented Bitcoin from becoming mainstream. The absence of central authority over crypto-currencies – a government or a bank – has made them useful for criminals and fraudsters, and the design of the computer networks that manage them makes it difficult to manage money. a large number of transactions.

"They will all come up against these same kinds of technological limitations," said Richard Ma, managing director of Quantstamp, a company that conducts security audits for new cryptocurrencies.

Companies are devoting significant resources to their projects, even as cryptocurrency prices have fallen over the last year.

Facebook has more than 50 engineers working on his project, said three people familiar with this effort. An industry website, The Block, was created follow-up of the constant flow of new job offers for the Facebook project.

The Facebook effort, led by PayPal's former president, David Marcus, began last year after Telegram raised $ 1.7 billion to fund its cryptocurrency project.

Facebook has been shy about what it builds. The team sits in an office with separate access by key card, thus preventing other Facebook employees from entering, according to two Facebook employees.

Facebook is investigating different ways to use blockchain technology introduced by Bitcoin, which allows you to keep shared records of financial transactions across multiple computers, rather than relying on a single central player like PayPal or Visa.

The five people who were informed of the work of the Facebook team said that the most immediate product of the company would probably be a coin that would be linked to the value of traditional currencies. Bloomberg first reported.

A digital token with a stable value would not be attractive to speculators – the main audience of crypto-currencies up to now – but would allow consumers to keep it and pay for things without worrying about the value of the change.

Several other companies have recently introduced "stablecoins" linked to the value of the dollar. JPMorgan Chase even stated that he was experimenting with the concept last month.

Facebook is considering linking the value of its coin to a basket of different foreign currencies, rather than just the dollar, said three people informed of these projects. Facebook could guarantee the value of the coin by saving each coin with a fixed number of dollars, euros and other national currencies in its bank accounts.

The company is in the process of overhauling its messaging infrastructure, which would connect three of its properties – Messenger, WhatsApp and Instagram. This integration, which could take more than a year, would extend the reach of Facebook's digital currency to 2.7 billion people using one of three apps each month.

The big question for Facebook is what control it would keep on the digital part. If Facebook is responsible for approving each transaction and tracking each user, it is difficult to understand why it would need a blockchain system rather than a traditional centralized system such as PayPal.

Working with cryptocurrency trading would ease at least some of Facebook's regulatory burden, as the exchanges would be responsible for holding the digital coins and checking the customers.

But if Facebook uses a coin that it does not fully control, it would be harder for the company to earn money with transaction fees and it would be easier for criminals to use the piece for illegal purposes.

Facebook employees told the exchanges that they were hoping to get a product during the first half of the year.

Parts from other courier companies will probably look more like traditional crypto-currencies, with fluctuating values ​​and a decentralized design that gives users more control.

Telegram, which was launched by a team of Russian exiles, prides itself on mocking governments. This could help Telegram in countries like Iran and Russia, where citizens – especially dissidents – have difficulty using the traditional financial system.

Last month, Telegram sent a letter to its investors in which it was informed that 90% of the key components of the network hosting the Gram name would be used.

The company told investors that it was hoping to have a version of the system in the coming months, according to two investors who requested anonymity due to confidentiality agreements.

The Signal-based messaging application, which is run by a foundation, has the smallest project, Mobilecoin. He raised $ 30 million last year and is currently trying to raise an additional $ 30 million, according to three people informed of the effort.

While Signal's founder, Moxie Marlinspike, is advising this initiative, it is taking place independently of Signal. The project is a favorite of many longtime cryptocurrency advocates due to strict privacy controls.

But Mobilecoin, like other projects in progress, will still have to solve the problems that have prevented all other crypto-currencies from meeting expectations.

"The jury is still" about their effectiveness, said Mr. Ma, of Quantstamp.


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