Facebook Taps Winklevoss Twins, Coinbase to Help Build Massive Cryptocurrency Project
Facebook’s plan to launch a global cryptocurrency is bigger than initially believed. According to the Financial Times, the social media giant has held talks with at least two digital exchanges to gather intel on custody solutions and cryptocurrency conversion options.
Facebook’s Ambitious Plan
As Hacked reported on Friday, Facebook is reportedly making progress on a new cryptocurrency payment system that will be ready for trials by the end of 2019. The so-called ‘GlobalCoin’ cryptocurrency is expected to be launched in a dozen countries in the first quarter of 2020.
New intel from the Financial Times suggests that the scope of the project is much bigger than initially believed.
For starters, Facebook has already held talks with Coinbase and Gemini, two of America’s most prominent cryptocurrency exchanges, about coin safety and conversion options.
Coinbase, a San Francisco-based exchange with tens of millions of users, has expanded its services in recent years to target institutional investors. This includes developing a custody service that operates as a standalone, independently-capitalized fiduciary regulated by the state of New York.
Gemini was founded by internet entrepreneurs Cameron and Tyler Winklevoss – the same twins who sued Facebook founder Mark Zuckerberg in 2004 for allegedly stealing their social networking idea. They received a $65 million settlement and poured a huge chunk of that into bitcoin.
As FT reports, the Winklevoss backstory makes Gemini an unlikely partner of Facebook. Still, the social media giant will need all the help it can get navigating the complex regulatory challenges associated with launching its own currency.
The two exchanges aren’t the first companies Facebook has approached with its crypto endeavors. Mark Zuckerberg’s company is reportedly seeking to raise $1 billion for the new project and has already spoken with Visa and MasterCard about a potential partnership.
What Will Facebook’s Contribution Be?
Crypto purists have been quick to dismiss Facebook’s entry into the digital currency arena. After all, a centralized payment system operated by a company that sells your personal information to advertisers hardly fits the narrative of decentralization. It also spits in the face of many privacy-focused projects that have guided the blockchain revolution for the past decade.
But not everyone has sour grapes over Facebook’s plans to enter the market. In fact, many view it as a net positive for the ecosystem as a whole.
Zooko Wilcox, a developer of the privacy-focused Zcash, believes Facebook’s cryptocurrency plans are “awesome.”
Unpopular opinion: I think the fact that Facebook is working on a crypocurrency is awesome.
— zooko (@zooko) May 24, 2019
Among all the major privacy-focused coins, Zcash is arguably the most secure. You can thank zk-SNARKs for that.
Others, like Andre Z. Puschel, believe Facebook’s contribution to the crypto-sphere will be a “net positive.” If you believe that cryptocurrency needs mass adoption or at least widescale public awareness to succeed, social media platforms like Facebook could play a huge role.
I think any contributions to the space are net positive. Would prefer efforts went to building on bitcoin, but recognize volatility would be a non-starter. Unclear how exchange rates and regulatory complexities will be handled. And if a stablecoin, what currency is it pegged to?
— Andrew Z Puschel (@AndrewPuschel) May 24, 2019
Many Questions Unanswered
Facebook has been pretty hush-hush about its crypto endeavors and exchanges that are consulting with it have declined to comment. This means we don’t really know what ‘GlobalCoin’ or ‘Facebook Coin‘ will look like.
Conceivably, it will take the form of a stablecoin that will allow users of Facebook’s vast social media network to transfer money quickly and easily. This will likely have conversion options to and from fiat and other cryptocurrencies. Previous rumors indicated that WhatsApp could be the primary vehicle for the transfer service.
As of December, Facebook had roughly 40 people working on various blockchain applications. Less than two months later, the social media network acquired Chainspace, a blockchain startup that was founded by University College London researchers.
Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.