According to a client note issued by Barclay’s internet analyst Ross Sandler, Facebook’s launch of its own digital currency could yield billions in additional revenue for the firm. The social network has been reportedly developing its own stable-coin, although precise details of the project remain limited.
Sandler estimates that the launch of “Facebook Coin” could add as much as $19 billion in revenue by 2021 and “change the story for Facecbook shares.”
Could Facebook’s Digital Currency be a Boon for the Social Network?
In the note issued today and originally reported by CNBC, Sandler gave both an upper and lower estimate of the opportunity presented by the launch of the new digital currency. Whilst not quite the almost $20 billion upper estimate, the internet analyst’s conservative reckoning was still an impressive $3 billion over the same two year period.
Sources reported by the New York Times claim that the social network plans to initially make its stable-coin available through its instant messaging application, WhatsApp. However, Facebook itself is yet to detail the project.
Sandler believes that the launch of a digital currency will give the company huge opportunity to grow. The Cambridge Analytica scandal last year impacted Facebook’s share price negatively. Sandler commented that the addition of an alternate revenue stream provided by offering payments is “sorely needed at this stage of the company’s narrative.”
The analyst went on to note that the inclusion of a native payment method would allow for more premium content appearing on the site. He then speculated on the nature of the eventual digital currency:
“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.”
During the client note, Sandler also drew attention to the social network’s previous efforts to launch a digital currency. In 2010, the company issued its first attempt at a form of electronic cash – “Facebook credits”. The profitability of this early scheme was questionable and it was ultimately shelved, however.
Sandler notes that the current effort into the payments space by Facebook is much more grandiose than that previous. He highlighted this with mention of the team of blockchain specialists being assembled at Facebook – amongst them, David Marcus, the former president of PayPal.
However, the Barclays analyst did admit to one or two challenges looming for the social network. He noted that “Facebook coin” would need to prove itself as more useful than existing methods of payments. This, if well-executed, should help the multi-billion-dollar company inspire greater investor confidence following the issues it faced in 2018.
Finally, Sandler speculated on the future. He stated that he could see the social network “eventually” getting into remittance payments and consumer lending.
Crypto Community Divided on “Facebook Coin”
The potential launch of Facebook’s digital currency has divided the opinion of the crypto space. Some believe that it represents a major milestone for general adoption and that billions of people could be about to be turned on to crypto:
Mark my words, if Facebookcoin (or Zuckbucks) is actually listed on crypto exchanges and is made accessible to 2.5 billion people, we’re in for a helluva ride.
— Jeremy Gardner (@Disruptepreneur) February 28, 2019
Meanwhile, legend of the crypto community Andreas Antonopoulos commented at length on many of the issues with such centrally-issued digital tokens in a video he posted to Twitter:
When Facebook launches a coin, many people will use these candy-colored financial surveillance systems.
The question is, what will you use? https://t.co/qQWAtw0OF1
— Andreas M. Antonopoulos (@aantonop) March 1, 2019
Related Reading: Don’t Count Facebook’s Crypto Or JPM Coin Out, They Could Boost Bitcoin