The New York Times reports that a team at WhatsApp are working on a digital coin for users to send value over the network. "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," writes Nathaniel Popper at the New York Times. So, Facebook is going to release some kind of token, and perhaps even a stablecoin, or digital asset pegged 1:1 to the US dollar or basket of currencies. Efforts by JPMorgan or Facebook to release a digital coin are doomed to failure, not least because these coins strive to mimic the existing financial infrastructure, while avoiding the features that make bitcoin interesting: an immutable record and messaging protocol on the public blockchain. Facebook, for instance, is trying to generate the value from its network. "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."
Lafferty Group has been covering these emerging messaging businesses since 2016, ranging from Korea's Kakao and Russia's Telegram to Japan's Line, and we anticpated that social and messaging networks were the likely future home of digital coins. In fact, Lafferty News raised just this scenario a few weeks back, noting that Facebook's ultimate goal is to coalesce its profiles on users. Facebook doesn't necessarily know a user's phone number, but WhatsApp does. In this manner, Facebook can potentially offer a network of up to two billion users. That's more than any bank, or even Alipay or Tencent, can manage. Yet many users signed up to WhatsApp due to its offer of free OTT messages and encryption. We won't be happy to see that go.
But Facebook has another obstacle in its place. While Ireland has tied itself in a Brexit-shaped knot by maintaining a united front with the EU27, the country has a special role to play in the regulation of Europe's digital space. As the EU and often the EMEA headquarters for Apple, Facebook, Twitter and LinkedIn, Ireland trumps its attractiveness to big tech companies. Their location in Ireland means they answer to Ireland's data regulator Helen Dixon, who is responsible for enforcing General Data Protection Regulations (GDPR) that came into force last year. The data protection commissioner is currently investigating 16 cases involved the aforementioned tech companies. "Ms Dixon has 10 inquiries under way into Facebook and its WhatsApp and Instagram units, three inquiries at Twitter, two at Apple and one at LinkedIn," notes the Financial Times. "She is expected to start publishing her findings over the summer while some cases will not be finished until later in the year. Breaches of GDPR will result in fines of up to four percent of a company's turnover." Some of the investigations are driven by complaints, while Ms Dixon said her office had initiated seven of the 16 probes of its "own volition", which allows the regulator discretion to set standards through these investigations. Facebook recently announced plans to integrate WhatsApp more closely into Facebook. In early February, Germany's Bundeskartelamt ordered Facebook to desist from combining user information from both WhatsApp and Facebook.
A little Brexit-proofing at work, perhaps? Barclaycard, which processes almost fifty percent of UK's card transactions, today announces that it will start accepting cards that run on the Discover Global Network across its UK merchant network. Barclaycard and Discover Financial Services announce a new partnership that will allow Discover cardholders to spend on the Barclaycard network. Rob Cameron, chief executive of Payment Acceptance at Barclaycard, said the partnership is an important milestone. "For the first time, Discover Global Network's extensive cardholder base will be able to purchase from our UK merchants whether they're in-store visiting the UK or shopping online from abroad. It also benefits our business customers as they can serve a wider audience, which ultimately could boost sales."
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