One of the world’s most innovative media executives says Facebook has been forced down the crypto path and he isn’t convinced the journey will work out.
Robert Tercek, who has worked for Sony Pictures and the Oprah Winfrey Network (OWN), says the social media giant is struggling and needed to try something new.
“Facebook has no choice – usage is down, visits are down, engagement is down, revenue is down. They’ve admitted this publicly,” Mr Tercek told Mark Pesce on the ‘The Next Billion Seconds’ podcast.
“They have a growth problem. They’ve hit the growth wall, and largely it’s self-imposed.”
“So they have no choice. They have to seek out other forms of revenue.”
How will a Facebook crypto work?
Facebook’s plunge into crypto has happened gradually, with only small hints emerging about what it’s actually planning.
The first hint came when an executive from Coinbase left the crypto exchange to be part of a mystery Facebook project.
Then in December of 2018, Facebook advertised five blockchain positions on the careers page of its website, sparking speculation it was close to launching some kind of crypto product.
The rumour is that Facebook will make a crypto for users of the messaging service WhatsApp, with a token to be used for money transfers within the app.
Mr Tercek agrees that is one of the most obvious paths for Facebook to take.
“They have this enormous base of people using WhatsApp, which they actually haven’t been very successful in monetising, so this is an area for them to look at other opportunities,” he said.
“The global remittances business is about a 500 billion dollar business. So it’s a nice, big, juicy business. It’s dominated by companies like Western Union.
“Let’s say the average worker sends about $200 or $300 a month back to their home country, you’re going to pay a fee somewhere around $12.
“If you can cut that in half – obviously people are going to move their business.”
The challenge for a Facebook crypto
Mr Tercek says there is one significant factor that’s standing in the way of a Facebook crypto being successful. That factor is trust (or a lack thereof).
“What strikes me as paradoxical here is the company that’s done more to destroy trust on the Internet is seeking to offer a new kind of currency and basically they’re going to hang this whole thing on ‘trust us,’” he said.
“I’m a skeptic.”
The opportunity for a Facebook crypto
Bitcoin pioneer Mark Jeffrey, who joined Mr Tercek on the Mark Pesce podcast, has a more optimistic view of any potential Facebook crypto.
“The amount of money that’s in the world is 80 trillion dollars,” he said.
“So that’s the addressable market of the store and transfer of value app.
“Facebook has recognised this. Stable coins are the first step, that’s the gateway drug into that universe.
“Facebook is late to the party, however this is a very, very real market.” M
What would a Facebook crypto do for Bitcoin
While Facebook is expected to use a ‘stable coin’ for any transactions, Mr Jeffrey believes a Facebook crypto could do wonders for Bitcoin.
“I don’t think the stable coin is the end of it once your have a stable coin that’s easily traded for other things.”
“Overall, it’s a good thing because they’re introducing cryptocurrency to a whole bunch of people that have never used it before.
“And once they get used to the idea that they can send currency as easily as email in any amount without crazy fees, once they get hooked on that they’re never going to go back and they’re going to start exploring all of the options in that universe.
“So ultimately, I’m all for this.”
But Mr Tercek isn’t so convinced.
“Wouldn’t that be a colossal irony,” he said.
“Here we are at the 10th anniversary of cryptocurrency being introduced and the whole principle is decentralisation so now this centralised giant – this company that’s seeking to dominate every aspect of our lives and monetise our data – is now going to try to also centralise digital currency and go in the exact opposite direction of the original thesis of Bitcoin.” M