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What Lies Ahead for Facebook if Its Crypto Project Works?

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Facebook eyes the peer-to-peer payment market

Facebook (FB) is developing a digital currency in the mold of Bitcoin that will be linked to its WhatsApp messaging platform and used for peer-to-peer payments, according to a report from the New York Times. The company has discussed with cryptocurrency exchanges the possibility of bringing its digital currency to mainstream consumers, according to the report. Square (SQ) operates a Bitcoin exchange linked to its Cash App.

Former PayPal (PYPL) executive David Marcus is reportedly leading Facebook’s crypto team. PayPal is one of the companies Facebook would compete with if it were to enter the peer-to-peer payment market. Google and Apple are also in the peer-to-peer payment business, with Google last year expanding its India-specific payment app, Tez.

A $19 billion boost to Facebook’s top line

Facebook could generate as much as $19 billion in additional revenue by 2021 if its crypto project works out, according to a Barclays investor note cited by CNBC. Facebook generated $55.8 billion in revenue in 2018. Twitter (TWTR) and Alphabet (GOOGL) reported revenues of $3.0 billion and $136.8 billion, respectively, in 2018.

In a move that could help it keep away from the many controversies that have dogged cryptocurrencies, Facebook is reportedly considering pegging its virtual currency to the value of a fiat currency, ensuring value stability.

Facebook currently derives the bulk of its revenue from advertising, so getting into the peer-to-peer business would open another avenue for the company through which to diversify its business.

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