Facebook is preparing to launch a cryptocurrency, the The New York Times reports. The new cryptocurrency would be integrated with Facebook's WhatsApp messaging platform, allowing ordinary WhatsApp users to send electronic money to friends and family across international borders. the Time says that he spoke to five anonymous sources who were informed about the project.
The most popular crypto-currencies float freely in relation to conventional currencies, leading to high volatility. In contrast, Facebook plans to associate its currency with a basket of national currencies. This approach could give the new WhatsApp piece greater stability without tying it too tightly to the financial system of a specific country.
the Time Note that Facebook is only one of the many courier companies working on cryptocurrencies. Two privacy-focused messaging applications, Telegram and Signal, also operate with their own cryptocurrency. These should be more traditional cryptocurrencies not related to conventional currency.
According to Time, Facebook has made sufficient progress in the project to address cryptocurrency trading over the potential inclusion of the currency. One thing that the Time Accountability, however, is how Facebook will resolve the fundamental tradeoff between decentralization and accessibility that has altered existing cryptocurrencies.
The problem with centralized crypto-currencies
Blockchain networks, such as Bitcoin and Ethereum, have no central authority, which means that users have 100% of the burden of protecting their parts against loss and theft. If the hard drive storing your parts is damaged and you do not have backups, your parts will disappear forever. If a hacker recovers your secret keys, he can steal your coins and you will probably have no recourse.
No Bitcoin company has the ability to cancel fraudulent transactions, restore lost coins, or stop fraudulent service providers. This means that participation in the Bitcoin ecosystem requires a level of sophistication greater than that of the average Facebook or WhatsApp user.
Presumably, Facebook will attempt to address some of these shortcomings by integrating secure payment software into WhatsApp, supporting the value of its cryptocurrency with Facebook's financial resources and by controlling the WhatsApp payment ecosystem for activities fraudulent.
But it will be difficult for Facebook to release itself of any responsibility for the use of cryptocurrency outside of Facebook's control. One of the main strengths of crypto-currencies is that they are open platforms that everyone can build on, without the paperwork that comes with traditional payment platforms.
But government regulators will likely require veterinary Facebook users to send files to law enforcement, cancel fraudulent transactions, and comply with other banking regulations around the world, just like traditional payment network providers. To comply with many of these regulations, Facebook should actively monitor the activities of third-party developers and ask them to comply with many of these same regulations.
But that means that whatever its technological fundamentals, a WhatsAppCoin would look a lot like a classic payment service. For now, we do not see why Facebook is not content to create a closed payment service classic, like PayPal or Venmo, to avoid the complexity and sizing problems related to a blockchain.