Facebook Reportedly Working on Digital Coin Launch
Already established online communication companies are looking into the opportunities provided by digital assets, aiming at mainstream adoption.
Startup projects fueled by initial coin offerings (ICOs) have failed to achieve mainstream adoption for their digital assets, so established companies are taking the opposite route, adding a digital coin or token to their business model. As reported by the New York Times, Facebook is secretly preparing the launch of a coin to be used on the WhatsApp network, thus ensuring immediate widespread adoption of a digital asset. The newspaper was citing unidentified sources with knowledge of the matter, who claimed to have seen briefs for the idea.
Telegram, which conducted one of the largest ICOs about a year ago, is yet to issue a token. The project raised as much as $1.7 billion, according to some estimates, although the ICO haul may be much smaller based on 2019 prices. The TON token is yet to become widely adopted.
The attempts of Facebook and Telegram to create digital tokens for a chat environment are nothing new. In fact, pure crypto-based ventures have worked on this idea for years. Projects such as Status Network (SNT) were seen as promising although the actual delivery of a chat product has dragged. Using a token in a chat environment is still a technical challenge given the lack of scalability for some networks.
At the same time, the technical solutions of EOS, TRON, and other networks using delegates may help bring out a more agile token. This was the case with KIN, the project launched by the Kik chat app. Initially, the asset was based on the Ethereum blockchain. However, within the actual chat, Kik is planning to introduce a token that uses the Stellar (XLM) network, which is faster and cheaper.
The Times pointed out that the biggest advantage of a digital asset is the possibility for fast cross-border transfers of value. Still, even digital assets are not without limitations when it comes to large-scale payments. Most platforms include know-your-customer (KYC) procedures and cap the sums that can be sent. Unlike the idea behind Bitcoin (BTC) and other early cryptocurrencies, which offered a limitless global payment network, social media coins or tokens are designed for micropayments
Another issue is whether tech company coins or tokens would be tradable or use a different ecosystem to avoid the volatility of crypto exchanges. The KIN token, for example, has never been marketed nor listed on major exchanges, leading to slow trading and low liquidity.
As for the recently announced digital asset by JP Morgan Chase, the coin would run on a private network, and its value would be pegged to the dollar, also avoiding the inherent volatility of cryptocurrency valuations. Facebook has indicated its coin may be pegged to a basket of fiat currencies instead of just the US dollar.