GlobalCoin will be a so-called “stablecoin,” meaning low price volatility…
GlobalCoin is a new distributed cryptocurrency offering anyone the possibility to take advantage of the benefits of using cryptocurrencies in an easy way and with an added value.
GlobalCoin will be a so-called “stablecoin,” meaning low price volatility, especially in comparison to other cryptocurrencies such as Bitcoin and Ethereum. Low volatility will presumably encourage adoption and usage for transactions, where stable prices are essential to facilitate a common understanding of value for both buyers and sellers as well as to ensure consistent value over time.
Some of the advantages are:
- Ease of use of your account or wallet.
- Promptness in operations with no limits.
- Expense reduction for transactions.
- Value free from depreciation and Government or financial institution intervention.
- Possibility to get coin revaluations
Facebook is reportedly rolling out a digital payments system next year that will allow Facebook users (as well as WhatsApp and Instagram users) to pay for goods and services using Facebook’s own cryptocurrency, dubbed “GlobalCoin.”
Steps Followed by Facebook to Ensure Price Stability:
Facebook will peg GlobalCoin to a basket of international government-issued currencies, including the U.S. dollar, euro, and Japanese yen. If it follows the approach of other stablecoin projects, Facebook will use a large reserve of those international currencies to buy and sell GlobalCoin to offset price movements.
Facebook is attempting to ensure that GlobalCoin has broad financial institutional support by at least partially decentralizing the management of the currency among several organizations as part of an independent foundation. This not only distances Facebook from the regulatory obstacles of running its own currency but also enables and incentivizes adoption by bringing other large institutions, such as Western Union, into the fold.
Will Facebook’s GlobalCoin Impact Ecommerce?
For years, rumors have swirled about Facebook’s entry into cryptocurrency while the social media giant worked quietly to figure out its approach. Details are emerging.
Will the Facebook crypto-currency work?
Blockchain technology can help to slash the time and cost of sending money across borders by bypassing banking networks.
Blockchain expert David Gerard said that Facebook would gain access to valuable spending data by creating its own payment system.
However, he questioned why the social media giant needed to mint its own crypto-currency to harvest that data. Instead, he said, Facebook could create a platform like PayPal, which allows users to transfer traditional currencies.
Crypto-currencies are vulnerable to fluctuations in value, which Gerard said could create a barrier to the success of Facebook’s so-called GlobalCoin.
“Normal people don’t want to deal with a currency that’s going up and down all the time,” he explained.
But Garrick Hileman, a researcher at London School of Economics, said the GlobalCoin project could be one of the most significant events in the short history of crypto-currencies.
Conservatively, he estimated that around 30 million people use crypto-currencies today. That compares to Facebook’s 2.4 billion monthly users.
Advantages of GlobalCoin:
- Early adoption promotions. Facebook will almost certainly reward merchants for early acceptance of GlobalCoin, while also heavily promoting it to consumers. Merchants can look for opportunities to participate if interested.
- Developing countries. If an ecommerce business has customers in developing countries, GlobalCoin may be a fit. Facebook is reportedly pushing adoption in countries that are traditionally underserved by large financial institutions. Accepting GlobalCoin may provide a cost-effective way to expand a presence in those markets.
- Lower transaction processing fees. Processing payments via GlobalCoin will almost certainly be cheaper than traditional credit card processing fees.
Risks of GlobalCoin:
- Privacy. Processing transactional data creates new privacy concerns for Facebook. Merchants and consumers should closely monitor how Facebook will use the data.
- Conversion to local currency. Facebook is taking steps to help convert local currency into GlobalCoin (and vice versa) at ATMs and other exchanges. Merchants should evaluate the process, timing, and expense of the conversion to ensure it works for their capital needs.