The worst of two worlds? A comment on Facebook's digital currency

Even in the bear market so many companies want to jump on the crypto train. Although the hype about digital currencies seems frozen in the crypto-winter, the subject of Bitcoin & Co. is not dead for companies either. Now Facebook seems to be working on its own digital currency. Why the term "cryptocurrency" is forbidden and what the coin is about, we explain in the commentary.

In the bull market they shot like mushrooms from the earth: We are talking about Altcoins. Everybody thought that the Bitcoin value proposition could be implemented faster and better. Bitcoin is too lazy? Here you have Bitcoin Cash! On Bitcoin, you can not place a utility token? Long live ICOs!

The cryptocurrency no. 1 is off the throne, but no Altcoin project has succeeded. All the more surprising that the issue of cryptocurrencies remains attractive from a marketing perspective. But one after anonther.

Facebook is planning the crypto coup
At the end of last year, we reported plans by Internet giant Facebook to work on a kind of stable coin. The currency, the rumor mill said, should be covered by a basket of fiat currencies like the US dollar. The value is then secured by deposits of the Facebook group. This would stop the speculative activity of the crypto community and thus ensure its functionality as a payment token. Now, the New York Times reported news about Facebook's cryptocurrency with reference to an anonymous five-member group from the development team.

Thus, the development status of the coin is already well advanced. The company is currently in contact with a number of Bitcoin exchanges; one should expect a launch in the first half of this year.

Furthermore, up to 50 employees were hired specifically for the project Facebook Coin. They form a kind of "Blockchain Task Force", which is reportedly under the direction of former PayPal boss David Marcus. Expertise in terms of payment systems, of course, exists.

Focus on payment function

And that's the crux of it all. Although Facebook remains silent in this matter, one can assume that the Coin has as little to do with a cryptocurrency as Bitcoin SV does with "Satoshi's True Vision." The cooperation with Marcus is good evidence that the focus of the coin should be primarily on the establishment of a payment system between the various Facebook platforms Messenger, WhatsApp and Instagram.

A focus makes sense from a business perspective. Finally, a decentralized cryptocurrency secured by proof of work can not be monetized or controlled centrally. So, if you're looking forward to an exciting New Coin on the Block, it's awry. The "Facebook cryptocurrency" will most likely be a kind of PayPal replacement for users of the social media platforms from Facebook.

That does not have to be bad per se; however, one should be aware that centralized payment systems conflict with the nature of cryptocurrencies such as bitcoin. Payments with such coins are therefore neither censorship-resistant (a circumstance that should not be taken lightly in view of the past data scandals), nor can network participants participate in the project through decentralized incentive structures.

Basically, Facebook could easily integrate PayPal. The result would have been the same.