Facebook and Telegram Are Hoping to Succeed Where Bitcoin Failed


SAN FRANCISCO — Some of the world’s greatest web messaging firms are hoping to succeed the place cryptocurrency start-ups have failed by introducing mainstream shoppers to the choice world of digital cash.

The web outfits, together with Facebook, Telegram and Signal, are planning to roll out new cryptocurrencies over the following yr which can be meant to permit customers to ship cash to contacts on their messaging techniques, like a Venmo or PayPal that may transfer throughout worldwide borders.

The most anticipated however secretive venture is underway at Facebook. The firm is engaged on a coin that customers of WhatsApp, which Facebook owns, may ship to buddies and household immediately, mentioned 5 individuals briefed on the hassle who spoke on the situation of anonymity due to confidentiality agreements.

The Facebook venture is way sufficient alongside that the social networking large has held conversations with cryptocurrency exchanges about promoting the Facebook coin to shoppers, mentioned 4 individuals briefed on the negotiations.

Like Bitcoin, the new cryptocurrencies would make it easier to move money between countries, particularly in the developing world where it is hard for ordinary people to open bank accounts and buy things online. The current designs being discussed generally do away with the energy-guzzling mining process that Bitcoin relies on.

Facebook is looking at several ways to use the blockchain, the technology introduced by Bitcoin that makes it possible to keep shared records of financial transactions on several computers, rather than relying on one big central player like PayPal or Visa.

The five people who have been briefed on the Facebook team’s work said the company’s most immediate product was likely to be a coin that would be pegged to the value of traditional currencies, as Bloomberg first reported.

A digital token with a stable value would not be attractive to speculators — the main audience for cryptocurrencies so far — but it would allow consumers to hold it and pay for things without worrying about the value of the coin rising and falling.

Several other companies have recently introduced so-called stablecoins, linked to the value of the dollar. JPMorgan Chase even said it was experimenting with the concept last month.

Facebook is looking at pegging the value of its coin to a basket of different foreign currencies, rather than just the dollar, three people briefed on the plans said. Facebook could guarantee the value of the coin by backing every coin with a set number of dollars, euros and other national currencies held in Facebook bank accounts.

The company is overhauling its messaging infrastructure, which would connect three of its properties — Messenger, WhatsApp and Instagram. That integration, which could take more than a year, would extend the reach of Facebook’s digital currency across the 2.7 billion people who use one of the three apps each month.

The big question facing Facebook is how much control it would retain over the digital coin. If Facebook is responsible for approving every transaction and keeping track of every user, it is not clear why it would need a blockchain system, rather than a traditional, centralized system like PayPal.

The privacy-focused messaging application Signal, which is run by a foundation, has the smallest project, called Mobilecoin. It raised $30 million last year and is trying to raise another $30 million, according to three people briefed on the effort.

While the founder of Signal, Moxie Marlinspike, is advising the effort, it is being run independently of Signal. The project is a favorite of many longtime cryptocurrency advocates because of strong privacy controls.

But Mobilecoin, like the other projects underway, will still have to solve the problems that have stopped all the other cryptocurrencies from living up to expectations.

“The jury is still out” on their effectiveness, Mr. Ma of Quantstamp said.



Source link Nytimes.com

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