50-person Facebook team plans cryptocurrency payment tech, report says
The purported coin is geared for ordinary money transfers and not investment speculation, according to the New York Times.
Ready to send some virtual money to your Facebook friends or WhatsApp contacts so you can split the restaurant bill? Maybe someday you'll be using a cryptocurrency to do so.
Many people in the tech world have soured on cryptocurrencies and their accounting underpinnings, called blockchain. But Facebook remains interested, with a 50-person project underway to build a technology that'll let members send each other digital money, the New York Times reported Thursday.
Cryptocurrencies initially excited fans who wanted a new digital-era payment mechanism, but as the hype increased, investors hoping to see their value rise dominated the cryptocurrency domain. The resulting bubble has mostly burst, but it appears Facebook is trying to sidestep such frenzies and build something more useful for day-to-day money transfers among its more than 2 billion members, the Times said.
Facebook's cryptocurrency project would likely involve a cryptocurrency whose price remains stable, the Times said, corroborating an earlier Bloomberg report. That design would be geared toward avoiding a speculative frenzy like the one that caused the value of the seminal cryptocurrency, bitcoin, to soar and then crash. Cryptocurrencies that are desirable for investment can be poorly suited for ordinary payment transactions since the value in ordinary money can fluctuate wildly.
Facebook didn't comment on the story details, but it did confirm its blockchain work.
"Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology," the company said in a statement. "This new small team is exploring many different applications."
The Times report cited five people familiar with the project and said Facebook is in discussions with cryptocurrency exchanges, the online marketplaces where you can convert ordinary money into cryptocurrencies and vice versa.
Using cryptocurrencies to transfer money has long been one of the technology's supposed virtues. In principle, it could be used to lower transaction fees that are common with other payment services. Those fees are especially heavy when converting from one country's currency to another.
In practice, though, cryptocurrencies haven't enabled such a frictionless money-transfer world. For one thing, their own transaction fees have increased. For another, the process commonly used to lock in a cryptocurrency transaction, called proof of work, is typically slow and requires enormous amounts of electrical power. And cryptocurrencies have reputation problems linked to their use by scammers and criminals.
The leader of the Facebook project is David Marcus, formerly president of online payment company PayPal, the Times said. The Block, a cryptocurrency tracking site, has been flagging Facebook's blockchain-related job openings.