Facebook’s CopyCat Coin – What follows is an opinion piece. Read it as such.
Facebook recently announced that it will create its own cryptocurrency, called by various names by the media (some called it global coin, some called it Libra coin, others just FB coin).
For our purposes, we will just call it what it is: CopyCat Coin.
We call it CopyCat Coin because using native app currency via messengers is not a new concept. In fact, China has been running trillions of dollars worth of commerce via messengers. WeChat and AliPay apps handle quite a lot of financial affairs in China through messenger apps.
China gave a free hand to the internet giants to experiment with bringing financial transactions to the messaging apps, according to McKinsey’s report. This model works in China because Government has openly declared that it will monitor its citizens behavior via surveillance to grant them social scores. Surveillance is not seen as a threat by most Chinese nationals, in fact, they assume it. And Governments have a direct interest (sometimes financially) in these companies that operate in China, so the Government already has access and control of personal data, one way or the other.
It is a different story in western world.
We still live in the delusion of privacy and data rights.
While most of us know that it is a delusion that we created to make ourselves feel cozy, it was taken away from us when Cambridge Analytica news broke out and it was further wounded by the news about Facebook granting access to our personal information to other big companies, without ever disclosing it.
Doubling down the intrusion
Facebook garners over 2 billion users, that is about 50% of the world’s internet users. It would have been higher if Facebook were to penetrate China, but we know that is not going to happen. The point is, when their CopyCat Coin comes into market, they are going to market it as a thing of convenience.
People will resist it initially, however, Facebook will lure them with heavy discounts, freebies, and even throw some free coins at its users to get them to try.
Conducting commerce through messengers is very convenient. People will forego their right to privacy for convenience. This is a fact and Facebook knows it.
When people are hooked to sitting on the couch and settling bills via messenger, they will happily grant access to their personal details, knowing quite well that this information is not going to be used for the world betterment.
When another scandal breaks out – it will not be about name and phone number, it will be about our credit scores, our social scores (which may not be openly declared like China did, it may be a covert operation) and pretty much everything.
This point was driven home by Paul Kocher in his interview with Mashable, “[Our] medical procedures, personal relationships, health problems, bad habits, hopes, and fears are all reflected in how we spend money,” he continued. “If abused, this information can harm users in both obvious ways (e.g. job discrimination, etc.) and more subtly (e.g. showing offers for higher-interest credit cards or lower quality health insurance). Given this, the idea of combining Bitcoin’s theft mitigation and Facebook’s privacy seems particularly toxic for users.”
Why should this bother true bitcoiners?
The idea of decentralization is slowly seeping into the mass consciousness.
Media is doing an amazing job directing people’s attention to bitcoin’s price action but a small percentage of people are learning about what bitcoin is and how decentralization could change the social structure for the better.
Now, Facebook’s coin is going to sidetrack the decentralization conversation.
We are sure that companies like Amazon will not freely let Facebook capture online market. Imagine what Amazon coin will do to the market, if and when they create one? All it will take is for Amazon to say that using Amazon coin will grant you X% discount, and voila.
That could change, if CopyCat Coin catches on and succeeds to bring buyers and sellers onto its platform before the other players catch on.
All of this noise of the big players entering the ‘supposed crypto’ space, will stray away people who would otherwise had the opportunity to learn what decentralization is and why bitcoin was born. Without the right knowledge and insights into what bitcoin is and what it can do, the concept of decentralization may face the threat of fading away.
Not everyone looks at it that way, and that’s a good thing
While we focused on rather negative and cynical potentialities, not everyone thinks that Facebook’s CopyCat Coin is going to disrupt bitcoin’s progress.
In fact, they believe that Facebook’s entry only affirms the cryptocurrency market’s validity and further extends bitcoin’s reign as the king.
Caitlin Long, one of the greatest influencers in the blockchain space, predicts that Facebook’s coin will only bring more attention to bitcoin. In her words, “Here’s my biggest prediction: Facebook’s foray into cryptocurrency will end up benefiting bitcoin. It will take time, but Facebook will greatly accelerate the pace of teaching people about cryptocurrencies. And when this happens, more people will turn to bitcoin for one simple reason—bitcoin is scarce, while Facebook’s cryptocurrency is not.”
Financial markets expert and crypto veteran Teeka Tiwari ecos Caitlin’s sentiments. He opined “as more people get exposed to crypto-like assets and functionality, they’ll understand how much more powerful bitcoin and ether are compared to JPM Coin and Facebook Coin.
Now, I know a lot of people are wondering whether JPM Coin or Facebook Coin will kill the rest of the crypto space. But the answer is, of course not… They’re just internal coins. They’ll only make the rest of the crypto space much bigger.”
The gist of the opinions of other financial and crypto veterans is that Facebook’s entry into the space is going to act as a catalyst for the overall crypto space in general and to strengthen bitcoin’s position in particular.
While we are of the opinion that the noise, hype and media coverage around these giants entering the space will deter the general public from becoming aware of the power of decentralization – others are of the opinion that it will do the opposite.
We just have to wait and see which of those versions plays out, or something else entirely.
Thank you for reading this article.
Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.
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About the author
RK Reddy holds two Masters degrees, one in Accounting and another in Business Administration with over 15 years of experience in the financial services industry.
RK Reddy is an ardent fan of Blockchain and Cryptocurrencies. You can see the excitement about this new blockchain technology in every article on Cryptotapas.com. Sometimes this excitement leads to an overly optimistic view. Guilty as charged. RK Reddy says “what may seem like an ‘overly optimistic expectation’ today may become an everyday norm in 5-10 years; look at the history of cars or airplanes, Blockchain and Cryptocurrencies belong to a similar frame of reference.” Of course, that is just his opinion.