Facebook has created their own cryptocurrency called “Globalcoin” that is set to launch in 2020. Their cryptocurrency will be released in a dozen countries with the intention of creating a cheap and safe alternative to making payments. Facebook also hopes this will be a way for those who do not have bank accounts to still make payments. This is essentially a challenge against the banking system as Facebook intends on reducing costs for users. To avoid vastly flucuating prices, the cryptocurrency will be paired with established fiat currencies. Facebook has been consulting with Western Union to understand the regulations of sending money across the world in the fastest and cheapest method to uphold the desire for accessibility for those without bank accounts.
While “Globalcoin’s” purpose is to eradicate financial barriers is a noble cause, analysis of the cryptocurrency claims that it will face many demographic issues. The concept of cryptocurrency is lost on older generations leaving it to be young users. However the vast majority of young users are not able to use it enough due to their lack of proper financial standing. Facebook has already receieved $1 billion in funding from Visa and Mastercard, so hopefully its goal of tackling countries with weak financial infrastructure will hold up to their investors.
Creating this cryptocurrency comes at very low risk for Facebook and they hope it will open up various new sources of income. While cryptocurrency entered the market very recently, Facebook is still the first organization to create their own form of cryptocurrency that is intended for more than an institutional purpose. The issue of the age demographic continues to come into play when considering the success of Facebook itself as an app beyond their launch of “Globalcoin.” The number of users above the age of 65 have doubled since 2012. Facebook is already losing its momentum with users that are 35 and younger so the launch of its cryptocurrency appears to be a desperate plea to remain relevant under the guise of creating a platform for those in lesser financial situations and countries. A recent survey took note that lower income teenagers were more likely to use Facebook than their wealthier counterparts, making “Globalcoin” seem more likely to fail. We will have to wait and see the outcome when “Globalcoin” launches early next year. Until then, crypto analysts will continue to make their predictions about Facebook’s latest innovation.