Facebook’s upcoming cryptocurrency will generate billions in revenue for the firm, predicts a Barclays analyst.
As reported by CNBC, Barclays analyst Ross Sandler, on Monday sent a note to the firm’s clients stating that Facebook’s decision to introduce digital currency across its various platforms – Facebook, Whatsapp, and Instagram – could generate anywhere between $3 billion to $19 billion in additional revenue by 2021.
A Big Push After the Bad Press
The Menlo Park-headquartered firm was riddled with controversies in the past year, including the data breach by London-based Cambridge Analytica and the alleged use of the ad campaigns for meddling with elections in the United States. This impacted the share price of the company for a while, which bounced back again to add 30 percent yearly gain.
“Merely establishing this revenue stream starts to change the story for Facebook shares in our view,” Sandler noted.
Though not announced officially, multiple media sources revealed that the social media giant is working on the development of its own digital currency called “Facebook Coin.” Moreover, to avoid the wild price swings, Facebook will reportedly peg its crypto against US dollar, creating a so-called “stablecoin.”
In 2017, the California-based company brought in $40.6 billion in total revenue, out of which $39.9 billion was generated from advertisements on the platform.
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“Any attempt to build out revenue streams outside of advertising, especially those that don’t abuse user privacy are likely to be well-received by Facebook’s shareholders,” Barclays’ note stated.
A Similar Attempt in the Past
Facebook Coin is not the first native currency of the platform. Earlier in 2010, Facebook introduced a virtual currency for the platform called “Facebook Credits,” which could be bought in exchange for fiats – similar to virtual currencies used in various games and apps.
Sandler pointed out that the previous initiative failed as the social media platform had to bear the currency interchange cost, “which negatively impacts the profitability of the business, especially when making high volumes of lower-value transactions.”
After eight years, however, the market and the technology have matured significantly and the company’s plan to introduce a digital currency could “re-invigorate that business strategy.”
“Based on our checks, the first version of Facebook Coin may be a single purpose coin for micro-payments and domestic p2p money transfer (in-country), very similar to the original credits from 2010 and Venmo today,” the analyst added.
Meanwhile, to bolster its blockchain initiative, Facebook, last month, acqui-hired the entire team of the blockchain startup Chainspace.