Following reports and rumours about Facebook’s top-secret plan to launch a cryptocurrency, one Wall Street analyst has predicted such a digital asset could prove to be big business for the embattled social network.
Ross Sandler, an analyst with Barclays, has estimated that the so-called “Facebook Coin” could generate an additional $19bn in revenue for the tech giant by 2021 – and may even make the company’s stock more palatable for investors as a result.
Mark Zuckerberg’s firm has faced scandal after scandal over recent months, ranging from allegations it helped facilitate meddling in international elections to concerns surrounding the privacy of its users. The controversies have had a detrimental impact on Facebook shares, not least because of concerns about how this could affect its advertising revenues in the long-term.
So intense has the scrutiny become that the billionaire recently unveiled a blueprint for making Facebook a “privacy focused platform” where users can interact in private and benefit from end-to-end encryption so secure that it cannot be penetrated by the company itself.
According to CNBC, Mr Sandler described the Facebook Coin as something that was “sorely needed at this stage of the company’s narrative,” as it would enable the tech giant to develop a lucrative new revenue stream that isn’t at the expense of its community’s privacy.
The reports that such a project was in the works fully emerged last week, with The New York Times reporting that the digital asset was designed for Facebook users who want to send money to their loved ones internationally. Dozens of engineers are said to be involved in the effort – and at present, a launch date remains unclear.
There was disappointment among some in the cryptocurrency world when it was suggested that any Facebook Coin would be pegged to an old-fashioned currency such as the US dollar – but according to Mr Sandler, this misses the point. Because a stablecoin would not be as susceptible to vulnerability than the likes of Bitcoin, it would be less of a speculative asset and more practical for everyday use.
Mr Sandler also cautioned that – despite the $19bn sweetener that could await Facebook – the company does have some hurdles to overcome. As well as re-establishing trust following recent scandals, he warned it would need to show that its product offers something that current payment options does not. There would also be the prospect of scrutiny from regulators around the world.