Facebook’s GlobalCoin, New Digital Currency to Launch by 2020
Facebook’s GlobalCoin is expected to launch in early 2020 and began testing by the end of this year.
After hints that Facebook was entering the digital currency world began last December, multiple reports now are confirming that Facebook will in fact launch ‘GlobalCoin,’ its own digital currency by 2020. The currency is expected to be active in about a dozen countries by the first quarter of 2020 and will be used to buy things in the offline world as well as on Facebook platforms which also include Instagram and WhatsApp.
Last December, Bloomberg reported that Facebook was developing a cryptocurrency for WhatsApp. According to Bloomberg, the currency would launch in India and be a “stablecoin” – a digital currency that is pegged to the U.S. dollar to minimize instability.
The move into cryptocurrency doesn’t come as a complete surprise. In 2014, Facebook hired David Marcus, the former head of PayPal and now the head of Facebook’s cryptocurrency team. Bloomberg also reported that as of last December it had found at least 40 people in Facebook’s blockchain division, based on their LinkedIn profiles.
New reports by the BBC and Financial Times (FT) on Thursday and Friday expanded on Bloomberg’s original report, revealing the global ambitions for Facebook’s new digital currency.
Anonymous sources close to the project told FT that Facebook had talked to two of Chicago’s highest-frequency trading firms Jump and DRW about making a market for GlobalCoin and held talks with at least two cryptocurrency exchanges. The exchanges, Gemini and Coinbase, would presumably be places where Facebook’s GlobalCoin could be safely stored or converted into other cryptocurrencies or fiat currencies like the U.S. dollar.
In an interesting twist, Gemini is founded by the Winklevoss twins who sued Facebook and Mark Zuckerberg for stealing their idea of a social network. The twins won a $65 million settlement in cash and Facebook shares.
Global Ambitions for GlobalCoin
According to the BBC’s report, Facebook has also already spoken with Bank of England governor Mark Carney. Zuckerberg and Carney reportedly met last month to discuss the risks involved in launching GlobalCoin. BBC said Facebook had also spoken to the U.S. Treasury about regulatory issues and is in talks with Western Union.
Facebook’s digital currency project is nicknamed Project Libra – noteworthy because FT reported last April Facebook registered a fintech company in Switzerland under the name of Libra.
“There is a huge opening for social media companies to move in and take a big part of the banking business,” David Yermack, professor of finance and business transformation at the New York University Stern School of Business, told FT. “They have an advantage due to their customer bases and the frequency with which people use them. [But] the main challenge is regulation.”
GlobalCoin is Facebook’s second go at a digital currency. Facebook previously launched Facebook Credits, which enabled people to buy goods on apps on Facebook, but if was discontinued after the project failed to catch on.