Traditional fintech firms, save for Bitcoin pundit Jack Dorsey’s Square, have been slow to adopt cryptocurrency. While PayPal has dabbled in the arena, purportedly launching a digital token for internal testing last year, firms like Visa, Mastercard, and their ilk have been hesitant to take the plunge.
In fact, an executive — the chief executive — from Mastercard called crypto “junk” last year, citing the lack of transparency and their non-conformity to traditional finance. This is quickly changing though, with news that the aforementioned firms are investing in Facebook’s digital asset play.
Facebook Bags Investments With Uber, Visa, PayPal For Venture
Reported Tuesday first by The Wall Street Journal, three major fintech companies are looking to invest a likely competitor to their own services. This competitor, as aforementioned, is Facebook’s foray into the cryptocurrency industry.
The Journal, citing sources familiar as normal, claims that Visa, Mastercard, PayPal, the recently-‘IPOed’ Uber, Stripe, and other big names in finance/tech will be contributing around $10 million to an entity that governs the coin.
This capital will be used to purchase assets meant to back the cryptocurrency, which is most likely going to be a stablecoin tied to a basket of fiat currencies. This $10 million lines up with recent reports that revealed Facebook will be charging that eight-figure sum to those looking to run nodes for the cryptocurrency.
This recent report, which comes after rumors indicated Facebook has been in discussion with giants like Visa, was dropped just ahead of the supposed June 18th release date of the whitepaper of “Globalcoin”, the name of the cryptocurrency. As Blockonomi has covered extensively, Globalcoin will likely be a private cryptocurrency that allows for low-cost, rapid, and borderless value transfer between Facebook’s billions of clients.
Globalcoin to Boost Crypto, Aid Bitcoin Adoption
Anyhow, regardless of Globalcoin’s exact nature, some have ventured that its launch will be the largest catalyst for Bitcoin adoption — and thus price — in this industry’s history. Blockchain Capital’s Spencer Bogart broke down his thoughts on the matter in an extensive Twitter thread. Put short and sweet, the stablecoin is “among the most bullish external tailwinds for Bitcoin in 2019/2020”. Bogart adds that the only bigger catalyst for BTC growth will be quantitative easing (an inflationary fiscal policy), which he calls a “reinvigorated push among central banks for easy-money globally”.
For better or worse, Facebook’s crypto effort is among the most bullish external tailwinds for Bitcoin in 2019/2020 (topped only by reinvigorated push among central banks for easy-money globally)
— Spencer Bogart (@CremeDeLaCrypto) June 11, 2019
Explaining the importance of Facebook’s Globalcoin, Bogart explains that the corporate cryptocurrency “eases the biggest friction in acquiring digital assets”, in that it makes getting fiat into this ecosystem extremely easily. Once fiat is allocated towards Globalcoin, the investor assumes that value can flow easily between the Facebook ecosystem and something like, let’s say, Bitcoin or Ethereum. He writes:
“Facebook making a concerted push for digital asset adoption and creating a circular economy is great because it solves that friction point. Once people are holding/earning a digital asset, it’s relatively trivial to go from, for example, USDC to BTC.”
Also important is that Globalcoin will catalyze growth in cryptocurrency infrastructure, pushing companies to build everything from custody and wallet services to compliance measures and exchanges. In fact, the investor postulated that once Globalcoin hits the mainstream, “large financial institutions” will be incentivized to join in on the bandwagon.
Many still see issues with Globalcoin, however. Most notably, issues with privacy and governmental oversight. Just the other day, Mark Zuckerberg was thrown into yet another scandal involving the privacy of his creation’s users.
Emails published by the Journal on Wednesday revealed that Zuckerberg has been involved in “potentially problematic privacy practices”. More specifically, the Silicon Valley all-star mentioned issues with privacy in emails, evidently accentuating that he has been following these situations closely.
The thing is, for the longest, Facebook has been slow to act in terms of stemming privacy issues. And some fear that this seemingly negligence may continue with Globalcoin.