uploads///Crypto Project

What Lies Ahead for Facebook if Its Crypto Project Works?


Mar. 28 2019, Published 11:12 a.m. ET

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.

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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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