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This article is from CoinDesk and was originally written by Brady Dale
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Facebook has started rolling out its own cryptocurrency, but frankly, the world's largest social media company hasn't made an official public announcement about it so far. So for the past six months, all we know is what we've learned from media reports, but even a peek into the pipeline gives us some insight into how Facebook is utilizing blockchain technology.
In short, Facebook is currently building an asset-backed cryptocurrency under former PayPal president David Marcus, and it will operate within its internal instant messaging infrastructure, including WhatsApp, Instagram and Facebook Messenger.
The latest news on the Libra project comes from British broadcaster BBC, who revealed that Facebook has internally dubbed its cryptocurrency GlobalCoin, and that it is expected to be launched in more than a dozen countries around the world in the first quarter of 2020.
However, Mark Zuckerberg's "diversification ambitions" into the fintech industry have been going on since 2017. Here's a look at everything you need to know about Facebook's cryptocurrency.
December 2017
Facebook's earliest demonstration of interest in distributed ledger technology occurred in December 2017, when David Marcus joined the board of directors of Coinbase, a well-known cryptocurrency exchange. This move was notable because David Marcus had another role at the time - Vice President of Instant Messaging Products at Facebook, where he managed two of the world's largest instant messaging apps: Facebook Messenger and WhatsApp! (Facebook acquired WhatsApp in February 2014 for $19 billion).
While Facebook is already one of the top few companies in the world in the instant messaging space, there is still one functional difference between them and their biggest competitor, WeChat: payments.
At this point, David Marcus' role is particularly important, as he was previously president of US online payment giant PayPal, and should be well placed to solve these kinds of technical problems.
August 2018
What's more, Facebook isn't limiting itself to "just" payments; in August 2018, it decided to get serious about cryptocurrencies after David Marcus decided to leave the Coinbase board.
In fact, the main reason David Marcus relinquished his position on Coinbase's board of directors was that he was appointed by Facebook in May 2018 to run the blockchain business. According to a Coinbase spokesperson at the time, David Marcus left Coinbase to avoid the appearance of a conflict of interest.
December 2018
The surfacing of Facebook's cryptocurrency began in December 2018 with a Bloomberg report that Facebook allegedly planned to issue a stablecoin anchored to a "basket" of currencies. Stablecoin is a controversial cryptocurrency because it is a relatively frictionless solution compared to other cryptocurrencies, and is generally not subject to price volatility.
But that's also when the concern began that Facebook's cryptocurrency might be overly centralized. After all, many stablecoins in the cryptocurrency industry have had their share of problems, such as Tether's USDT, Ampleforth, TrueUSD, and the ill-fated Basis.
Subsequent reports have also revealed that Facebook is planning to run a cryptocurrency pilot within its WhatsApp product, and the first target is from India - which brings us to the fact that Facebook's crypto ambitions are expanding step by step. According to a source, it seems that Facebook is not just focusing on stablecoins at the moment, as they are approaching several crypto-hub companies and other supporters in an effort to alleviate the industry's concerns about its over-centralization.
January 2019
The New York Times is reporting that Facebook wants to unify the deployment of cryptocurrencies on Instagram, WhatsApp, and Facebook Messenger, apparently for a strategic reason, because on one hand, it could boost the P2P payments business across platforms, and on the other hand, it could also attract a new group of cryptocurrency user base for Facebook's social network.
February 2019
In early February, tech news outlet Cheddar revealed that Facebook had acquired Chainspace, a UK-based blockchain company. The deal was reportedly a "talent acquisition," in which Facebook recruited the startup's employees without looking at its business.
In fact, since the beginning of 2019, Facebook has been posting a lot of jobs related to blockchain technology, and they've been tapping into talent the "old-fashioned" way with acquisitions. Shortly thereafter, rumors surfaced that Facebook was looking for investors to back its cryptocurrency project, and many Silicon Valley investors said they had heard that Facebook was raising money, but didn't disclose many details.
The release of Facebook's cryptocurrency was delayed at the end of February, but at that point it became clear that the project was being run in a mysterious way. All of the social media giant's blockchain-related work appears to be "behind closed doors," and all of the people involved have signed non-disclosure agreements with Facebook.
At the time, four sources told the New York Times that Facebook had been in contact with a number of industry-leading cryptocurrency exchanges. (According to the FT in May, Facebook met with two exchanges, Coinbase and Gemini.)
April 2019
Facebook Inc. claims to be focused on privacy, and Mark Zuckerberg elaborated on this to developers at its annual F8 conference, arguing that sending money to others should be as simple as sending a photo. Mark Zuckerberg believes that the public news feed should no longer be Facebook's main attraction, and he wants Facebook to be a platform for people to communicate in privacy.
However, end-to-end encrypted content could reduce the viability of ad targeting if this does happen. This, in turn, is precisely why Facebook is issuing cryptocurrencies, as by doing so, it will allow them to make up for the loss of ad revenue.
Notably, 98% of Facebook Inc.'s $40 billion in revenue in 2017 came from the advertising business. According to analysts at Barclays, Facebook's cryptocurrency revenue will soar from $3 billion to $19 billion by 2021.
May 2019
New York Times reporter Nathaniel Popper revealed on Twitter that Facebook was seeking outside funding for its Libra cryptocurrency project. The Wall Street Journal later confirmed the story, revealing that in addition to seeking help from venture capital, Facebook had also met with Western Union and payments giant Visa.
Meanwhile, the U.S. Congress has begun to pay attention to Facebook's coin offering. To deal with this, Facebook has tapped two compliance professionals from Coinbase who have extensive experience in the banking and payments industry. Not only that, but Facebook also brought in MIT cryptoeconomist Christian Catalini to advise Libra.
In mid-May, Reuters reported that Facebook had registered a new company called Libra Networks in Switzerland, with Facebook Global Holdings as a shareholder. The company has adopted the Libra project name, and from the registration it appears that they will be developing financial services products, of which blockchain is a key component.
According to Le Temps, "Libra Networks" is actually headed by Majella Goss, who not only oversees Facebook's Swiss marketplace, but also runs a co-working space in Geneva.
According to the information disclosed by the BBC, Facebook's GlobalCoin cryptocurrency test will be launched at the end of this year, and the official release should be in the first quarter of 2020. In addition, Facebook could take a cue from the success of the Asian e-commerce stablecoin Terra and offer its customers discounts on online purchases through GlobalCoin - something that would benefit both Facebook and retailers, given the current high processing fees for paying with credit cards.
Well, that's all there is to say about Facebook's "Libra" cryptocurrency project so far, can Mark Zuckerberg use cryptocurrency to transform Facebook and keep it ahead of the curve? Let's wait and see.
