Payments could help Facebook develop an entirely new revenue stream aside from advertising something “sorely needed at this stage of the company’s narrative,” says Barclays internet analyst Ross Sandler.
Barclays see as much as $19 billion in additional revenue in its “upside case” for Facebook by 2021 if its cryptocurrency plans work out.
The social media giant is reportedly developing a cryptocurrency to use for peer-to-peer payments.
One Wall Street firm sees major upside for Facebook if its secretive cryptocurrency plan works out.
The social network is reportedly developing a cryptocurrency that could be part of a multibillion-dollar revenue opportunity, Barclays internet analyst Ross Sandler said in a note to clients Monday.
You may have heard that Facebook is considering the launch of its own crypto. There are rumors about that for a long time now and analysts say that it could be a huge business opportunity for the company.
Now, the Barclays bank has recently affirmed that a Facebook crypto could be a $19 billion USD revenue opportunity, which makes it seem even more likely that Facebook will start its new crypto business.
The analysis was made by Ross Sandler, an internet analyst that works for Barclays. According to him, “Facebook Coin” could bring an additional $19 billion USD in revenue and you should know that even in his conservative expectations, it would bring in at least $3 billion USD with the launch of the coin. According to Sandler, just by creating this new revenue stream, Facebook shares would skyrocket.
Facebook is reported to be working on its own token, which will be, like a stablecoin, a token with a value pegged to traditional currencies. The idea is to use it in apps like Whatsapp, which is owned by Facebook. Important sources like Bloomberg and the The New York Times have reported on this story so far, so it seems like a credible rumor.
The company’s option to create a stablecoin can be used to solve one of the major problems in the crypto market: it would not be so volatile as Bitcoin is. The fact here is that speculators love Bitcoin because its price flows up and down constantly and this could be used to attract the investors, which sometimes are put off by all the volatility in the market.
This could also be a great opportunity for Facebook as its prices tanked last year because of how the company handled advertising, among other things. At the time, Cambridge Analytica, a British political consulting firm, collected the data of over 50 million users from the social media company without their permission. This is why decentralized companies are better, folks.
In any case, in order to make its investors profit again, the launch of a token like this seems like the perfect idea. Prices may be 30% up this year, however, they could go up even more, which is something that the investors simply love, so they could easily get very excited by the idea.
Sandler has affirmed that Facebook really needs new revenue options at the time since users are leaving the company due to the lack of privacy and this court hurt its image, its future and, most of all, its potential for advertising.
A currency that does not abuse the user’s privacy and has nothing to do with advertising could be the killer idea for Facebook, then, and it will be very well received by the investors.
The Barclays investor has compared Facebook’s revenue to Google’s digital distribution service, Google Play. According to him, Google gets at least $6 USD per user with the program and Facebook could also earn a lot with its users by making this strategy something real.
With the help of this token, Sandler believes, more premium content could also be put on Facebook and some companies could start to be strategic partners of Facebook in order to sell their content there instead of only receiving traffic, which is something that many media companies have complained so far.
You may not know, but Facebook is already interested in entering the payment industry for years now. The company has first created the idea of “Facebook Credits” back in 2010, according to Sandler.
As he points out, they were similar to the modern idea of cryptos that we have as the users would be able to prepay for virtual currencies using their own domestic channels and turn it into credit. With this credit, they could seamlessly make transactions on Facebook. Each virtual credit cost around 10 cents back then.
However, the blockchain technology was only beginning at the time and Facebook had to bear all the costs, which, according to Sandler, basically destroyed the whole idea. The business was not as profitable as it wanted to be mostly because there was a high volume of low-value transactions and Facebook had to bear all the costs.
Not long after it was started, Facebook Credits was gone, which may be why you have probably never heard about it or do not even remember it well.
Now, the Barclays analyst believes, both Facebook and the crypto sector are mature. With companies like Instagram and Whatsapp on its portfolio and a world that has come to accept the blockchain technology, it is easy to see a bright new future for Facebook.
However, do not get too hopeful too soon. It is hard to know when Facebook Coin will come out (however, we can say that there is a very big chance that it will come out). Initially, the token will possibly have in-country or value limitations, but it is possible to see a future in which Facebook Coin can even rival Bitcoin, due to its possible high adoption.
Sandler believes that this will most likely be a very ambitious project and that Facebook may have David Marcus on his side, which is a good sign. David Marcus was a former PayPal president and you know how successful Paypal is.
Facebook will have to make an effort in order to create something that will amaze people and prove to all the value of its company, but we can certainly be sure that if Facebook Coin is successful, the world of cryptos as we believe is about to change forever.
Crypto diehards may not be a fan of the idea as it will not be very decentralized, probably, but innovation will come and we can do nothing but to watch it happen and decide whether or not to participate.
