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Much has been made recently of Facebook’s decision to launch its own cryptocurrency. These plans may have been a bit misconstrued in light of the company’s actual intentions. At the end of May, crypto reporter Kyle Torpey shed some new light on the issue in a post on www.forbes.com. Let’s start to clarify Facebook’s planned entry in the crypto market.
Facebook’s plans to launch its own cryptocurrency will likely be in name only. This is opposed to Bitcoin’s roll in the industry as the leading decentralized digital currency of choice. The term being used for the new entry is ‘GlobalCoin’. This would more likely resemble Ripple’s XRP token as a centralized digital currency.
Terms such as cryptocurrency and blockchain technology are often used with limited understanding of their true meaning. Bitcoin and other decentralized cryptos are not tied to any financial institution. Market values are dictated by their trading value in the absence of any solid market indicators. Ripple’s XRP token and Facebook’s planned Global Coin would be tied to a more centralized institution.
Bitcoin transactions were designed to be dynamic and mostly anonymous. Devoid of direct ties to financial entities as well as specific governments, bitcoin acts as a political version of digital currency. New apps that would expand bitcoin payments to more mainstream venues such as Whole Foods and Starbucks are more custodial wallets. This is a more controllable and ‘censorable iteration’ of bitcoin payments.
To put things in more simpler terms, Facebook’s GlobalCoin would better resemble PayPal than Bitcoin. PayPal would be considered a traditional, centralized payment wallet. Facebook’s planned application works in the concept of crypto and blockchain as popular buzzwords.
Facebook is working with banks and other traditional and centralized financial institutions on this initiative. The main point behind bitcoin was a complete avoidance of the traditional boundaries of centralized entities. Known as stable coins, nobody knows when regulatory authorities will decide to crack down on these centralized coin offerings.
According to noted blockchain skeptic David Gerard, there has yet to be any kind of explanation of why Facebook’s planned digital payment system is being developed as a cryptocurrency. It is highly unlikely that any government would allow a centralized Digital Currency to operate in an anonymous and uncontrollable manner.
• Source: ’What Facebook’s Cryptocurrency Means: 6 Predictions From Forbes.com On June 8, 2019.