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Author: Anatol Antonovici
Senior Reporter
Anatol Antonovici

Facebook Might Add $19B if Crypto Project Succeeds

Banking giant Barclays estimated that Facebook could add up to $19 billion in revenue by 2021 if its cryptocurrency project work, CNBC reports, citing a note to investors prepared by Barclays internet analyst Ross Sandler.

The Best Case Scenario

Last week, we reported that Facebook might launch its own cryptocurrency in the first half of 2019. Now Barclays gave some estimates related to how much the tech company would gain from adopting the blockchain-based coin. In the best-case scenario, Mark Zuckerberg’s social media giant can record about $19 billion in additional revenue within two years.

Facebook is now working on a digital currency, called Facebook Coin, to be used for peer to peer payments on WhatsApp application.

On Monday, Barclays analyst Ross Sandler said in a note to clients that the crypto project might bring in billions in revenue. He said:

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

It’s worth mentioning that Facebook’s digital currency is likely to be a stablecoin, suggesting that it will have a fixed price against the US dollar. Thus, speculators won’t find it attractive.

Facebook has recently had a difficult period with the Cambridge Analytica scandal in the spotlight. An emphasis on payments might help the company become attractive to investors again. The upcoming coin might be the start of a new revenue option, which, as Sandler put it, is something:

Sorely needed at this stage of the company’s narrative.

He added:

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.

Facebook Has Already Had a Virtual Currency

Barclays noted that Facebook had already introduced a form of virtual currency back in 2010. However, it has nothing to do with blockchain and today’s cryptocurrencies. Called "Facebook credits," these virtual units could be purchased with fiat money and then used for buying app options.

The problem was that Facebook had to consider the interchange cost, which, as Sandler said:

Negatively impacts the profitability of the business, especially when making high volumes of lower-value transactions.

That business strategy can work today given that the Silicon Valley giant and the crypto sector went mainstream while Instagram and WhatsApp became among the most popular apps worldwide.

Based on our checks, the first version of Facebook Coin may 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.

Sandler stated.

He added that the scope of the current project was much larger than the Facebook credits one. The strongest argument is that the social media company has built an entire team for Facebook Coin, led by former PayPal president David Marcus.

Sandler concluded that, if the Facebook Coin reaches success, the company might eventually expand its offers and get into services like consumer lending, physical payments, and remittance.

WhatsApp Co-Founder Calls Everyone to Delete Facebook

Ironically, when Facebook prepares a cryptocurrency for WhatsApp, which it owns, the co-founder of the latter reportedly told students to delete their Facebook accounts, as he is critical to the company’s profit models.

Speaking for Computer Science 181, an undergraduate class that revolves around tech firm’s social influence and ethical responsibilities, Brian Acton revealed more details about how he had sold WhatsApp to Facebook and how the latter was using ads and private.

Meet The Author
Anatol Antonovici
Anatol Antonovici
Senior Reporter

Anatol has been writing for our news site for a year and is the newest member of our team. While he’s new to us, he’s certainly not new to trading with over 10 years’ experience being a professional financial journalist and working in the markets.

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