Facebook and Digital Money

March 4, 2019

Digital currency like Bitcoin is often associated with cyber crime. Rightly or wrongly, Bitcoin evokes images of Dark Web markets selling drugs, an association reinforced by the Silk Road bust.

Facebook, on the other hand, evokes smiles from grandmothers, but a UK investigative body characterized Facebook is more negative terms. My recollection is that the British government sees Facebook as an example of Wild West capitalism which intentionally or unintentionally enables outfits like the now defunct Cambridge Analytica.

I thought about these associations when I worked my way through “Regarding Facebook’s Cryptocurerncy.” The write up asserted:

just because Facebook launches a stablecoin cryptocurrency for peer-to-peer payments doesn’t mean people will actually use it.

Facebook’s possible angle is getting money. The write up points out:

Remittances are the obvious target market here. And it would be huge, and important, and wonderful, if Facebook were to make remittances 10x cheaper and faster … but that would require much more than fast international stablecoin transfers, because, again, those stablecoins are not legal tender at their destination, and I don’t know if you’ve noticed but businesses tend to have this whole thing about receiving legal tender.

The fix is for Facebook to find ways to get organizations to accept Facecoins.

The other angle is:

for Facebook to establish relationships with cryptocurrency exchanges worldwide, or — even more dramatically — become or sponsor exchanges themselves.

The write up is interesting, but it left me with several questions zipping through my admittedly limited brain:

  1. How could bad actors make use of Facecoin?
  2. Will Facebook provide these digital currency data to government authorities?
  3. What third party services will Facebook enable through an existing or new API?
  4. What audit mechanisms are in place?
  5. What if Facebook’s presumed digital currency is used for illegal activities?

I would suggest that when digital currency becomes part of an organization which the British government views in a less than positive manner, regulatory authorities may be sitting on the sidelines.

Stephen E Arnold, March 4, 2019

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