Analyst predicts Facebook’s FaceCoin could earn up to $19 billion by 2021

Analyst predicts Facebook’s FaceCoin could earn up to $19 billion by 2021

It is always encouraging for crypto enthusiasts when one of the titans of Fintech makes a demonstrative move in the crypto space. These moves are what must happen in order to raise public awareness to the next level, and one such highly anticipated move has been the development of a Facebook-based cryptocurrency, FaceCoin. The social media giant has not been forthcoming with specific details, but rumors and candid interviews with Bloomberg and the New York Times have yielded tiny morsels. The latest news, however, is that an analyst has taken these “morsels” and done the math. He predicts that Facebook could benefit to the tune of anywhere from $3 to $19 billion by 2021.

Ross Sandler, an Internet analyst with Barclay’s, made this disclosure in a recent client note. Based on his analysis of the details at hand, after cranking his assumptions into his carefully prepare spreadsheet, he was able to conclude that Facebook could, if everything falls into place, dramatically enhance its shareholder value over the next few years by adding billions to the bottom line.

The New York Times recently revealed that Facebook intends to issue a stable-coin, i.e., one backed by a basket of fiat currencies so that price volatility is not an issue, nicknamed “FaceCoin”. It would take advantage of a decentralized blockchain ledger system, supported by through its instant messaging application, WhatsApp. Facebook has not confirmed or denied this set of facts.

The coin would target both “Peer-to-Peer” domestic payments, as well as the lucrative cross-border remittance market, a market estimated to be roughly $500 billion in revenue per year. Per Sandler:

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.

Cross-border payments have traditionally been the private domain of global banks with footprints in multiple jurisdictions across the planet. Typically, these wire transfers are very costly, take up to 48 hours or more to complete, and are cumbersome at best. For the past several decades, there have been a multitude of startups that have tried to wrest control from banks by applying the latest in technology to advantage, but none have achieved critical mass or broad-based acceptance.

Facebook, however, has 2.3 billion active clients located across the globe, eager to try the latest that technology has to offer, and cryptos and blockchain bring a lot to the table that is new and innovative. A single medium of exchange does not exist today. One fiat must be converted to another fiat in order for the transfer to take place. FaceCoin would solve that issue and cut timeframes to a matter of seconds.

While some issues might fade away quickly, there remain other challenges that every cross-border service must face. Facebook (NASDAQ:FB) will need to form partnering arrangements with local crypto exchanges and perhaps mobile phone apps to make it convenient and seamless to convert FaceCoin to whatever fiat currency was desired.

Regulators stand large, too. As one reporter framed the hurdles ahead:

That would also be insanely messy from a legal / regulatory standpoint. There are privacy issues. There are security issues. There are liquidity issues. There are KYC / AML issues. There are regulatory issues involving not just one, or a few, but conceivably hundreds of regulatory domains. But if anyone has the reach and money and wherewithal to push that armada of boulders up this hill, it’s Facebook.

Facebook also has a checkered past in the payments arena. The firm tried its luck with “Facebook Credits” in 2011, a form of virtual currency, but the concept did not gain traction and was terminated within two years. “Facebook Gifts” was the next attempt and met a similar fate. “Facebook Messenger Payments” followed in 2015, but it, too, has languished about, searching for an audience of support.

Blockchain, a stable-coin, and WhatsApp, however, could wipe the slate clean and provide the “perfect solution” for leveraging Facebook’s broad and diverse customer base. While Sandler may have been overly optimistic on his timing assumptions, analysts within Facebook have obviously done the math, as well, and foresee their current development path as potentially opening a major opportunity for future growth. In any event, FaceCoin will soon be a reality and could propel the crypto industry forward.

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