Published in El Pais, June 18th 2019.
In previous articles I have written about stablecoins. A type of cryptocurrency pegged to the US dollar so that in theory one coin will always be worth the same amount. All the benefits of blockchain technology with none of the worries of fluctuation (remember that at one point you could purchase a Bitcoin for less than 1 cent). While at time of writing the details of the currency have yet to be formally announced, it is believed that anyone can exchange real money for this currency and use it on shops or send money to different users.
Who is the target market for this coin? The 2.4 billion users of Facebook. The potential is huge not only for Facebook but for the cryptocurrency market overall. With a simple announcement Mark Zuckerberg can remove the wild west image over digital coins and put it into mainstream. Facebook has some serious financial support too as companies like Visa, Hotels.com, Uber, PayPal and Mastercard are all reportedly ready to support the coin once it goes live. A far cry from the old days of cryptocurrency where major financial institutions refusing to get involved with it.
If this coin does become popular the rest will follow too. With users starting to enjoy the benefits of blockchain technology they will naturally look at more traditional coins and wonder what they too have to offer and start to seriously consider it as an alternative to fiat currency.
It is not all good news however as the one draw back to a stablecoin is that the entire network must be controlled by a single group, where as other coins have a more decentralized approach which is what many argue are the key benefits of cryptocurrency. With Facebook seeming to pop up in the news every other month about misusing user information, many are questioning whether they can be trusted with such a large blockchain network. For their part it is rumoured that they will hand control over to a third-party organization but that will do little to ease peoples fears.
I personally do not like stablecoins and shudder at the thought of Facebook having control over a large blockchain, but I cannot deny what impact it may have on the crypto economy. If this is what is needed to make them more popular for the rest of the world, so be it.