According to a recent report published by The New York Times, Facebook is planning to launch a cryptocurrency for its WhatsApp userbase. By doing so, the movement of money within a country and across the globe can be made easier for the general public. Besides Facebook, messaging giants Telegram and Signal are also reportedly targeting to launch their own cryptos. For banks, this news comes off as a huge “RED ALERT” and here’s everything you need to know how this will change the entire crypto image.
Straight off the bat, this move taken by Facebook targets the remittance industry. In the current frameworks provided by outlets like Western Union, the cost associated with sending money across borders is too slow and too expensive. Sending money across the globe even takes days through these traditional frameworks. If a global framework is provided by WhatsApp which is powered by cryptos, the entire remittance framework of the world can be changed. So, for the remittance industry, of which banks are an integral part, Facebook’s coin is a huge red alert.
When it comes to the banks, we recently saw the Venezuela fiasco took place as the Bank of England refused to give back the gold held by it in its custody, owned by Venezuela. If it was cryptos, things would not have been this difficult for Venezuela owing to the aspect of decentralization, with no single party being in control as seen in the case of banks, and they are much easy to liquidate.
Cryptos have emerged poised against the traditional financial system of the world that has been put in place by the banks. The economic recession of 2008 created the ripple that resulted in the tide of cryptos. But since their eruption, the connotation attached with bitcoin, the world’s leading cryptocurrency, and other coins has largely been negative in the media and in the eyes of the general public. The bad image that is associated with cryptos is due to the illegal activities linked with them such as money laundering, usage by criminals, and usage in the dark web (an online marketplace for illegal activities like drug selling and buying, child pornography and much more dangerous things).
With Facebook’s crypto coin, the possibilities offered by cryptos apart from their negative usage will be put out in the open in front of everyone. The public which has not been able to get in touch with cryptos will get its first taste of the crypto world. Faster global transactions at much lower costs and ease of use in terms of money handling will help masses get aware of the ease offered by cryptos. With this, the shortcomings associated with the banking system, through which global transactions often take days to complete along with heavy transaction fees, will be exposed. People will get more aware of the overheads involved with banking in the form of taxes unnecessary heavy transaction fees. As promoted by the well-renowned crypto expert Anthony Pompliano, the movement “Long Bitcoin, Short the Bankers” will get stronger.
Estonia just ordered the Danske Bank branch to close that was involved in one of the largest money laundering schemes in history.
The majority of criminals aren’t using Bitcoin to launder money, they’re using US dollars.
Long Bitcoin, Short the Bankers!
— Pomp 🌪 (@APompliano) February 19, 2019
But the coin being launched by WhatsApp will also have to deal with its regulatory framework. If exchanges are going to handle the transactions of WhatsApp coin and there is no filter put in place by the parent company, criminals will likely find their way to use this currency in order to perform illegal activities. Solving this puzzle will be a challenge for Facebook.
Overall, the wave of trust which has largely been on the banking side will shift towards cryptos after mainstream exposure of their capabilities. Seeing cryptos in the action will trigger more of its adoption and as a result, even more capital will be flowing into this space than ever before. The technology of blockchain which has been underlying the world bitcoin and cryptos will also get even more highlighted. This is also the exact technology lying behind the idea of decentralization, removing the control of a central controlling party from any framework. The wave of decentralization will get more intense as a by-product. Facebook, in this regard, is already looking into exploring the blockchain tech for improving its login mechanism through Facebook connect. The idea is to handle the privacy concerns linked to Facebook’s data handling.
As of now, the idea of Facebook’s coin is being kept limited to the WhatsApp user base only. But if Facebook, which is an advertisement-based platform, decides to incorporate a crypto framework in its economic model as well, things could change drastically for the content creators on the platform. Just like Brave, which uses the Basic Attention Token (BAT) for its economic workflow, if a crypto framework is established for the users, publishers, and advertisers, overheads costs caused by middlemen ad-exchanges can be taken out of the picture completely improving the experience of the platform for everyone. For now, we’ll have to wait and see if Facebook ever decides to do so.
Social media giant Facebook, which had 2.27 billion monthly active users in the third-quarter of 2018, adopting cryptos will be counted as one of the major milestones in the digital currency arena. If Facebook coin launches anytime soon providing efficient worldwide financial services, banks need to be afraid. Very afraid. A strong crypto wave is already on its way!