Facebook cryptocurrency could work as loyalty points

If the pivot of Facebook From the town square to the private lounge was not enough ironic, it's a new twist: the big companies, it seems, were invited to join us by the fireside.

Thursday, The Wall Street Journal reported new potential details regarding Facebook's long-awaited plans for cryptocurrency. The company would seek dozens of business partners, including online merchants and financial companies, with the goal of expanding the reach of its blockchain-based market. Potential partners of Facebook are invited to participate in an investment fund, valued at $ 1 billion or more, which would serve as a support for the Facebook piece and mitigate the speculative fluctuations that make crypto-currencies such as Bitcoin difficult to use. The land, according to the Newspaper, implies to offer merchants fees lower than those of credit cards.

Some were fast To note this would reduce Facebook's ability to make short-term money payments. But it may not matter much if, in the end, Facebook's cryptography effort really consists of making you spend more time on Facebook.

Facebook seems to be building plumbing to make its market a reality. At the F8 developer conference this week, the word "blockchain" was missing. Even though Zuckerberg pointed to the company's plan to rearrange your Facebook experience around intimate relationships, his update included many ways that money would be involved. "I think it should be as easy to send money to someone as to send a photo," he said, referring to "payments." simple and secure "at the heart of his vision of privacy. This apparently goes beyond the peer-to-peer payments available on Venmo and Facebook's own Messenger application. In a series of keynote speeches, Facebook executives showcased a host of business-driven enhancements: improved control of Instagram's digital shopping mall, donation stickers, and new tool for small business owners to list items on WhatsApp.

Indeed, WhatsApp seems to be at the center of Facebook's marketing efforts, at least to begin with. At the F8, Facebook said that WhatsApp Pay, currently on trial in India, was going to expand to other unnamed countries later this year. The platform is not chain-based (for the moment) and is designed for peer-to-peer payments. But with 80% of small businesses in India using WhatsApp to market their products, a form of payment processing is a natural evolution. In December, Bloomberg reported that the first tests of the encrypted coin could take place in India, initially to allow workers to send money home from abroad.

An extra touch of the NewspaperThe report points to the possibility that the coin is part of the lucrative ecosystem of Facebook ads. The system, which would still be under discussion within Facebook, could potentially run on both sides of the equation of ads: merchants could use coins to pay for ads and users would be rewarded in coins for being viewed or interact with them. This reflects a growing perception – seen recently in efforts like the Brave browser, which compensates users through tokens for clicking on ads – that people should be paid to grab their attention, not just to help the giants of the internet to make money. For Facebook, it also presents a vision of how its ads and eye-based activities could continue in the supposed era of protecting the company's privacy. The idea is to keep Facebook's parts – and therefore users – tightly entangled in the platform.

"I do not believe that they are doing anything that does not help to increase interactions on their platforms," ​​said Joshua Gans, a professor at the University of Toronto. Sending money to businesses is a challenge, he notes. Compared to their friends and family, businesses are more likely to drop their Facebook coins at the end of the month in favor of real money. Gans is skeptical that Facebook would pay users for viewing advertisements – an extremely complex system to create – unless it involves something like a discount for the purchase of a product via a Facebook ad . On the merchant side, encouraging businesses to pay for advertisements and services on Facebook with the coin could be a way to stop the flow of money out of the system.

As the Newspaper As a reminder, Facebook's incursion into the blockchain could look a little like a loyalty point system: chips that can be earned and spent via Facebook services, or withdrawn elsewhere from partner merchants. This is not unprecedented among technology companies: Uber, for example, has Uber Cash, which rewards users for purchases made in and out of Uber with application-specific money. Gans' offerings, such as the Apple Card, have a similar goal: it's a service that, despite rumors of the credit card industry upheaval, is essentially a clever and cumbersome way to buy more apps and more. of Apple products.

A Facebook spokesperson repeated a previous comment: "Like many other businesses, Facebook is exploring ways to leverage the power of blockchain technology. This new small team is exploring many different applications. "

Facebook still faces many challenges, ranging from determining how it will oversee the system to users' privacy concerns and figuring out how to put money into its motto – process which, for other crypto – currencies, is generally managed by exchanges. It must also deal with the realities of the global economic system, which operates in both euros, yen and dollars. Even if it supports the currency with a basket of currencies, as indicated, it can not be stable with all the currencies of the world, "says Gans. "It's not the way the world works." Hence the need to use financial partners to facilitate transactions in and out of the Facebook system.

At the end of the day: It is unclear how this will work in practice. "There are a lot of moving parts. Facebook does not always do what we expect, "says Gans.

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