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Facebook is reportedly developing a cryptocurrency to enable users of WhatsApp, one of its chat apps, to send cross-border transfers instantly, according to The New York Times, which cited five people briefed on the effort.
Facebook — which would roll out the coin this year — reportedly has 50 engineers working on its project, which is being led by former PayPal president David Marcus, and has had conversations with cryptocurrency exchanges about selling the coin on their platforms.
The social media giant plans to guarantee the value of the coin by backing each one with a set number of dollars, euros, and other national currencies held in Facebook bank accounts. The firm would integrate the option across Instagram and Messenger, which when combined with WhatsApp could bring the digital currency to 2.7 billion people.
This coin could have implications on the use of cryptocurrencies in both the retail and remittance industries. Merchants and payment firms, in the US specifically, have been shying away from cryptocurrency acceptance for purchases, as its high rates of transaction failures and rapidly fluctuating values are threatening to merchants because the value of a cryptocurrency can change before a purchase actually clears.
But Facebook’s approach of potentially utilizing blockchain and backing the coin with multiple foreign currencies, which could limit its volatility and possibly incentivize more merchants to accept it, could streamline cryptocurrency acceptance.
Additionally, the instant cross-border capability of this coin could have implications on the remittance industry, as some firms have dabbled in blockchain — which could increase speed and efficiency by cutting down the middlemen — to streamline transactions: Legacy remittance firm MoneyGram partnered with distributed ledger fintech Ripple to test its cryptocurrency within “payment flows,” a move that could help eliminate “prefunded accounts” — a type of account the remittance process relies on that can make transfers more time-consuming, tie up capital in select markets, and make transfers more direct.
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