According to reports, Facebook is attempting to dip into payments space using its own cryptocurrency. This move seems to replicate WeChat’s (the Chinese equivalent to WhatsApp), which was widely successful in the Asian giant.
Will Facebook find the same success?
The answer has many faces. First, we must speak about Facebook Coin, the cryptocurrency Facebook is currently developing because the reports say that the payment system would use Facebook’s crypto.
So far, we know little about Facebook cryptocurrency plans. One of the few features we know it will have is that it’ll be a stablecoin, which means that instead of having a determined amount of available currency, like Bitcoin, it will have a fixed price at the amount of currency in circulation is what will vary.
How will be the price determined? As far as we can tell, it will be fixed against the dollar or a combination of dollars, euros and yens, depending on who you ask.
Also, Facebook Coin transactions will not be anonymous, as they will be linked with Facebook accounts.
We must take the project with a grain of salt. Many other crypto projects have been announced and never launched, so Facebook payment system may never see the light if the cryptocoin never hits the market.
On the other hand, we must consider what made WeChat payment system so successful in China.
What made WeChat Pay so successful is that it was integrated into the messaging system, allowing it to reach 900 million users easily. That’s something that will not be a problem for WhatsApp. But there is an important difference: WeChat Pay uses regular currency, not cryptocoins, which makes it much simpler.
Also, the fact that Facebook Coin will probably be pegged to regular currencies means that it will need real money-backing to function. The easiest and safest way is full reserving: for every certain Facecoin amount issued, Facebook will have to hold the same amount in reserves (in USD, euros, yen or whatever currency they will attach it to) and it is evident that many people do not trust Facebook due to issues in privacy and personal data storage.
If the move presents so much resistance and skepticism, why is Facebook still pushing it? Simple: it presents a $19 billion revenue chance. In the end, money talks.
Still, there are fundamental differences in how people in China use and see WeChat, and how we use and see WhatsApp. WeChat is more than a messaging app; it includes games, payments and many other features.