Friday, March 1, 2019

After Facebook Announcement of Potential Cryptocurrency, the FB Stock Does-Nothing

CoinSpeaker
After Facebook Announcement of Potential Cryptocurrency, the FB Stock Does-Nothing

We already wrote of how Facebook is talking to exchanges about potentially listing a cryptocurrency. That’s the main finding from a New York Times story published on several efforts to introduce native cryptocurrencies to widely used messaging platforms.

There were also reports that Signal and Telegram are also planning to roll out tokens over the next 12 months.

However, even though they announced, what we could say, pretty big news – the Facebook stock price didn’t seem to bother. It stands pretty steady at $161.45 on Nasdaq. This is interesting if we look at the recent Snapchat tumble of 13 percent what happens to be its worst performance since May last year.

However, analysts agree that the company has financial statements that Wall Street dreams are made of. Profit margins are at 40 percent, free cash flow outperforms due to low capex, and annual growth exceeds 20 percent year-over-year. In fact, FB posted 35 percent growth this past year with lots of runway to go.

Actually, it was Bloomberg who first broke the story of a “Facebook coin” in December last year. This part, reported first by Bloomberg, apparently remains true:

“The company is developing a stablecoin, a type of digital currency pegged to the U.S. dollar, to minimize volatility, said the people, who asked not to be identified discussing internal plans. Facebook is far from releasing the coin, because it’s still working on the strategy, including a plan for custody assets, or regular currencies that would be held to protect the value of the stablecoin, the people said.”

Hoping to Succeed Where Other Coins Have Failed?

Then came Nathaniel Popper and Mike Isaac at the NYT who reported that Facebook, Telegram and Signal all plan to “roll out new cryptocurrencies over the next year that are meant to allow users to send money to contacts on their messaging systems, like a Venmo or PayPal that can move across international borders.”

However, in their statement, Facebook did not directly address its work on a digital coin. The other companies declined to comment on their projects. Most of them appear to be working on digital coins that could exist on a decentralized network of computers, independent to some degree of the companies that created them.

Like Bitcoin, the new cryptocurrencies would make it easier to move money between countries, particularly in the developing world where it is hard for ordinary people to open bank accounts and buy things online. The current designs being discussed generally do away with the energy-guzzling mining process that Bitcoin relies on.

It is already known that Telegram, which has an estimated 300 million users worldwide, is also working on a digital coin. Signal, an encrypted messaging service that is popular among technologists and privacy advocates, has its own coin in the works. And so do the biggest messaging applications in South Korea and Japan, Kakao and Line.

The truth is that Facebook is looking at several ways to use the blockchain, the technology introduced by bitcoin that makes it possible to keep shared records of financial transactions on several computers, rather than relying on one big central player like PayPal or Visa.

Is Coming to Blockchain Worth It?

In a recent video interview with Jonathan Zittrain, a Harvard law professor, Facebook’s CEO Mark Zuckerberg was pretty vocal about how convenient it would be for internet users to utilize various services with only one set of login credentials. He acknowledged that there is no service out there currently, but that he has been “thinking about” it.

Facebook does have Facebook Connect, which is a single sign-on application, but blockchain would allow for the information to be stored on a decentralized system.

Zuckerberg pointed out that while blockchain could “empower users”, the “question of consent” would still be an important consideration.

He appeared ambivalent about the idea – although one thing is for sure: Zuckerberg is certainly thinking about blockchain more than ever. When one considers that Facebook has a market capitalization of billions of dollars and boasts over 2 billion monthly active users – the company utilizing blockchain for log-ins would certainly send a message to the tech world.

After Facebook Announcement of Potential Cryptocurrency, the FB Stock Does-Nothing



After Facebook Announcement of Potential Cryptocurrency, the FB Stock Does-Nothing

Cryptocurrency is a digital currency that uses encryption (cryptography) to regulate the generation of currency and verify the transfer of funds, independently of a central bank. Cryptography is the practice and study of techniques for secure communication in the presence of third party adversaries.


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