Facebook vs. Bitcoin: Massification Challenge
Facebook promises to massify its cryptocurrency, but Bitcoin is still the most popular with 172 active addresses
One third of the world’s population starting monthly sessions on its platform make Facebook the most popular social network. Now the company plans to create its own cryptocurrency, which could become one of the most widely used. Moreover, it could also compete directly with Bitcoin due to its number of users.
Bitcoin and Facebook’s cryptocurrency certainly have different purposes and are aimed
We cannot compare the market possibilities of a crypto asset such as Bitcoin, whose owners’ trust generate value, with another supported by a fiduciary currency, since they work differently. However, some media and members of the crypto market see Facebook’s project as a possible contender for public cryptocurrencies because of their potential adoption. Many inactive members of the cryptocurrency community would not easily notice the conceptual and operational differences of both assets.
More than One Billion Users
Some studies indicate that Facebook owns a total of one billion active users monthly. This figure is equivalent to the population with the most potential adoption of the cryptocurrency, since Facebook plans to have the crypto asset distributed as a reward for those users who see advertisements, interact or buy products on its platform.
The crypto asset can also be used by Facebook and WhatsApp users to send remittances or mobile payments, so it should be considered that WhatsApp also owns more than one billion active users around the world.
Regarding Bitcoin, a big difference can be seen in the figures. A Chainalysis study last year said that 172 million Bitcoin addresses are economically active. Each of these addresses may not belong to a single user, but an individual may own several wallets or addresses within the network, so it cannot be asserted that there are 172 million Bitcoin users.
The figures vary according to the studies, since a Statista report affirms that there are really only 36 million active Bitcoin addresses and the University of Cambridge postulates that there are 139 million registered users in exchange services around the world. Consequently, it is impossible to know how many users there are in the crypto market. However, the number of Bitcoin users will not reach that of a social network of Facebook’s size.
Facebook’s cryptocurrency has a high possibility of being massified, since it is devised with the aim that all the company’s customers can access it. However, a point against Facebook could be the state regulations, since if this crypto asset wants to operate in the United States, it will have to be accountable to regulatory bodies such as the Securities and Exchange Commission (SEC), which has previously been an obstacle for the launch of cryptocurrencies within social networks, as was the case of the Telegram and Kik projects.
Battle of the Titans
Facebook is not only competing with Bitcoin, but also with other giants of the Internet and the financial world. The social network’s cryptocurrency could be an alternative to credit cards and digital fiduciary currency platforms, such as PayPal and Alipay.
Zuckerberg’s company is seeking strategic support from companies such as Visa or MasterCard to launch its cryptocurrency, and has even talked to online merchants to accept it as a payment method. In this sense, the company will offer the possibility of paying products within and outside its platform without the cumulative rates of credit cards or the high commissions of digital remittances, thus covering both markets.
The Wall Street Journal says that Facebook seems interested in emulating Apple and Amazon, since these two companies recently launched financial services thanks to their alliances with firms in the sector. Therefore, the social network may not want to be left behind in this move and also launch a financial service for its customers.
Facebook entrepreneurs have been seeking to remove Google’s dominance of advertising for some years. According to members of the project, Facebook’s cryptocurrency will be used as a fictitious token or a reward for all those users who see advertising on the page and buy items in it, which could motivate many more companies to pay for advertising on Facebook.
Loyal Users
Facebook’s cryptocurrency could succeed in capitalizing the interest of those users not actively involved in the crypto market, since it is an easily accessible payment system that promises to have many functions.
However, those who are part of the cryptocurrency community may not be very interested in changing to Facebook’s revolution. Bitcoin captured the attention of its users because it offers greater privacy and autonomy than traditional payment methods, being created under the ideological principles of free market economics, private property and self-government of the anarcho-capitalist doctrine.
At the moment, Facebook’s cryptocurrency does not seem to offer the same levels of privacy that crypto assets like Bitcoin, Ethereum or Litecoin have, to mention some of the most popular. Similarly, Facebook does not have the best reputation with respect to the privacy sector either, after it was discovered last year that the company stores private information of its users for commercial purposes.
These details indicate that Bitcoin owners may not contribute to adopt Facebook’s new crypto asset, whose token would not directly affect the Bitcoin market. However, it is necessary to recognize Facebook’s potential massification, which could eventually become a huge challenge of paramount importance for initiatives such as Bitcoin, which emerged from anonymous development and have had a community growth throughout the years.
By Willmen Blanco