Facebook gearing up to develop a crypto-based P2P payment system


Facebook gearing up to develop a crypto-based P2P payment system

Major payment system providers like Visa (NYSE:V) and MasterCard (NYSE:MA) may be having nightmares lately and for good reason. The word on the street is that Facebook is aggressively moving forward with plans to create an internal payment system that connects overnight its 2.3 billion active customer base.

How do you do this feat without having to get the banks and their payment associations involved?

A crypto-based system would do the trick, allowing for a medium of exchange independent of central bank control and capable of handling cross-border traffic in a snap.

Does this plan sound like a pipe dream?

Not necessarily so. Facebook is in hiring mode, trying to attract the best and brightest developers in the blockchain and cryptocurrency space. They have already built a staff of forty professionals and are looking to add significantly to that number. David Marcus, the former president of PayPal (NASDAQ:PYPL) and VP at Messenger, formed the unit in April of this year. He has poached executives from his former employer, PayPal, as well as from Google Pay and Samsung Pay. Marcus has also been a former board member at Coinbase, the largest US-based cryptocurrency exchange, and has been an outspoken advocate of the cryptocurrency revolution.

Alex Heath, a reporter for Cheddar’s, asserted that:

They’ve been very quiet about what they’ve been working on, very stealthy. But it’s definitely going to be some kind of blockchain-based cryptocurrency payments product. They’ve already got policy people in D.C. to ramp this up. They’re actively, actively recruiting. They’re also trying to scoop up crypto start-ups that are at the white-paper level, which means they don’t really even have a product yet.

Despite the exciting idea that Facebook would even consider taking on titans like Visa and MasterCard, the news is that they are not having an easy go at acquiring the talent that they need. Mark Zuckerberg has alienated many industry insiders with his decision to sell personal data to private firms for profit. He may have crossed an ethical line that to many can never be rectified. According to another reporter:

Facebook CEO Mark Zuckerberg has apologized for the debacle, but the damage to his credibility and to Facebook’s brand continues to reverberate.

Once again, Heath adds his insights:

The talent in this industry is so finite, and there are so many big players wanting these talented cryptographers and academics. So Facebook is going really hard at them. And they’re having difficulty. A lot of people obviously don’t trust the Facebook brand right now, especially people in the crypto/blockchain world. A lot of them got into this industry because of the centralization and the data misuse of companies like Facebook.

A general premise in business is to build a large network of customers and then leverage that network by selling additional value-based services for a fee. A proprietary payment service is actually an incredibly clever strategic initiative. To attempt to achieve this plan in a traditional manner would require a presence and approval of local banking authorities across the planet. A simple crypto token, perhaps a stable coin to preserve a constant value in U.S. Dollars, could leapfrog this authorization process and be up and running in a short period of time. The major hurdle will be security.

Can Facebook block the hacking attacks that will surely come, as well as regulatory attempts to block and tackle their efforts on the ground?

Alex Heath concluded that:

So the idea of Facebook creating a cryptocurrency and a digital economy within its ecosystem is either incredibly exciting — if you talk to some people — or one of the scariest things in the world, if you talk to others. It’s very polarizing, but they are actively building this up. I think we can expect to see Facebook buy some companies up in the crypto space in the next year.

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Facebook gearing up to develop a crypto-based P2P payment system

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