Facebook Creates Crypto Buzz, But Why All The Fuss?

rycharde (63)in #facebook • 5 years ago (edited)

The cryptosphere seems abuzz with speculation about Facebook's soon to be released (at some point) cryptocurrency.

A nice churn of opinions can be found at: Facebook Coin Seeks $1 Billion in Funding; Is it Really the ‘Biggest Boon for Crypto Ever?’.

Here is an interesting take, although also a tad optimistic: Facebook Isn’t Going After Bitcoin. It’s Going After the Dollar.

Notice, however, that Bloomberg's older article talks about FB holding currencies, in the plural, and not just the US Dollar.

So, I just need to make some observations and ask a few questions.

Why do so many writers and commenters assume that a stablecoin has to be denominated in USD?

If I was designing a stablecoin now, I'd peg it to the IMF's SDR (Special Drawing Rights); it is a basket of currencies waiting in the wings to possibly replace them.

A stablecoin is only stable with respect to whatever it is designed to mirror. It is impossible for anything to be stable with respect to every local currency - unless, of course, it becomes the only currency left standing. Ted Livingstons says, "And a stablecoin allows money to move on the blockchain without the risk of it becoming more or less valuable than the local fiat currency." This is only true if the stablecoin is pegging the local currency, otherwise it isn't true. Perhaps I'm being pedantic over semantics in that the speed of blockchain transactions means the money sent is the same as the money that arrives, but such stability is not guaranteed for anybody holding a stablecoin beyond that transaction.

The existing cryptocurrencies can do nothing to stop Facebook, hence they are trying to spin this as a positive development for cryptos and blockchains in general.

I once lived in a town where the through-road was widened to allow for greater traffic to the border. The locals were excited, expecting more people to stop and eat and shop at the roadside businesses. I offered the opinion that they were more likely to sit there watching the cars and lorries pass by faster. What do you think happened? A high tide will not raise a sinking ship.

The idea seems to be that if FB can widen ownership of their own cryptocurrency, then that will open the door to wider ownership of other cryptos. I would wager that FB will make their coin look less like Bitcoin and more like Paypal. What if it is more like the JPM Coin but for personal use? If the latter, then FB coin need not even be traded on any crypto exchanges. It could even be a blockchain version of the abandoned Facebook Credits.

And finally, what will Zuck call his new coin? I would have gone for FAB, but that's already been taken. What would be an appropriate name?

And really finally, if you do have any concrete information that may answer some of my queries, then please share.

_{image: Facebook Credits, wikimedia. Remember those?}