It seems that the crypto fever has finally arrived in what is considered one of Internet’s powerhouses. For months, the industry has lobbied for Facebook to get involved in a crypto project, and now, at least to reports coming from the New York Times (NYT,) people’s desires may be about to materialize.
Facebook, one of the world’s most influential websites, is now looking for support from several prominent venture capital (VC) companies in order to develop a digital token. The pieces of news were reported by Nathaniel Popper, one of NYT’s tech specialists, on April 8th via the microblogging site Twitter.
Lining up with Cryptocurrencies’ Decentralization
The journalists cited sources that are familiarized with the matter. According to Popper, the website founded by Mark Zuckerberg is currently looking for a $1 billion sum to come up with a crypto project, most specifically, a digital token. Whilst it is evidently clear that Facebook has the resources to fund its own project without issues, the fact that it is seeking help from outside, says the NYT tech reporter, could be more about lining up with cryptocurrencies’ decentralized nature.
“Update on Facebook’s cryptocurrency: Sources tell me that Facebook is now looking to get VC firms to invest in the Facebook cryptocurrency project we reported on earlier this year. I hear they are targeting big sums — as much as $1b,” he informed in his personal, verified Twitter account, @nathanielpopper.
“Given that one of the big allures of blockchain projects is the decentralization, getting outside investors could help Facebook present the project as more decentralized and less controlled by Facebook,” he explained via Twitter about the situation. According to Popper, the project would be a stablecoin that is going to be pegged to several currencies held in bank accounts.
A Stable Value
Popper stated that one person he spoke with “said that Facebook is talking about using the money as collateral for its cryptocurrency. Facebook has been designing the coin to keep a stable value, pegged to a basket of foreign currencies held in bank accounts.”
After a Bloomberg story in December, the industry was put in alert about the prospect of a “Facebook Coin.” According to the site and the information reported at the time, the token would be used to perform money transfers made via WhatsApp, focusing on the remittances market in India.
However, in the month of February 2019, the New York Times published a story saying that the coin would be more versatile, with the possibility of using it across the whole Facebook network: Facebook Messenger, WhatsApp, and even Instagram, providing top-end exposure to nearly $3 billion people per month.
The Move Has Been in the Works for Weeks
At the time, the NYT cited several sources that preferred to stay anonymous, saying that Facebook hired more than 50 engineers to help it come up with its native cryptocurrency. Facebook has, allegedly, begun shopping its coin to several crypto exchanges that are not yet known. As a Twitter user wrote on the thread, taking outside investors could also make the project more likely to be considered a security.
Experts, including Jalak Jobanputra (partner of Future Perfect Ventures,) have identified the cold and volatile market as one of the reasons why VC firms have been so affected. “Given how much the volumes have decreased in the last year, I wouldn’t be surprised if we are seeing valuations come down on the secondary markets for some of these companies,” he said in February when asked about the possibility of a trend of discounted venture evaluations in the crypto space.
By Andres Chavez