Move over Bitcoin.
According to the British newspaper The Guardian, “Facebook plans to launch its own cryptocurrency in early 2020, allowing users to make digital payments in a dozen countries.”
“Payments is one of the areas where we have an opportunity to make it much simpler,” Zuckerberg said at the company’s developer conference last month. “I think it should be just as easy to send someone money as it is to send a photo.”
To stabilize the digital currency, the company plans to peg its value to a basket of established currencies, including the US dollar.
According to the Financial Times, Facebook wants to launch its own currency, following in the footsteps of so-called “super apps” like China’s WeChat, which allow users to send money, shop, order taxis and play games without ever having to leave the one Platform. …
A previous Wall Street Journal report reported that Facebook could encourage transactions by rewarding its users with the currency when they see ads on the platform, similar to earning loyalty points. Experts believe this type of network will encourage Facebook’s large user base to spend more time and money on the platform. It could address users’ concerns about Facebook’s advertising business model – but it could also allow the company to collect more data about users, such as spending habits.
The dramatic rise of digital currencies
According to Cryptoslate.com, “Cryptocurrencies have grown from a tiny niche to a $250 billion market cap industry in less than a decade, but their immense growth appears to have been difficult to track,” financial regulators around the world have struggling to oversee an industry and assets that are difficult to track. Countries like China, Taiwan and Russia have all banned cryptocurrency transactions and done everything they can to control the industry.”
Forbes wrote these details about what investors need to know about cryptocurrencies:
“While Bitcoin (BTC) and Ethereum (ETC) are currently the first and second largest market capitalization cryptocurrencies, respectively (BTC $105.3 billion, ETC $18.8 billion), according to this list on Investing. com more than 2,500 other cryptocurrencies. There are many options, but how valuable are they?”
TheNextWeb.com wrote a very helpful article about the differences between cryptocurrencies, virtual currencies and digital currencies:
“Digital currency is the umbrella term for all electronic money, which includes both virtual currencies and cryptocurrencies. It can be regulated or unregulated.
It is only available in digital or electronic form and is intangible, unlike a dollar bill or coin. Digital currencies that can only be owned and used through electronic wallets or certain connected networks are also commonly referred to as digital money or cyber cash.
The absence of intermediaries means transactions are typically instantaneous with little or no fees.”
Virtual currencies are a type of digital currency that are typically controlled by their creators and used and accepted by the members of a particular virtual community
This is where things get a little confusing: all virtual currencies are digital (they only exist online), but not all digital currencies are virtual because they exist outside of a specific virtual environment.
Cryptocurrencies such as Bitcoin and Ethereum are considered virtual currencies.”
More predictions for 2019 come true
Earlier this year, I wrote a blog in which I quoted several experts who predicted an impending rise in cryptocurrencies that would replace many loyalty programs. Here is an excerpt from that piece:
The IMF says even governments could introduce their own cryptocurrencies to prevent the systems from becoming havens for fraudsters. “A central bank-regulated system could become the basis for a rapid expansion of financial services to developing countries and the poorest people in Western societies, without the risks associated with privately managed digital currencies.”
The IMF’s proposal is likely to be greeted with caution by many digital currency operators, who believe that one of the key advantages of their technology is that it lies outside the mainstream banking system. The intervention of a central bank could also be seen as strict regulation that would slow down transactions and increase costs. …”
So what happens next with this trend? Airlines like AirAsia’s BigCoin are preparing to launch their own cryptocurrencies. “’The airline will convert its frequent flyer points into BigCoin,’” [AirAsia founder and chief executive Tony] Fernandes said: “Before announcing that starting this month, ticket prices on the airline’s website will also be displayed in BigCoin, in addition to prices in fiat currencies.”
To understand where this is going, think more broadly about your loyalty program points, such as: B. Your miles at airlines, restaurants, gas stations, hotels or other companies. Most of these can be converted into new cryptocurrencies – and the trend will gain momentum in 2019 and beyond. How about university cash programs and even cities issuing bonds in their own cryptocurrencies?
There are many benefits to following the AirAsia model of building a blockchain loyalty program, and the winners will be both consumers and the organizations trying to build loyalty. “Instead of trying to get everyday customers to engage with cryptocurrencies and their many pitfalls for new entrants, an app-based loyalty system can get people to use cryptocurrencies without even realizing it:
- Allow the loyalty app to act as a crypto wallet with multiple features.
- Encourage initial accumulation by rewarding loyalty points for everyday actions to introduce newcomers to the system.
- Give people multiple ways to collect and spend those loyalty points.”
Consider this quote: “If a city launches its own cryptocurrency, however, the digital tokens will likely be backed by some sort of city asset. Most local cryptocurrencies do not try to disrupt the movement of money. They simply give citizens more (and more efficient) ways to invest and purchase goods in their cities. In return, they want to offer cities more opportunities to finance projects that they previously could not afford.
“By switching to a token system, a student who cares about urban poverty can make a $20 purchase knowing that their contribution will go toward an affordable housing project, for example.” He can use his tokens for other urban goods, such as public transport or food, or he can keep them as an investment. …”
Sanja Kon, Vice President of UTRUST Global Partnerships, predicts a rise in cryptocurrency transactions in 2019: “Crypto payments have been mostly a niche phenomenon, with Bitcoin being the most widely used cryptocurrency.” In 2019, we will see a rise in multi-cryptocurrency payments as “More and more customers are interested in the benefits of cryptocurrency payments, including lower transaction costs and decentralization.”
Serious questions remain about Facebook’s cryptocurrency plans
Not everyone believes Facebook’s plans will be good for global consumers. Newsbtc.com wrote:
“The Block’s Frank Chaparro reminds his followers that Zuckerberg didn’t particularly care about the privacy of his users, even when Facebook was a young company. Others shared this opinion, noting that the product will likely not only be centralized, but also subject to censorship, government oversight, and other concerns unrelated to Bitcoin.”
And the US Senate Banking Committee wrote this letter asking Facebook about its plans. Here some examples:
- How would the new cryptocurrency-based payment system work and what measures have been taken to financial regulators to ensure that it meets all legal and regulatory requirements?
- What privacy and consumer protection would users have in the new payment system?
- Does Facebook have information that affects the creditworthiness, creditworthiness, creditworthiness, character, general reputation, personal characteristics or lifestyle of an individual (or a group of individuals) and which is available (from Facebook or an unaffiliated third party). determination be used? Eligibility for or marketing a product or service related to (1) credit, (2) insurance, (3) employment, or (4) housing?
Final thoughts
This is not the first time that Facebook has dabbled in digital currencies. More than a decade ago, Facebook Credits was created, a virtual currency that allowed people to purchase items in apps on the social networking site. However, Facebook ended the project after less than two years.
There is no doubt that this new cryptocurrency will have a major global impact when Facebook launches in 2020. However, what is perhaps more important is the trend of numerous global organizations to introduce their own cryptocurrencies.
This ZDNet article from last summer proclaimed that the cryptocurrency bubble was over – now the boom is coming. The problem is that Bitcoin’s value collapsed last fall after this article was published, before rising again more recently.
Regardless of what happens with Bitcoin, there is no denying the amazing growth trends outlined in the ZDNet article on Initial Coin Offerings (ICOs). Just as cybersecurity topics have gained prominence over the last decade, over the next decade this cryptocurrency topic will move from a fringe area of technology and finance into our mainstream vocabulary – even for state and local governments.
What lies ahead for ICOs in the near future remains somewhat of a mystery. Still, I have no doubt that we will return to this important cryptocurrency topic and its related cybersecurity subtopics such as cryptojacking malware in 2020 and beyond.
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