Facebook’s parent company, Meta, is working on plans to integrate virtual currency and loan services into its platforms. Some staff members are already calling the digital tokens Zuck Bucks after company founder Mark Zuckerberg.
Meta is in the early phases of broadening the suite of financial services it offers to users of its apps and services, including Facebook, WhatsApp, and Instagram, according to the Financial Times (1).
The FT reported that the company’s financial branch, Meta Financial Technologies, has been looking into digital tokens as part of a larger shift to the metaverse.
Control of a proprietary currency might provide the corporation with an extra revenue stream as its primary, advertising-based social media business seems to be slowing.
In February, Meta stock plummeted more than 20% when the company announced its first-ever quarterly decrease in active Facebook users, slashing the firm’s valuation by about 200 billion USD.
According to sources familiar with Meta’s ambitions, the company’s eventual product will not be a blockchain-based cryptocurrency. Instead, a “reputation token” or “social token” reward system for beneficial impacts to Facebook groups is being considered, as well as “creator coins” for influencers.
A Meta representative told Reuters that the business “has no developments to share today” and that the company is focused on “developing for the metaverse,” which “includes what payments and financial services might look like.”
Meta has had troubles with digital currencies in the past. Libra, Facebook’s attempt to create a crypto stablecoin in 2019 failed due to governmental and economic opposition (2).
The company offloaded the Libra project, later rebranded as “Diem” early this year (3).
The company, on the other hand, is still not disregarding blockchain.
Last month, Instagram CEO Mark Zuckerberg stated that non-fungible tokens (NFTs) would be introduced “near-term.” According to the Financial Times, in May, Facebook will launch a test program for posting and sharing NFTs on its site.
Read Also: Facebook: The King of Social Media or Unchecked Hedonism?
Zuck Bucks and Meta’s NFT Plans
The coin will be more akin to Robux from the Roblox video game than a blockchain-based currency. While Meta had planned to launch its stablecoin, Diem, this new approach suggests officials shut down a less likely alternative currency.
According to the publication, “staffers are now seeking to find the least regulated approach to give virtual money,” with “a digital token not based on the blockchain appearing to be the most appealing choice.”
In November, Vishal Shah, the company’s head of metaverse product (4), stated that the company’s “aim is to create a means for as many players as possible to create a business in the metaverse.”
Read Also: Eye-Tracking, Metaverse, and Health Crisis with Virtual Addiction
Is Meta Backing Away from Blockchain Technology?
Simply put, it is too early to make any definitive statements about Zuckerberg’s broader metaverse goals.
Especially since the fiat-backed, dollar-pegged USDP stablecoin is now accepted by the Novi digital wallet Facebook designed for the failed Diem project — rebranded from its initial Libra project following a massive global outcry from regulators, central bankers, and politicians. Also, it may back whatever virtual asset-focused Silvergate Bank comes up with for the assets and intellectual property it bought from Diem in January.
Meta is also working to include NFTs, which are cryptocurrency-based non-fungible tokens that contain various unique and unalterable forms of media on Instagram.
According to the Financial Times, NFTs will launch on Facebook in May. The ability to post and share collectibles will be the first step, but NFT-gated groups and the capacity to mint new NFTs will come soon after. Fees and advertisements will almost certainly start at some point (5).
Read Also: The Crypto Space, Power Imbalance, and Uncertainties with DAOs
Zuck Bucks
Meta is considering two new virtual currencies in addition to the aptly titled in-app payments token, which would likely be used across the social media giant’s platform — including its Facebook Shop eCommerce effort.
One would be a “social” or “reputation token” that could be used as a reward in Facebook groups, while the other would be an Instagram influencer “creator currency.”
In terms of the Zuck Buck, it’s worth noting that Meta is allegedly considering developing a small business lending offering, which might complement Zuckerberg’s claim that the Facebook Shop eCommerce site had attracted 1 million companies and 250 million users by March 2021 (6).
Facebook Shop stated in June that it would expand Shops to its Marketplace as well as WhatsApp users. Facebook Shop was expanded inside Groups in November, allowing admins to create marketplaces within their communities.
All of this suggests that the anticipated payments coin will have a lot more uses than Facebook Credits, which had a short lifespan due to a lack of locations to spend it and expensive overhead.
Facebook has been promoting its Shops aggressively, announcing a payment agreement that allows Facebook Shop and Instagram Shop merchants to use Shopify’s Shop Pay service a year ago. In July, Shopify returned the favor by allowing Shopify businesses to use Facebook Pay.
Internal tokens may be able to bypass the stringent regulation that standard cryptocurrency confronts. Considering the novelty of these plans, economists believe that regulators will eventually modify financial law to safeguard customers from Zuck Bucks (7).
Read Also: You Can Now Pay Using Your Face With this Technology
Meta is Looking to Diversify its Revenue Streams
The company’s 118 billion USD ad business is in serious trouble, and it needs to expand its streams of revenue (8).
Meta’s stock had dropped about 30% when Facebook reported lower-than-expected profitability and its first-ever monthly average user fall.
After losing 500,000 members in Q4, Meta’s market cap had dropped by more than 230 billion USD (9). Despite accounting for a minor portion of Facebook’s total, this is the first time the company’s MAU has decreased. Facebook blames lower-than-expected revenue on macroeconomic issues and Apple’s iOS updates, which the company estimates would cost up to 10 billion USD. Over 95% of iPhone users on iOS 14.5 or later have disabled ad tracking (10). (Suggested Reading: Facebook’s Ill-Fated Fight Against Privacy as Apple Remains Firm, Apple’s App Tracking Transparency and Feud with Facebook)
TikTok will soon eclipse Facebook into a new social media landscape that promotes content consumption over social circles unless it drastically modifies its approach (11, 12).
The original Facebook Credits in-app purchase model was a huge success, accounting for 16 percent of Facebook’s income when the company went public. When it launches in mid-May, the forthcoming trial with NFTs might be financed similarly, with fees or additional adverts.
Meta wants to leverage these NFTs to enable creators to sell their work and encourage their followers to stay on Facebook (Suggested Reading: Facebook’s Intention with its Newsletter Game).
Why Did Diem Fail?
1/7 From the statement by the CEO Stuart Levey on the sale of the Diem group's assets to Silvergate — “From the outset, the Diem project has been focused on leveraging the benefits of blockchain technology to design a better and more inclusive payment system. pic.twitter.com/fX9ptwDt0k
— Diem Association (@DiemAssociation) January 31, 2022
Facebook’s crypto endeavor, called Libra at the time, was first revealed in 2019 (13). Since then, the Diem Association and Facebook have toned back their goals numerous times. The Libra cryptocurrency was originally intended to be a brand-new currency linked to a basket of fiat money and stocks.
The Libra Association has always faced tremendous hostility from authorities and central banks. Many people believe that Libra would compete with sovereign currencies, causing significant macroeconomic consequences. It might have resulted in shadow banking, inflation, and a mechanism to circumvent monetary policies.
As a result, the Libra Association had adopted a more realistic approach to stablecoins. The Libra Association decided to establish many single-currency stablecoins rather than creating a new currency from the ground up. One LibraUSD, for example, was supposedly worth one dollar at all times. The same could be said for LibraGBP, LibraEUR, and so on.
That strategy, however, was altered once more. Later, Facebook announced a trial version of Novi, its cryptocurrency wallet, and the Libra Association became the Diem Association. Novi uses USDP as its money instead of the Diem on the association’s blockchain (the Diem network). Paxos was the issuer of this stablecoin, and Coinbase was in charge of crypto custody (14). Now, it is working on Zuck Bucks.
According to Janet Yellen, the US Treasury Secretary (15), “Sovereign money is at the heart of a well-functioning financial system, and the US benefits from the central role of the USD and US financial institutes play in global finance.”
Yellen said that any potential CBDC design would have to consider its impact on the financial system, its ability to address financial crime and national security issues, privacy implications, macro policy capabilities, and how it might interact with existing fiat currencies, stablecoins, or other CBDCs.
Yellen said any possible CBDC would have to defend the dollar’s role in international markets, citing US President Joe Biden’s executive order on digital assets.
In other words, the US aims to maintain the dollar’s current role as the world’s reserve currency, and any innovations, including Zuck Bucks, must uphold that.
Through her address, Yellen emphasized five lessons she believes applicable to Treasury’s work on digital assets: The financial system “benefits from responsible innovation,” there are potential damages to vulnerable individuals if legislation does not keep up with innovation, rules should focus on exercises and risks rather than technologies specifically, the dollar’s current role benefits the United States, and regulators should collaborate with industry to support responsible innovation.
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Closing Remarks
Interestingly though, Meta aims to avoid all scrutiny for its Zuck Bucks.
But this is not only about Meta; all other companies incorporating crypto payments on their platforms now must tread carefully. It also includes Robinhood’s new cryptocurrency wallet and Block’s Cash app.
In the words of Yellen, they need to “innovate with responsibility.”
Source :- https://timesnext.com Author :- Team Rucha Joshi Date :-April 09, 2022 at 12:35PM