Facebook wants to launch its own worldwide crypto coin early next year. This “GlobalCoin” would pose an unprecedented challenge for established banks, but it is already raising concerns about user privacy.
Earlier this month, Facebook boss Mark Zuckerberg spoke in secret about plans with Britain’s most powerful central banker, Mark Carney, the BBC reports. Consultations were also held with officials from the US Treasury Department. The ambitious project must initially be introduced in a dozen countries. This summer Facebook may come with more details.
With the new world currency, the 2.4 billion users of Facebook, which also owns WhatsApp and Instagram, will soon be able to pay among themselves. Moreover, according to press agency Bloomberg, Facebook is negotiating with dozens of web stores. If they accept Facebook money as a means of payment for their things – such as clothing or books – this greatly increases the usability.
Alternative to the banks
The GlobalCoin, as the Facebook payment method is called internally, allows people to pay and receive money without a bank account. With that, Facebook can become the biggest challenger for the established banks so far. The coin is already being compared with the bitcoin. There was cautious cheering among Twitter supporters of that alternative currency on Friday. With the help of Facebook, the scale needed to familiarize the general public with crypto currency can finally be reached.
There are, however, major differences. One of the disadvantages of bitcoin is that the value goes back and forth. To make its currency more stable, Facebook would like to link it to a “basket” of traditional currencies such as the dollar, euro and Japanese yen. Another distinction with initiatives such as bitcoin is that they are organized decentrally. Computer users themselves ensure that transactions are checked and are reliable. At GlobalCoin, on the other hand, there seems to be one supreme authority: Facebook.
The news about the Facebook currency comes at a sensitive time. The platform is under fire worldwide due to privacy violations and inadequate security. There is also much criticism of his role in fake news campaigns, such as the American presidential election. By also facilitating payments later, the social network would learn much more about its users. For advertisers, for example, it is interesting whether someone spends a lot of money on cars, jewelry or telephones.
More sensitive information also comes within reach. Facebook may soon know who has little money and does not pay the bills on time. Companies have a lot of money left over for this type of data about the creditworthiness of potential customers. The US Senate sent a worried letter to Facebook two weeks ago. The representatives of the people want answers to the question of how the new payment system protects the rights of consumers. Facebook will also have to prevent its network from being misused for criminal transactions and money laundering.
The financial world has been looking forward to Facebook’s plans for years. Messages about a crypto coin for WhatsApp users appeared at the end of last year. Yet success is not guaranteed. About ten years ago, the company also made an attempt. With “Facebook Credits” users could make purchases in apps on the social network. That virtual money failed because of a lack of interest.