ONathaniel Popper, New York Times reporter and author of cryptocurrency book Digital Gold, has said that Facebook is reportedly looking to amass $1 billion in funds from venture capitalist for the purpose of developing its own token.
Update on Facebook’s cryptocurrency: Sources tell me that Facebook is now looking to get VC firms to invest in the Facebook cryptocurrency project we reported on earlier this year. I hear they are targeting big sums — as much as $1b.
Popper also said that sourcing funds from outside sources could help Facebook in getting the project to be viewed as decentralized. He says,
Given that one of the big allures of blockchain projects is the decentralization, getting outside investors could help Facebook present the project as more decentralized and less controlled by Facebook.
There has been some resistance to the idea of a Facebook-owned cryptocurrency, perhaps Facebook is aware of this. Facebook banned crypto advertisements on its platform and the fact that it is now deeply researching and implementing it has drawn skepticism. The outside capital may be an attempt to assuage potential investors.
One person I spoke with said that Facebook is talking about using the money as collateral for its cryptocurrency. Facebook has been designing the coin to keep a stable value, pegged to a basket of foreign currencies held in bank accounts.
Stablecoins are an extremely hot niche in the market right now and Japan’s Mitsubishi Financial Group is also planning to launch a Yen-backed stablecoin this year.
Popper also rightly talks about the fact that one of the biggest names in the world is looking for outside investment, as Facebook is certainly not short of funds,
It’s interesting to think of one of the richest companies on earth raising money. When was the last time they did outside fundraising?
To what degree Facebook plans to leverage the benefits of decentralized technology remains unknown, as we know very little about the project. $1 billion is a lot of money, and it’s not like Facebook does not have the funds to facilitate development and growth.
The exact purpose of Facebook’s cryptocurrency is rumoured to focus on remittances, and intended for use in countries like India. WhatsApp is expected to play a role in this project and, together with Facebook, would instantly expose cryptocurrencies to the many billions who use the two platforms. Bloomberg first reported this news and not much information has surfaced since, except for an NYT report that said that Facebook was speaking to unnamed exchanges about the name Facebook Coin.