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Barclays Analyst: Facebook Coin Worth $19 Billion in Revenue by 2021

Interest in Facebook’s forthcoming stablecoin is beginning to take hold in the broader financial market.

According to a report published by CNBC on Mar. 11, Barclays analyst Ross Sandler wrote in a client note that the “Facebook coin” could generate as much as $19 billion in additional revenue by the year 2021. The advent of a new revenue stream in the form of a stablecoin-backed payment protocol would be a windfall for Facebook’s share price, which took a hit in 2018 amid a series of scandals related to user privacy.

Sandler looks to the establishment of a stablecoin, which so far has been proposed for Facebook’s messaging platform Whatsapp, as a substantial source of revenue for the social media giant outside of their reliance on pure advertising, a move that Sandler finds is “sorely needed at this stage of the company’s narrative.”

Assuming cryptocurrency implementation works out for Facebook, Barclays reports the upside to be worth an additional $19 billion in revenue for the company within the next several years, with the base-case, conservative estimate pegged at $3 billion. While Facebook will have its hands full in initiating a smooth launch for the stablecoin and securing adoption for its near 3 billion platform users, its worst-case scenario still appears profitable according to the banking analyst.

Sandler told CNBC,

“Merely establishing this revenue stream starts to change the story for Facebook shares in our view.”

As CNBC points out, Facebook’s decision to rely upon a stablecoin format for their upcoming currency, which will rely on the value of several different fiat currencies, should be more attractive to investors and users given the highly volatile state of cryptocurrency prices. Sandler’s views Facebook’s move into a crypto-backed payment platform, which provides padding beyond what advertising revenue can bring in alone, as a substantial benefit to shareholders, saying,

“Any attempt to build out revenue streams outside of advertising, especially those that don’t abuse user privacy are likely to be well-received by Facebook’s shareholders.”

Interestingly, Sandler points out that the most recent news related to stablecoin development is not the first time that Facebook has tried its hand at building a payment protocol. In 2010, the company created a virtual currency called “Facebook credits,” which CNBC describes as similar to modern-day cryptocurrency. Users would exchange fiat for these credits, which would then allow for in-app purchases. However, Facebook was forced to carry the cost of interchanging between fiat and digital credits, which severely cut into the profitability of the venture and led to the project being scrapped.

Sandler and his research at Barclays believes the earliest iteration of the Facebook coin will be a “single purpose coin for micro-payments and domestic p2p money transfer (in-country), very similar to the original credits from 2010 and Venmo today.”

With former PayPal President David Marcus heading Facebook’s blockchain and stablecoin projects, Sandler believes that the company has more ambitious plans for its payment platform project compared to the failed attempt in 2010. In addition, a recent blog post by Facebook CEO Mark Zuckerberg makes it all the more apparent that the company is looking for innovative ways to increase user security, with cryptocurrency being a logical continuation for payments. If all goes according to plan, Sandler could see the company extending into the realm of consumer lending, remittance and physical payments, an industry that cryptocurrencies across the market have been attempting to capitalize on.

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Payoneer CEO Calls Single Currency Bitcoin (BTC) Unrealistic

Bitcoin (BTC), Cryptocurrency–With the crypto markets staging a small recovery on the day and looking to close out the year on a relative positive note despite 2018’s ongoing bear cycle, the number one currency by market capitalization continues to be divisive.

Speaking in an interview with CNBC published on Dec. 28, Scott Galit, CEO of New York-based payment processing firm Payoneer, made the claim that a single global non-fiat currency like Bitcoin was unrealistic.

Galit’s take on Bitcoin hinges more upon what he views as an unattainable position for BTC to become a single, unifying global currency as some have pushed as a possibility for the decentralized coin. Galit admits that the idea of a non-fiat, digital currency is appealing to large swaths of the internet as a way to get past the hurdle of international transaction barriers, but finds the application unrealistic,

“Despite the interests of lots of people out there in the Internet world who love the idea of frictionless commerce and frictionless money and avoiding fiat currencies, I don’t see it”

In particular, Galit cites the unlikelihood of the U.S. government accepting BTC for taxes on account of the extreme price volatility of cryptocurrency. As outlined by Galit, the U.S. government would be exposing itself to an exchange rate that fluctuates to the degree of BTC, an outcome that would never make its way through Congress,

“Now you could have a debate whether taxes are fair or unfair or whatever but they are a reality. There are going to be taxes because governments need revenues,” Galit says. “Countries actually need tax revenue in order to fund services for their residents.”

In November Ohio became the first state to allow taxes to be paid in Bitcoin, beginning with businesses and increasing in availability to individual filers. However, the process involves a trading platform which converts the paid BTC into dollars, protecting the state from the aforementioned volatility of cryptocurrency.

Galit also calls upon the responsibility of the Federal Reserve to maintain control over the nation’s fiat, a source of leverage that would become worthless in the event of BTC becoming a dominant currency,

“Central bankers are there to actually help manage the economies and provide kind of stewardship for those economies,” Galit says. “Part of that is actually managing currency in the interest rates [for lending] and in exchange rates. If you don’t actually have any control over a currency you’ve lost one of the major policy tools that you have, so what do you do?”

Galit’s comments come just one week after Yahoo Finance named payment platform Square as their company of the year. Square, which was founded by Twitter’s CEO Jack Dorsey, began offering Bitcoin as a trading option in November 2017, with the company going to great lengths throughout 2018 to push the feature as a legitimate division of their service. In November, Square announced that BTC based revenue for Q3 had climbed steadily to $43 million, upt from $37 million in the previous quarter.

Dorsey, who also presides as CEO of Twitter–a social media platform likely feeling the pressure to enter cryptocurrency following rival Facebook’s ties to a stablecoin–has long been vocal in his support for Bitcoin. In March, Dorsey broke headlines by stating that he believed Bitcoin could become the world’s single currency, catalyzed by internet adoption,

“The world ultimately will have a single currency, the internet will have a single currency. I personally believe that it will be bitcoin”

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XRP, Ethereum (ETH) in Position for Big 2019

Cryptocurrency, Ethereum (ETH), XRP–While the crypto markets limp into the final week of 2018, down over $700 billion since the start of the year, some optimism is brewing for the industry in 2019 and beyond.

In November, the number one coin by market capitalization Bitcoin experienced its worth month of price drop since August 2011, bringing the bear market full circle as most altcoins are still reeling from 90 percent or more losses throughout the year. In response to the crashing crypto market and the fall of Bitcoin, billionaire investor and long time cryptocurrency bull Mike Novogratz held a conference call to give his opinion on the industry and the stat of his investment firm Galaxy Digital Holdings. Novogratz, in his usual candid manner, did not hold back on indicting what has transpired for crypto valuation over the last twelve months,

“It’s been a horrible bear market in tokens. There’s plenty of reason to be depressed.”

However, Novogratz also highlighted his belief that crypto would make a turn in 2019 and beyond, as adoption for both blockchain and the token model gains legitimacy in sectors like finance and gaming,

“I fundamentally think you’re going to see big adaption in 2019, 2020. Lots of the items in the digital world, the e-gaming space, are low value items so I think people will be more comfortable participating in blockchain.”

More recently, news out of social media giant Facebook has it that the company is developing a stablecoin for its Whatsapp messaging platform, with an emphasis on targeting the largely untapped digital payment space of India. With over 2 billion active users, Facebook has the potential to not only push cryptocurrency into the spotlight, but catalyze interest in sectors that have so far been reluctant to invest in blockchain despite otherwise benefiting.

However, as pointed out by the BitMex CEO Arthur Hayes, the current fad of stablecoins could pave the way to renewed interest in Ethereum. Despite falling to the third position by market cap, just behind XRP, Ether is poised for a renewal in pricing and use if the ICO landscape makes a return.

“Once there are new issues, then Ether will rebound aggressively. When the ICO market returns, Ether will quickly test $200. The timing of the ICO rebirth is 12 to 18 months out”

The fast profits of 2017 brought about more than a fair share of bad actors to the industry of ICOs, with most projects being focused on turning a quick buck as opposed to building a working product. The negativity towards Initial Coin Offerings has been colored throughout 2018 with countless stories of fraud and outright theft, dampening the once exciting development. With the market pruning that has occurred throughout 2018, the ICO industry could find legitimacy once again next year and into 2020, particularly by the crypto buzz stirred up when Facebook releases its stablecoin.

XRP, the second coin by capitalization, is likewise positioned for a big 2019. Ironically, the coin is ending the year in a similar state to where it was a year ago: lots of investor excitement mediated by exchange development. In 2017, the price of XRP skyrocketed in anticipation of a Coinbase listing that never materialized. Now, XRP has been noted as a potential coin of interest for Coinbase. However, in even bigger news for the currency, the world’s leading exchange Binance has announced plans to integrate XRP as a base pair for trading.

While the news has less immediate potential for the price of XRP, the long-term ramifications for having a currency that is transaction oriented and capable of handling the scale that crippled Bitcoin’s network earlier in the year–with miniscule fees and transfer times–could provide a boom for the coin well into next year. With Facebook driving interest in stablecoins, XRP is still in position as a currency of choice for fintech and banking, with several large partnerships already established.

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Facebook Cryptocurrency Shows Path Forward is Integration, Not Domination

Blockchain, Cryptocurrency, Facebook–Last week, EWN reported on an industry rumor that Facebook, the social media giant with over 2 billion active users, was in the process of developing a new stablecoin cryptocurrency. Details on the token included an emphasis on being used for payments via the WhatsApp messaging service, with a particular focus on expanding into the largely untapped digital payments market of India.

Some pundits have used the Facebook development as an opportunity to cast stones at the broader industry of cryptocurrency, with the argument that Big Tech is now taking the reins of the blockchain away. As opposed to cryptocurrency being used as a tool of subversion for the established tech industry, in a similar way that the digital asset side has the potential to circumvent traditional fiat, the rise of Facebook Coin is putting the more libertarian narrative into a flux.

However, the adoption of cryptocurrency by a company as large and entrenched in the global social system as Facebook is an indication that the technology is reaching a critical point of validation as opposed to being swallowed by the zeitgeist of established platforms. The road to Main Street, like all technologies, is paved through integration, not domination. Cryptocurrency and the underlying proof of blockchain is a multifaceted conceptualization, made up of tenets of usability and belief.

Will the crypto anarchists be upset that a mainstream corporation is co-opting their beloved technology? Possibly. The advent of Google and internet conglomerates did not slow down the juggernaut of file and data-sharing for those who saw the technology as a portal to freely distributed information. Cryptocurrency will find a similar footing for different groups based upon their necessities. Stablecoins provide Facebook and like-minded social media platforms a secure means for transferring value globally, while also providing the innovation of truly digital money. Bitcoin, like many other cryptocurrencies, holds a distinct position as a digital asset, one that can be freely traded, speculated on and treated as an investment property in addition to currency.

If cryptocurrency continues to gain footing in mainstream corporations–a revelation that few investors in the industry would be sad to see–the rise of privacy coins could be a logical extension. While Facebook, Twitter and other casual operations will prefer the lack of volatility found in stablecoins, others users of crypto may seek it out as a means of private transactions, finding more utility in anonymous coins such as Monero and the like.

The watermark for Bitcoin and other cryptos is being used to buy a coffee at Starbucks, not overthrowing governments. Facebook is not taking away from the industry by building their own coin–they’re contributing to the recognition of the industry as a legitimate technology and providing validation for its use.

The staunch libertarian and anarchic ethos that has been entwined with cryptocurrency since its conception was the radical, passionate fuel that was needed to light the fire of development. It’s not casual interest that would give someone belief in an industry down over $600 billion in one year–but a belief for the potential of a technology and a futureseeking vision of what it could become in society. Facebook adoption is the integration that will lead to crypto-ubiquity, not the nail in the coffin that some see it as.

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Facebook May Be Setting Its Eyes on Crypto. Hires 40 Ex-PayPal Members to Work on Blockchain Division

After consolidating itself as the leading company in the world of social networks, Facebook has decided to intensify its efforts to enter the world of crypto and blockchain technologies in an attempt to expand its business model.

According to a report from the tech news portal Cheddar, Facebook has been quietly but resolutely focusing on research and development related to Blockchain technologies and perhaps exploring the creation of a proprietary cryptocurrency.

As reported by Ethereum World News, back in May, Facebook created a Blockchain Development Department, with David Marcus at the head. At the time, Marcus commented that he had in mind to start with a small group of people to explore the various possibilities without talking about any particular type of interest:

” I’m setting up a small group to explore how to best leverage Blockchain across Facebook, starting from scratch …  However, it seems that the potential offered by blockchain technologies is greater than what the Facebook team expected, and since that time, more than 40 new members have joined the division among which stands out an important group of “former PayPal execs.”

According to information published by the Web 2.0 behemoth, the use of blockchain technologies could be oriented to areas related to the economy or the data transmission.

[Facebook’s] ultimate goal is to help billions of people with access to things they don’t have now, which could be things like equitable financial services, new ways to save, or new ways to share information.

However, Facebook has kept the research and work of this team as secretive as possible. After being asked about Mr. Zuckerberg’s expectations of this department, a spokesperson commented that he could not give more details besides the exploratory character that this team has at the moment.

“Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology. This new small team is exploring many different applications. We don’t have anything further to share.”

Hiring people with experience in both tech and economic business may provide one more hint at Facebook’s intentions. However, it is not yet sure what could Mark Zuckerberg be aiming at. According to an analysis by Ethereum World News Reporter, Mr. John Njui, a native token or cryptocurrency could be particularly helpful for Facebook in many areas:

“With over 2 Billion active monthly users, Facebook cannot ignore the fact that such a user base can use a native cryptocurrency for the following purposes:

  • Pay for subscriptions on the social media platform
  • Pay for ads not to be displayed on their news feed
  • Rewarding users for CPU usage (mining)
  • Tipping rather than just liking posts
  • Paying business ads on the platform
  • Expanding its already existing marketplace to allow it to transcend international borders
  • Launching a crypto wallet with exchange services
  • Micropayments fused with cross-border transactions”

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Has Facebook Furthered Centralization with New Crypto Policy?

FACEBOOK (FB)–If Facebook thought it had won over proponents of decentralization by overturning the ban imposed on cryptocurrency advertisements, it missed the mark in the rhetoric detailed in its updated policy. While Facebook has reinstated the potential for crypto-based ads on its popular social media platform, the language is clear in defining the company as the ultimate arbitrator for what makes the cut. Taken from the announcement detailing the updated policy:

In the last few months, we’ve looked at the best way to refine this policy — to allow some ads while also working to ensure that they’re safe. So starting June 26, we’ll be updating our policy to allow ads that promote cryptocurrency and related content from pre-approved advertisers. But we’ll continue to prohibit ads that promote binary options and initial coin offerings.
Advertisers wanting to run ads for cryptocurrency products and services must submit an application to help us assess their eligibility — including any licenses they have obtained, whether they are traded on a public stock exchange, and other relevant public background on their business. Given these restrictions, not everyone who wants to advertise will be able to do so. But we’ll listen to feedback, look at how well this policy works and continue to study this technology so that, if necessary, we can revise it over time.

The language of the update is beneficial to the already established currencies and cryptos that provide the most legitimacy in terms of market share and media attention. However, Facebook becomes the ultimate arbitrator on what can be allowed on the platform. So while it seems plausible that Bitcoin, Ripple, etc. will make the cut for what currencies can attain eligibility, that remains open for interpretation. Consider the possibility of two competing currencies (such as the current struggle between BTC and Bitcoin Cash). If one manages to gain access to Facebook while the other does not, the social media platform’s 2.2 billion monthly user base is now exposed to only half the equation (ignore your personal sentiments on the BTC-BCH debate, and consider the implications of a one-sided advertisement campaign).

Given the sheer size of Facebook’s user base and the amount of influence crypto-based ads on the network will carry–remember, they are now being presented to the general public as having been vetted by FB–cryptocurrency could be funnelled in the direction of what Facebook deems palatable.

In some ways, the reversal is a huge win for cryptocurrency and could lead Google and Twitter to follow suit (as they originally piggybacked off of Facebook’s initial ban). But the conditions for future manipulation are troubling to the growing industry, particularly in a landscape where the major currencies of today could be obsolete tomorrow.

Facebook is in a stalemate spot with regard to crypto. No move they make is going to be received by all market parties as the right decision. Instead of taking the time to learn about cryptocurrency, evolve on cryptocurrency, and find a way to incorporate the technology onto their platform (because the technology might be the next stepping stone in social media and digital content), they instituted a policy that appealed to the masses. The vast majority of Facebook users have zero stake in cryptocurrency. Therefore, crypto ads are more detrimental to the platform’s user base than the benefit they could derive–or so the thinking goes at Menlo Park.

If there is one overriding benefit to be gleaned from Facebook updating their policy towards cryptocurrency, it’s in the wording that differentiates between established currencies and ICOs. It’s becoming more obvious, both to investors and observers of cryptocurrency, that ICOs are cancerous to the industry. Everyone is hopping on the ICO bandwagon, with empty projects that have flashy websites, great marketing copy, promise-filled futures, but zero substance. The tanking crypto-markets will do the entire industry as massive favor if it flushes out most of the bad practices currently swarming the ICO model, in addition to dampening the massive amount of unearned wealth flowing into the projects. In May, Boston College Carroll School of Management published that the average return on investment for an ICO was 82%. Compare that to the traditional stock market ROI of 7%, and you have an outlet for healthy profit. Now imagine the investors who have been in Bitcoin from 2012 or earlier. In addition to five-digit appreciative gains on their investment, they have the type of coinage to spread freely on ICO projects–with an expected ROI that hovers just under doubling their money even in a bear market (last year ICOs averaged 1300%). The end result is that projects are not being funded off of principle or potential merit–instead it becomes a pump scheme with no real incentive to create lasting technologies.

As a whole, ICOs have contributed to the worst aspects of cryptocurrency: empty projects, empty promises, and the emphasis on quick riches. But we do have to be careful in how we label the rhetoric surrounding innovation. Some of the brightest current projects in cryptocurrency started as an ICO, and, given the current conditions of the market, the next big thing in crypto will likely come out of an ICO. But for every one ICO that has the slightest amount of promise, with an honest development team not just waiting to cash out, there are hundreds of other pump schemes flooding the market. The real problem is not in the creation of new cryptocurrencies or innovative technologies–it’s the ICO model that is quickly becoming the standard for the industry. It’s no wonder that the narrative surrounding crypto has shifted to greed and volatility, given those are the exact conditions every ICO is born out of.

Investors and community enthusiasts of cryptocurrency should welcome models that drive innovation and provide incentive to develop in the industry. However, they should also shun what has quickly become a mockery of the entire movement of crypto. If Facebook can find a way to differentiate between the two, then their ad policy is an overwhelming success for the industry. Yet, given the predilection for control and less than scrupulous practices that have characterized Facebook in the past, the industry of cryptocurrency has to be wary of future dealings with the platform.

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Facebook Reintroduces Cryptocurrency Ads After January Ban

Facebook Announces Reversal Of Cryptocurrency Ad Ban

In January, Facebook imposed a ban on cryptocurrency-related advertisements, citing that companies in the industry were “not currently operating in good faith.” This statement alludes to the countless scams seen in the space, most notably, the high number of fraudulent ICOs and Ponzi schemes like BitConnect.

It is likely that Facebook saw the over $1 billion collapse of BitConnect at the beginning of January and wanted nothing to do with such a scheme. Nevertheless, the social media giant still noted that it would be revisiting the policy over time and would make any changes if deemed necessary.

Other technology service companies, like Google and Twitter, followed suit by introducing similar bans in the months following Facebook’s announcement. Although seen as a negative sign by most, others thought that it was the responsibility of these companies to protect their consumers.

However, with this recent ban reversal, Facebook hopes to reintroduce cryptocurrency companies back to its expansive ad ecosystem. Advertisers will be required to gain approval from the platform before promoting their crypto products.

Restrictions Still Apply

At the time of writing, ads promoting binary options and initial coin offerings are still banned due to the questionable nature of some of these operations.

All ads that do not fall into the restricted category will be permitted to submit ads through Facebook’s ad application system, starting today. In the aforementioned application, Facebook will specifically ask potential advertisers for information pertaining to the legitimacy of the cryptocurrency operation.

A blog post from the social media company stated:

Advertisers wanting to run ads for cryptocurrency products and services must submit an application to help us assess their eligibility — including any licenses they have obtained, whether they are traded on a public stock exchange, and other relevant public background on their business.

This system should allow for Facebook employees to determine the ‘bad apples’ from the ‘good apples’, only allowing bona fide and reliable companies to advertise their product or services.  

However, Facebook product manager, Rob Leathern also wrote:

Given these restrictions, not everyone who wants to advertise will be able to do so.

Despite these restrictions, this improved and more robust system should allow for legitimate cryptocurrency companies, like well-known exchanges or established infrastructure services to get their names out to more consumers.

Facebook is the first company to reverse such a ban, with Google, Twitter and Snapchat still holding bans against the industry. Google chalked their ban up to the “unregulated” and “speculative” nature of products and services advertised under the Google Ads umbrella.

It is unclear if Google or any other technology companies will be changing their policies on cryptocurrency ads any time soon. But many in the industry hope for the best, as Facebook’s recent announcement shows how this issue should specifically be addressed.

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