Will the Facebook-WhatsApp cryptocurrency strengthen bitcoin?

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Crypto 2.0 seems imminent, under the impulse of digital badets controlled by the company, such as a Facebook cryptocurrency. The cryptocurrency sector could benefit if such companies force more people to adopt crypto. But if the social media giant treated customers of financial payments with the same disregard for the privacy it displayed vis-à-vis its users, it would also argue in favor of decentralized competitors such as Bitcoin.

Nevertheless, such companies could well disrupt sectors ranging from entertainment to financial services. Facebook, for example, will offer payments in India, incorporating a cryptocurrency stablecoin to its WhatsApp mobile messaging service, according to Bloomberg. The company's WhatsApp mobile messaging service has 200 million users in India, a country that has received 69 billion dollars in remittances abroad in 2017, more than in any other country.

India and the developing world

As observed in Who Needs Cryptocurrency ?, people in developing countries have the greatest incentive to use cryptocurrency for business because they lack reliable banking systems. With 2.27 billion global usersFacebook may have an important opportunity to deploy a convenient and inexpensive remittance model in developing countries. Global average cost Shipments of $ 200 rose to 7.1% in the first quarter of 2018, more than double the 3% target set for the Sustainable Development Goal. While this can reduce costs and increase convenience, the company can scale up while improving Facebook's image.

Will the developing world trust Facebook?

But can Facebook gain confidence as a result of its mbadive data sharing scandal involving Cambridge Analytica and a host of other Internet companies? According to Richard Raizes, CIO and general partner of Plutus21, a Dallas-based investment firm focused on alternative badets, including cryptocurrency.

"Facebook ranks poorly among users in terms of confidentiality and data trust. But most users do not know that Facebook has WhatsApp, which is a trusted messenger for over a billion users. "

Skepticism towards the centralized cryptocurrency

Still, Raizes wants to know more about Facebook's plan.

"A decentralized cryptocurrency could be extremely innovative," he says. "On the other hand, a centralized model can put competitive pressure on Western Union, but it is not a truly disruptive technology."

Castle Island Ventures partner, Nic Carter, offers a sharper view. He expects Facebook to publish a centralized cryptocurrency, which he says will grow in popularity due to its convenience to WhatsApp's mbad market. But he does not think that such a business-controlled model can compete with decentralized tokens, designed to prevent intrusions into privacy and breaches of trust that Facebook has come to embody.

"FBcoin would further consolidate Facebook's control over its users," says Carter, "thus moving from the data domain to the financial realm, even if a little excitement for cryptocurrency can be diverted to cryptocurrency (supposedly centralized ) of Facebook, the value proposition for free, uncensored money, minimized by trust, will remain the same and will even be increased. "

Follow-up of the adoption of crypto and investments

But tracking the "decentralized and minimized by" trust adoption rate, such as Bitcoin, has become elusive. A study Cambridge Center for Alternative Finance concludes that more than 35 million people own digital badets primarily as an investment and not as a means of transaction. And no publicly available metric tracks the adoption rate of cryptocurrency, that is, the proportion of crypto owners who actually use cryptocurrency to engage in commerce.

This may help explain why investment problems such as the crackdown and mishaps of SEC regulation have deeply shaken the cryptocurrency markets, impacting tokens that are not currently subject to SEC rules, such as Bitcoin. Given the scarcity of practical applications, the lack of data on adoption and the popularity of cryptocurrency as a means of capital appreciation, investment factors appear to be more prevalent. influenced the cryptocurrency markets as the fundamentals.

Decentralized cryptographic technology could also mature

But just as Facebook seems to be developing a centrally controlled cryptocurrency, technology for decentralized cryptocurrencies can also mature. The planned launch of Bakkt this year, for example, is designed to stimulate a wave of applications facilitating the use of Bitcoin. In addition, RSK has developed an open source platform for Bitcoin to enable intelligent contracts, near instantaneous payments and increased scalability. Such innovations could favor the adoption of Bitcoin, supporting its prices based more on fundamentals than on the attractiveness of investments.

If FBCoin fails to protect customers, Bitcoin can benefit

If FBCoin fails to protect the fundamental rights of users, then, as Carter predicts, the case for immutable and decentralized cryptocurrency will become stronger than ever.

Brian Sewell is the founder of Zion Trades, www.ziontrades.com, a customer-centric cryptocurrency trading platform. Sign up for Newsletters.

This material is provided for general educational purposes only and does not constitute investment advice, legal, tax or professional advice, or an offer to buy or sell any badets. The opinions provided in this document are solely the personal opinions of the author and should not be taken into account in making decisions regarding cryptocurrencies. This material may be inaccurate and it is not necessary for the author to update this content or correct it at any time.

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