Facebook Also Announces its Own Cryptocurrency
Facebook also announces its own cryptocurrency! Exploring the market impact of too many stable coins.
The fact that Facebook, which is a corner of GAFA, finally deciding to produce its own cryptocurrency has become a hot topic in the Internet news community. Currency issuance should be welcome if it makes the most of a cryptocurrency blockchain and is convenient for users.
However, many companies and countries other than Facebook have announced the introduction of such stable coins (stable value currencies). The world would be filled with stable coins, but how does this affect our lives?
While briefly explaining stable coins, let’s forecast their future.
Facebook announces issuance of a stable coin
Finally, the “big game” of the net world has announced its entry into the cryptocurrency industry. The big game is Facebook, which is popular among SNS services. Currently, Facebook is developing its own cryptocurrency stable coin, and it will be issued around the world for use in their SNS platform in the near future. Facebook has in the past issued an electronic currency called “Facebook Credits” and purchase services in their app.
However, the number of users using “Facebook Credits” has not increased, and the transaction volume has been slight, so only the exchange fees will be lost and plans overdue. So, in order to revitalize this credit business, Facebook is trying to create a new cryptocurrency.
Cryptocurrency is different from “Facebook Credits” and has a mechanism called blockchain. Therefore, it is likely to develop not only how to use it as a payment currency within the app, but also the mass outflow of customer data that is the problem at present. According to Sandler, a prominent American net analyst, the “Facebook coin” is forecasting an additional $19 billion in revenue by 2021 (about 2 trillion Yen at current rates) by 2021.
(Reference: https://xn--zck9awe6dx83p2uw267du0f.com/news-facebookcoin-a-couple-of-year-19-billion-dollars/cryptocurrency news. Cryptocurrency News.com, 2019/3/12, Facebook Coin, Expected to Produce “$19 Billion” in Several Years!?)
A world full of stable coins | And beyond…
Users can benefit from the issuance of Facebook coins. For example, if you use cryptocurrency when purchasing a service in the app, the fee will be much cheaper (in units of Yen), and it will also be possible to use it as a donation for posts you like. Also, by recording all of Facebook’s customer information in a blockchain, it also provides an extremely tamper-proof, extremely secure storage location.
However, trying to create a stable coin is not limited to Facebook. Today, many stable coins are being developed overseas, including in Japan, and there are many that will be issued in the near future. Then, if stable coins overflow into the world, what kind of influence does it have on the cryptocurrency market and, ultimately, the financial market and our daily lives? I will tell you in detail in the next section.
List of stable coins to be issued in the future
Cryptocurrency can be issued by anyone, thus development is taking place around the world with efforts to produce an own unique stable coin.
The stable coins currently being developed are as follows:
[Stable coins currently under development]
・ PayMon: A coin linked to the value of gold issued by Iran to avert economic crisis
・ IBM coin: A coin that IBM aims to issue jointly with six banks in the world
・ MUFJ coin: A coin linked to Japanese yen issued by Mitsubishi UFJ Group
In addition, some stable coins have already been issued and are in circulation in the market.
[Stable coins already issued]
・ Tether: The most famous and used coin in the world, linked to the US dollar
・ USD Coin: A Coinbase issued coin with other member currently with a lot of momentum
・ TrueUSD: A coin with multiple agencies collateralizing currency issues
・ JPM Coin: The first US bank to receive a coin issued by JP Morgan
Besides the above, more than 80 stable coins have already been issued in the world. In addition, stable coins under development are only a small part of this total market.
Benefits by increasing the amount of stable coins
The increase in stable coins also benefits the users who use them. Originally, stable coins were born behind the reason that the price fluctuation risk of cryptocurrency such as Bitcoin was too high. In particular, Bitcoin increased 20,000 times in the past 10 years, and the price that fluctuates in one day is not enough at 10,000 Yen or 20,000 Yen. No one wants to use a currency where the value highly fluctuates, for example, to pay for at a store or use it for online shopping.
On the other hand, stable coins linked to values such as the US Dollar, Japanese Yen, and gold are unlikely to experience rapid price fluctuations like Bitcoin. Because the value is easy to stabilize, it can be used as a payment method instead of a legal currency. Also, cryptocurrency cannot be charged like a credit card, and there is also the benefit that the transaction fees can be kept extremely low. Therefore, it can be a low-cost payment method for users.
Disadvantages due to the increase in stable coins
It is the user who suffers the most if there are too many stable coins. Because holding multiple coins makes the management complicated and you need to bring up the coin information that is linked according to the payee and the place to make a payment. This is similar, for example, to changing the type of electronic money or credit card depending on the payee. “This store has points for discounting, so I must use this card,” and “this store has savings for electronic money,” and so on. This happens with cryptocurrency.
This is such a pain, isn’t it? Cryptocurrency is complete digital data, so you don’t have to carry cards or coins. However, there may be problems with winding up with too many stable coin types, such as with crowded wallets that store currency.
In polar terms, unifying the world’s currency into one stable coin is not technically impossible. But doing so can adversely affect various financial institutions because of their compatibility with legal currencies, and it may be difficult to unite because of the political relations of each country. It is not a bad thing that stable coins are born one after another, but it takes a while for the environment to be able to use them well. However, to put it the other way around, it can joyful to watch for the future of cryptocurrency.