Facebook Coin is coming… It’s going to upend the financial system as we know it… In the mailbag: Can socialism save capitalism?…
Last week, our favorite whipping boy here at The Daily Cut, Facebook CEO Mark Zuckerberg, announced the company was getting into the payments business.
As he outlined in a blog post on Facebook’s website, he’s going to take its WhatsApp, Instagram, and Facebook Messenger messaging platforms and merge them into one.
Then he wants to take this mega messaging platform and turn it into the world’s largest currency network.
That’s according to The New York Times. It claims Facebook is in talks with cryptocurrency exchanges about selling a new “Facebook Coin” to consumers.
And it could quickly become the world’s biggest currency.
The new Facebook messaging platform will instantly have 2.7 billion users.
That’s roughly the population of China and India combined. And it’s about one-third of the world’s 7.7 billion people.
All of those people will be able to send Facebook Coin to anyone anywhere in the world.
Think about that for a moment…
We’re talking about a new global digital currency used by 1 in every 3 humans on Planet Earth.
And it’s going to be issued and managed by Facebook – which, as regular Daily Cut readers know, is one of the world’s leading for-profit surveillance companies.
You can pay for food deliveries… taxi rides… or a can of soda at a vending machine all through these apps. They also let you deposit money into your bank account.
The two combined have about 1.5 billion monthly active users. That’s more than 56% of the user base Facebook’s new messaging app would have.
Yet Chinese consumers sent more than $2.9 trillion inside the two systems in 2016, according to the payments consultancy Aite Group.
That’s about one-quarter of China’s annual GDP.
By simple extrapolation, you’re talking at least $5 trillion for a Facebook app with close to double the number of users.
For instance The New York Times reported that Facebook was “hoping to succeed where cryptocurrency start-ups have failed by introducing mainstream consumers to the alternative world of digital coin.”
But our experts at Legacy Research say Facebook Coin doesn’t stand a chance against bitcoin.
Here’s digital currency pioneer Marco Wutzer, who heads up our Disruptive Profits advisory…
The supply of new bitcoins is fixed by a “protocol” – or set of pre-agreed rules – that governs the network. And there are no middlemen. It’s a true decentralized currency, in other words. Nobody is in charge.
Facebook Coin – or any other coin issued by a company, bank, or country – is essentially the same as any fiat currency such as the U.S. dollar. The issuer controls the supply… and with it the value of the tokens.
Facebook can still block and restrict transactions any way it wants. So its coin is no threat to bitcoin or any other truly decentralized currency.
As you know, Facebook knows everything you do on its platforms – including what you search for online… the videos you watched… the chat message you send… and whom you send them to.
With billions of people using Facebook Coin, it could also spy on trillions of dollars of financial transactions and sell that information to the highest bidder.
Anyone who likes the decentralized nature of bitcoin is going to hate the centralized nature of Facebook.
Teeka Tiwari agrees with Marco’s take.
If you don’t know Teeka, he’s a world-renowned cryptocurrency investing expert.
He also heads up Palm Beach Confidential which, back in April 2016, was the first letter in our industry to recommend a model portfolio of cryptocurrencies.
Here’s Teeka with more…
The Facebook news is great for crypto because it will help mainstream the idea of using digital tokens for payments. It’s bullish for Bitcoin, because it will normalize crypto assets to one of the largest base of users in the world.
But Facebook Coin is not a true crypto currency in the sense that Bitcoin is. It’s just a remittance vehicle. Bitcoin is much more than that. It’s a finite resource and a store of value without gate keepers. It’s also censorship resistant… extremely secure… allows self-custody of assets… and is impossible to block.
All of those features are going to make Bitcoin even more desirable in a world in which Facebook – the world’s premier for-profit surveillance company – is also effectively the world’s largest central bank.
More on that tomorrow. Stay tuned…
Last month, we asked: “Has socialism already taken hold in America?”
And there’s been no shortage of strong opinions in the Daily Cut mailbag on the subject.
Many of your fellow readers believe more socialism will spell disaster for the U.S., including Kurran K., a self-reported millennial who said…
More government will do exactly what it has done in every location any form of collectivism has ever been employed. It breeds corruption and poverty/death, the most recent example being Venezuela. All collectivists such as AOC [Democratic Socialist rising star Alexandria Ocasio-Cortez] never address these issues or the history of examples of the fallout of more government.
– Kurran K.
But socialism has its supporters, too…
This wealthy white male favors the shift to socialism and higher taxes on the rich. Ironically, this might be the thing that saves capitalism.
An efficient market cannot persist when one small group consistently takes all the benefit. Eventually those who don’t benefit walk away, or simply cannot afford to participate any longer.
When was America at its greatest and the Western world at its strongest? I would argue that it was roughly between the time of FDR’s New Deal and 1971. This was a time when everyone, not just the rich, benefited from the economic system.
– David D.
You need to look at Estonia and many other “socialist states” that provide good salaries, benefits, and treat employees with respect. Call it what you may, many people will no longer be hoodwinked into doing most of the work for little of the profit. If you find this shocking, you better wake up.
– Jack W.
Can higher taxes and more socialism save capitalism?
Have your say at [email protected]. We love getting your feedback, even if it’s just a short note.
March 11, 2019