Facebook studying crypto and India’s remittance market
“Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology,” a company spokesman told Indian media, adding that a “new small team is exploring many different applications. We don’t have anything further to share.” Photo: Reuters/Dado Ruvic/Illustration Facebook is known for beating all the […]
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Facebook is known for beating all the bushes when it comes to growing its business and, as 2018 came to an end, word came that it might be ready to inject a new cryptocurrency-based solution into India’s immense stream of revenue remittances and will be doing so via its globally popular WhatsApp messaging service.
The stakes are huge – some suggest that the total contribution of Indians abroad accounts for more than 10% of the more than $600 billion annual flow in remittances worldwide – but predicting Facebook strategy is not easy today. The social media giant says very little to the media in general and has said even less about this venture.
As far as India is concerned, the only recent item on the Facebook’s regular release roster was written by Sarah Clark Schiff, an FB product manager at Facebook and was entitled: “Increasing Ad Transparency Ahead of India’s General Elections” which speaks more to the bumpy and very public ride that the social media giant experienced in 2018.
“It’s important that people know more about the ads they see,” wrote Schiff, “especially those that reference political figures, political parties, elections, and legislation. That’s why we’re making big changes to the way we manage these ads on Facebook and Instagram. We’ve rolled out these changes in the US, Brazil, and the UK, and next, we’re taking our first steps towards bringing transparency to ads related to politics in India.”
Facebook did not respond to a request from Asia Times for a press release or official statement on the status of the Indian remittances venture but there are plenty of others that are speculating about its entry into the crypto sector. One Forbes crypto commentator went as far as describing the move as wanting to morph into “the world’s largest cryptocurrency player and building a mobile payments platform that could rival Visa, as well as some day disrupt the global banking system itself.”
Rumours about Facebook’s crypto strategy ramped up significantly when David Marcus left the board of crypto startup Coinbase to first head Facebook Messenger and then take the reins of a new and somewhat mysterious FB crypto venture team several months ago.
India’s intensive media has also been awash in hyperbolic portrayals of what is about to be launched. The Hindustan Times recently wrote: “Facebook is working on making a cryptocurrency that will let users transfer money on its WhatsApp messaging app, focusing first on the remittances market in India, according to people familiar with the matter.”
According to the Hindustan Times, “the company is developing a stablecoin – a type of digital currency pegged to the US dollar – to minimize volatility, said the people, who asked not to be identified when 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.”
“Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology,” a company spokesman told the paper in a statement. “This new small team is exploring many different applications. We don’t have anything further to share.”
The Times of India sort of spoiled the party when it delivered a sobering message to the estimated 200 million WhatApp users in India in a January 9 article entitled, “6 apps that can hack your Facebook, WhatsApp, Instagram data.” The Times tried to warn readers to be extremely cautious upon entering the realm of “WhatsApp” due to emergence of malware which uses “Firebase Cloud Messaging to send information” among other things. A certain SMS vulnerability is also mentioned.
Yet perhaps the most pertinent question in all of this came from the Motley Fool, who, in a story entitled “Facebook Chases Square Into the Peer-to-Peer Crypto Market”, asked if Facebook shouldn’t “be focusing on its privacy and security issues instead?”
By doing so, “The Fool” said the media giant could have comforted rattled users and investors while also “demonstrating that the company was more interested in improving its core business than aggressively chasing hot trends like mobile payments and cryptocurrency transfers.”
However, The Fool went on to credit Facebook for taking a very cautious and methodic approach to the new dimension of its supposed WhatsApp offering and said FaceBook was courting what The Fool described as a huge population in India that “leapfrogged the PC generation and started their computing experiences on smartphones.” It described Asia as “a rare bright spot [for FaceBook] and says Asia is a region “where daily active users and average revenue per user both rose 18% annually last quarter, fueled by its growth in India, Indonesia, and the Philippines.”
How all of this will play out in the light of the Indian government’s ambiguous, and at times hardline stance on crypto, remains to be seen.