
Facebook Is Developing a Cryptocurrency for WhatsApp Transfers, Sources Say - tareqak
https://www.bloomberg.com/news/articles/2018-12-21/facebook-is-said-to-develop-stablecoin-for-whatsapp-transfers
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bhalperin
Call it a “cryptocurrency” if that makes it sound sexy, but this is still
centralized — it’s effectively the same as the (already existing) Messenger
Payments.

~~~
tzfld
TBH at this point I have more trust in a centralized cryptocurrency backed by
a large corporation than in a decentralized one.

~~~
rakoo
"cryptocurrency" refers to a very specific type of currency that happens to
rely on cryptography, but the defining aspect is its decentralization.

~~~
votepaunchy
You should learn the meaning of cryptography!

[https://en.m.wikipedia.org/wiki/Cryptography](https://en.m.wikipedia.org/wiki/Cryptography)

~~~
rakoo
I don't see how the Wikipedia page contradicts what I said

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yason
Cryptocurrency mentioned. Blockchain mentioned. I really should've bought a
card for this buzzword bingo.

Is this just PR or are they genuinely so clueless? If the former I wonder if
they missed the shift this year where cryptocoins stopped being the coolest
kid in the town anymore.

If a centralized company wants to roll out electronic payments through its
services it can just, you know, do that. They don't need blockchain or
cryptocurrency to become, well, Facebank.

~~~
patrickaljord
> If a centralized company wants to roll out electronic payments through its
> services it can just, you know, do that.

Not it can't. There's a world outside of the US where whole businesses run on
WhatsApp. There is no solution, simply none today that exists to allow anyone
from any country to register and start making and receiving payments. Not
Stripe, not Paypal, none. If Facebook can deliver something that can then be
exchanged for real dollars, that could be huge. If a person in a small village
in Peru can just start receiving money from another person in another country
and that the only barrier of entry is having WhatsApp installed on your phone,
this could get ridiculously successful overnight.

~~~
gregschlom
And how does that person in that small village in Peru converts their WhatsApp
coins, or whatever they are called, into actual money?

And if the answer is: they do a transaction with someone else who wants to
trade their money for WhatsApp coins then again, why do you need the
blockchain versus a centralized WhatsApp currency.

Blockchain is a solution when there cannot be trust. If I trust WhatsApp, and
you trust WhatsApp, and WhatsApp has a money exchange feature, we don't need
the blockchain.

~~~
the_clarence
It could be about the legality of aetting a bank in every country and figuring
out rate exchange

~~~
geofft
Why would it be more legal / legally easier to set up a service in Peru that
turns WhatsDubloons into _soles_ and vice versa, affiliated with a
multinational company that converts WhatsDubloons into USD, than an entity
that directly transfers _soles_ and USD?

~~~
the_clarence
Because these crypto exchanges already exist

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rchaud
I'd be extremely wary of FB's ambitions in this area. FB the social network
will not last forever, and it seems obvious that companies like Google, Amazon
etc will shift their business model towards secretive "enterprise" services,
like AWS for the Pentagon, Dragonfly for China etc. Facebook tried to create
it's own walled-garden Internet in India under the extremely deceptive
"Facebook.org" initiative.

Awareness of stuff like Google+ breaches or FB's data sharing will soon become
a thing of the past once these companies start dealing directly with
governments and move away from public-facing products entirely. If FB starts
to implement an India-specific version of China's "social credit" policy
towards blacklisting suspected defaulters, with no recourse, the people likely
won't even know who's supplying that technology.

Phone-based currency transfers like M-Pesa have been successful in Tanzania,
Kenya and is available in India and Afghanistan. Unlike whatever FB will
offer, it doesn't require you to use Whatsapp. I can't wait to see the
permissions required on the new version of WA once that service is live.

~~~
KenanSulayman
Re “walled-garden”: there's also Workplace by Facebook
([http://work.facebook.com](http://work.facebook.com)) tailored for
enterprise.

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wonderwonder
Pretty interesting, Facebook generally does not have a reputation for 'jumping
on the bandwagon' so I assume they have thought this through. Many of their
whatsapp users live in very poor areas that are not traditionally served by
banks. If they integrate a wallet into the app it may allow for a real use
case. They would still need to provide some sort of 'convert to fiat'
functionality for those same unbanked users though. Could very well result in
them creating their own economic ecosystem in third world / emerging markets.
Effectively locks in a new customer base and revenue stream.

~~~
Scoundreller
> Many of their whatsapp users live in very poor areas that are not
> traditionally served by banks.

Bingo. Remittances are still expensive. Basic bank accounts are still out of
reach for many.

Any user with cash could become a convert-to-fiat provider.

Before Western Union had to signup shops, now you can go through your friend
lists to find someone you already know and trust.

~~~
foepys
There is a saying in German: "Bei Geld hört die Freundschaft auf", roughly
translated to "don't mix friends and money". Let me tell you: it's a saying
for a reason.

~~~
Scoundreller
I think that’s a very cultural thing.

If you need a plumber, in some parts of the world you’d be insane to open up
the phone book and call a random one. You would call your cousin who’s friends
with one instead. And probably cook them lunch when they come over.

Look at MLMs and which countries and groups they thrive in, vs ones that they
would never take off in.

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pqs
Why can't they just use a good old database, to record transactions? It is a
centralized system! I guess Facebook trusts itself!

~~~
viach
But do you trust Facebook? Also, regarding the "trust itself" part, it's not
necessarily the case. How can one make sure database admin haven't changed
some records?

~~~
pqs
I do not trust Facebook, but I trust my bank, which doesn't use
cryptocurrency. I guess they use databases, with lots of controls, but a
regular database nonetheless.

edit: I also trust PayPal, as I use it regularly, and it doesn't use a
cryptocurrency. My point is that I don't understand why Facebook would need a
Cryptocurrency to allow payments. As far as I know, WeChat doesn't use
cryptocurrency and is probably the main payment system of China.

~~~
viach
"My point is that I don't understand why Facebook would need a Cryptocurrency
to allow payments"

Let me try to explain. You trust your bank and PayPal and it's perfectly fine.
But only to the point things are going ok in general.

In some, say, areas, the situation is possible when you see a message on the
doors and ATMs of your previously trusted for decades banks: "Sorry, no check
out today". And it can long for days or even months.

And your previously trusted online e-money processor can freeze your funds for
whatever reason - "fraud suspect, suspicious activities, server offline".

It is hard to imagine for citizens of some countries, but in my opinion, this
is only matter of time when it happens.

Cryptocurrency and blockchains in general are indeed highly inefficient
databases and a tiny Postgres server outperform them all in Transactions Per
Second, that's true.

But Postgres database running on a centralized service won't give you a
feeling of independence and trust the biggest cryptocurrencies can provide
(sure, they are volatile in price and you need to manage your private keys
etc, but still).

~~~
thecatspaw
And how is that different when facebook controls all the mining nodes?

~~~
viach
Where can I see the source of your information where it is said they will
control all the mining nodes and there will be mining?

~~~
thecatspaw
Admittedly, nowhere, after all this whole article is based on speculation.

But I really doubt that facebook is going to release a coin which they cannot
control.

What is their case for creating a coin if they have no control over it?

~~~
viach
They could have a roadmap to slowly distribute initial stake over the time,
for example (if used PoS, which I think the most probable plan).

And the case would be not to own the biggest stake and control everything, but
instead having a popular cryptocurrency with APIs natively integrated with
Facebook's services. It'll bring new users and developers to their platform,
which has the real value.

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eitland
Yeah, more metadata to Facebook.

Also more ways for a huge American company to mess with my life if anyone
human, bot or algorithm working there has a bad day at work. (if anyone
doesn't catch my drift here, losing access to your mail account happens,
getting it fixed most likely involves either knowing a person working with
said company and/or hitting the front page of HN or another watering hole.)

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randomacct3847
I think we underestimate how “mainstream” digital currencies could be if the
UX is right. In a lot of ways we already deal with “centralized” digital
currencies already in the form of loyalty points with airlines, hotels,
food/coffee chains, grocery stores and gift cards that can only be spent at
specific merchants I.e. currencies that have some value and can be used to pay
for things.

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r32a_
It's a centralized stable coin built by Facebook, so it's basically PayPal?

~~~
zelly
There’s more potential than just payment transfer. It could be used as a
currency outside the context of WhatsApp money transfers. Facebook could
become the central bank of the internet.

~~~
r32a_
Unless there is a complete collapse of the Bitcoin blockchain and it's
ecosystem there is no way any cryptocurrency will take over Bitcoin as the
number 1 currency on the internet

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i_am_nomad
If this allows Facebook to monetize WhatsApp without introducing ads and the
privacy corrosion they would bring, then this would be a very good
development.

~~~
polyomino
If Facebook becomes a bank, they will be required to comply with fincen. E2E
encryption is not going to fly.

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tempsafdjla
this make zero sense. are they going to let anyone mine the coins? probably
not. if its just them mining it, then its totally pointless.

~~~
thaumasiotes
On the contrary. If facebook controls minting the coins but can't control
transactions using the coins, it'd be perfect, much better than the
decentralized cryptocoins we have today. It would instantly bypass state
controls on money transmission.

They'd probably run into trouble cashing out their coins in that case, though.

~~~
m-i-l
I'd rather have state control over money than for-profit megacorps, especially
one with such an appalling reputation as "They 'trust me', dumb f---s" F--
ebook. This is one of the issues they're finding with the move to a cashless
society in the Nordic countries[0], i.e. the monopoly over money moving from
the state to the private sector.

[0] [https://www.weforum.org/agenda/2018/11/sweden-cashless-
socie...](https://www.weforum.org/agenda/2018/11/sweden-cashless-society-is-
no-longer-a-utopia/)

~~~
thaumasiotes
> If facebook controls minting the coins _but can 't control transactions
> using the coins_

~~~
lawlessone
if only facebook can mine, then they choose do whatever they want, the
blockchain just becomes a weird centralized database

~~~
thaumasiotes
Why? Creating coins and transferring coins are completely separate things.
They're intertwined, in bitcoin, because bitcoins are created in transfers.
But there's no fundamental reason for that to be the case.

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0xferruccio
I’m curious on Mark Zuckerberg’s take on cryptocurrencies. He was big on p2p
file sharing as a business model when starting out FB. I don’t think he has
had any public comments on Bitcoin

[https://en.m.wikipedia.org/wiki/Wirehog](https://en.m.wikipedia.org/wiki/Wirehog)

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zelly
Knew this would happen one day. Big tech has 0 reason to use third party coins
when they do literally everything in house. FacebookCoin, AmazonCoin, etc.,
will work 100x better too—not just technologically but also in interopability
with current banking infrastructure and government regulators.
Decentralization is objectively worse for user experience all around. If a
centralized trusted authority like the FED or a FANG corporation could make
electronic cash, then people will happily use that because they don’t care
about privacy or cypherpunk ideals.

Zero reason for anyone to use Bitcoin/Ethereum/Monero when these exist.
(Unless they want to commit crimes—and yes, that’s how it would be perceived.)

~~~
Vinnl
Doesn't your argument apply to regular money as well, i.e.

"Zero reason for anyone to use Bitcoin/Ethereum/Monero when regular money
exists. (Unless they want to commit crimes—and yes, that’s how it would be
perceived.)"

~~~
fooker
It does, that's why people do not usually use bitcoin (/other coins) for
everyday transactions.

~~~
thecatspaw
Bitcoin isnt used for everyday transactions not because of its reputaiton. Its
because its inconvenient, and people like a stable currency. The reputation
followed what people buy with bitcoins

When I pay someone 1000$, I expect that to arrive as 1000$ (excluding fees
here). With stable currencies that is a pretty safe bet, unless the
transaction takes days.

~~~
fooker
Sure, but if you made it extremely convenient, the usage would increase by a
few orders of magnitude and the price could stabilize.

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_Codemonkeyism
I don't get this, is there a financial difference if Facebook holds the money
and stores the "amount" in WhatsApp vs. a cryptocurrency with tokens stored in
WhatsApp that you can only use in WhatsApp? I'm too stupid for this.

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t0astbread
This is the WhatsApp strategy in full effect: Advertise how privacy-friendly
your service is (blockchain, decentralized, end-to-end encryption) and make it
all proprietary and lock it down so that you (FB) still have full control

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polyomino
As they are trying to build an economy, they will have to bring both consumers
and merchants to their platform. Exposing a bunch of people to new money is
not enough, they need to be able to buy something useful with it.

Facebook will have to build something that its users want to buy, and then
find something for the users to do to earn fbcoin.

Maybe they could allow ads to be purchased in fbcoin, and pay users to
translate ads to their native language for fbcoin.

~~~
fooker
Facebook has a ton of merchants already using pages and groups. Also, their
'marketplace' feature has more or less replaced craigslist and ebay in my
city.

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acd10j
Payment sector specially in India is highly regulated, with even WhatsApp
current application for UPI payment licence in Legal limbo because Facebook
specially having bad name/luck with Regulators. Highly Doubtfull that current
regulation will allow Cryptocurrency in any form as payment mechanism. Most
that could be allowed would be glorified anti fraud Secure logger.

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kerng
Facebook was hiring blockchain engineers during the hype late last year - so I
guess they have to ship something to justify the team. I think nothing in this
scenario requires a blockchain.

------
floatboth
Because Telegram's TON was a huge success, yeah,

~~~
karlmcguire
I can't tell if this is sarcasm (and you know something I don't), or you're
being serious. I would agree if you're being serious, despite the lack of news
coverage, based on a few points:

\- $1.7B raised in ICO: This is far more than has ever been raised in any
other ICO. I also think it says something about investor optimism. I'd bet
that this was a data point in Facebook's decision to do something similar with
WhatsApp.

\- Telegram's development team: Some of the best in the world. They've done a
lot with a few highly talented programmers and mathematicians.

\- 200,000,000+ monthly active users as of March 2018.

~~~
floatboth
Of course it's sarcasm. It was cancelled, if you don't remember:
[https://www.independent.co.uk/life-style/gadgets-and-
tech/ne...](https://www.independent.co.uk/life-style/gadgets-and-
tech/news/telegram-ico-cryptocurrency-bitcoin-ton-a8334551.html)

> development team: Some of the best in the world

Well, messaging isn't exactly rocket science.

And they did a lot right (open source clients, bots, channels, proxies). But
their secret chat implementation is weird (literally every crypto expert has
the same question: "why did you pick these extremely unpopular barely known
primitives to reinvent your wheel?")

~~~
karlmcguire
They cancelled the ICO, not the underlying blockchain.

------
empath75
Super skeptical about this story. Why should they bother instead of just using
regular banking or keeping their own ledger.

~~~
zelly
To steal the Bitcoin/Ethereum market share. It doesn’t need to be better.
People just need to think it is. That’s the reason buzzwords and marketing
exists.

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BenjaminBlair
Seriously? With all the security breaches they had this year, Instagram too,
do they really expect people to trust them with cryptocurrency? I have no idea
how they thought this is a good idea.

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kgdinesh
I think battling Fake News on WhatsApp should come first before launching a
Cryptocurrency. I believe Blockchain can help in the former too.

~~~
Erlich_Bachman
You mean, in essence, more censorship? That is the last thing that WhatsApp
needs.

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klyrs
Also on HN rn

> WhatsApp has an encrypted child porn problem (techcrunch.com) >33 points by
> sahin-boydas 9 hours ago | hide | 57 comments

FML

~~~
ackbar03
I guess they just had to monetize whatsapp somehow

