The industry behemoths are both working behind the scenes to develop tokens that could easily overpower Bitcoin. Rumours that the online giants were working on separate crypto projects began at the start of the year, but it is now understood from insiders at both companies that they are step closer to becoming a reality in 2019. Facebook has been on a huge recruitment drive recently, snapping up the top talent within the blockchain (the underlying technology for cryptocurrencies) industry. Amazon too has been busily recruiting specialists.
According to one of the UK’s leading cryptocurrency and blockchain academics, the move into crypto by Facebook and Amazon could easily overshadow Bitcoin.
Gavin Brown, senior lecturer in cryptocurrency and blockchain technology at Manchester Metropolitan University, said: “This really could be an absolute gamechanger and would be a seriously smart move by both companies.
“This time last year Mark Zuckerberg was talking about crypto and blockchain being a solution to the challenges that Facebook faces, but there’s never been any clarity about what form that would take.
“But if it is, as anticipated, the creation of a ‘Facecoin’ as such then it would seriously take the world by storm – the same applies to Amazon.”
The idea behind creating a cryptocurrency for Facebook users or just Amazon customers makes sound financial sense for both provider and user.
Both organisations would be able to keep total control over all the funds within their domain, while customers would be offered a raft of incentives.
Mr Brown cites the example of the Starbucks prepaid card to demonstrate how much cash the idea of a company crypto would put at the fingertips of large organisations.
He said: “Starbucks holds an astonishing $1.3 billion on pre-paid cards.
“They could offer a discount within their own eco-system – it’s a saving for the customer but also guaranteed spend into the Starbucks accounts.
“Now imagine how that could work as a crypto with Facebook or Amazon.”
The idea behind gaining control over tokenised spending was explored by Disney when it launched its own paper currency – the Disney Dollar – in the eighties.
Mr Brown said: “If you went to Florida you exchanged your fiat currency which had pictures of Thomas Jefferson and Abraham Lincoln on it for tokens featuring Donald Duck and Goofy instead.
“Inside their eco system there was commercial gain to be had by being able to control the currency within your realm – the principal of a cryptocurrency through Facebook or Amazon would be the same, only digital.
“This is direct spending within those financial eco systems, and it’s a really smart move.”
One of the main attractions of investing in a Facebook or Amazon token is the fact that it would be unlikely to be as complex as Bitcoin or its peers.
The processes for setting up digital wallets with many cryptocurrencies can be laborious and difficult to understand.
Mr Brown added: “This would be easier, and enables people to move between the old world of fiat to the new world of cryptocurrency without going through the complicated procedures that currently put many people off getting involved.
“This would be a simple step into that market for them, and if you’re a CTO of a multinational and suddenly the creation of money is available to you in this fashion then it becomes impossible to ignore.”
But what effect will the move by giants like Amazon and Facebook have on Bitcoin?
Could this be a nail in the original crypto’s coffin?
He said: “It’s certainly a nail, but it couldn’t ever be THE nail.
“Bitcoin is and always will be attractive to millions of people so I doubt the coffin will ever get built.”
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