Will Facebook Cryptocurrency Have A Long-Term Impact?

Facebook Cryptocurrency: More Questions Than Answers

Facebook and Google frequently attempt to pivot from advertising with more failure than success. Google calls these “Other Bets” with “bet” being an appropriate word as user adoption for massive tech companies is always challenging to predict. Psychologically, these companies do not hold as much power as investors may think as acquisitions have always been the better path rather than launching products (Facebook: Instagram and Whatsapp vs. dating, for instance, or Android and YouTube for Google vs. Google Glass, for instance).

  1. Bank accounts are not tied to Messenger or Whatsapp, therefore there will be friction in the transfers and setting up crypto wallets.
  2. Messaging apps like Venmo transfer money without fees already and is linked to bank accounts. In other words, payment applications may be a better fit for crypto transfers.
  3. Many thought leaders in tech and those inclined to support disruption are adamantly against the Facebook platform and began the #deleteFacebook campaign. This group uses Signal for messages. Are power Facebook users and Whatsapp users disruptive enough to drive crypto adoption?
  4. Amazon already accepts payments while Apple is moving into financial services. Facebook’s direct leap into crypto could have psychological barriers for users who have not used Facebook for payment of any kind. Notably, Jack Dorsey of Square is also hiring a crypto team.
  5. Cryptocurrency is heavily regulated by foreign governments, and in some cases is illegal. With Facebook showing signs of saturation domestically in the United States, the company will have to rely on foreign governments legalizing the coin and allowing Facebook to be a crypto player in their country. I see this as a major headwind as currency brings up more regulatory issues than what tech has dealt with previously.
  6. Facebook is known for being used for election tampering and there is bipartisan support to regulate the social network. Globally, Facebook has been used by terrorist groups. Therefore, the platform could be especially prone to fraud and laundering compared to Amazon, Apple or a pure-play crypto option.
  7. Facebook would need to be regulated closely like a financial institution which would change how the company collects and uses data. Gramm-Leach-Bliley Act is a good example of a regulation that tightens the use of data for companies that are involved in financial transactions.

Sign up for Analysis on the Best Tech Stocks

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Beth Kindig

Beth Kindig

CEO and Lead Tech Analyst for the I/O Fund with cumulative audited results of 141%, beating Ark and other leading active tech funds over four audit periods in 2