For users, the advantage would be an easy to use stable-coin, that is more accessible to the average person. Right now, most crypto currency has plenty of complexity to it. FacebookCoin will probably work more similarly to CashApp vs. Bitcoin.
It means most people using it won't even realize it's a Blockchain token. It'll be like "Facebook Bucks". But then it also offers the flexibility of a blockchain token to more advanced users (withdraw to your own wallet, send to an exchange, etc).
This is the same reason why cryptocurrencies haven’t seen general adoption: none of that has any inherent value to someone who isn’t already a convert.
Things which would matter are “can transfer real money to a friend with less markup than Apple/Google/PayPal”, “can sell things online at better terms than PayPal”, “can make transactions at a low enough rate that a business model requiring micro-payments is viable”, etc.
Facebook has a few wrinkles where that could be interesting - micropayments for games and content in particular - but it’s unclear what a blockchain adds to that since you’re already centralized on a single massive company which negotiates on take-it-or-leave-it terms.
I agree, but [more general] cryptocurrencies do already check a few boxes:
- is cash you can email
- prevents hostile monetary policy from stealing your wealth (inflation, negative interest rates, haircuts, etc)
- keeps working when you travel (unlike Paypal / credit cards which often get frozen)
- uncensorable transactions that ignore borders
- can send large $ amounts anywhere for ridiculously cheap
- more vertigo than a theme park
If none of those excite you, crypto isn't for you today (just like the internet wasn't for you back in the 90's) and you should wait another 10 years until it's mainstream.
“cash you can email” may be a cool-sounding bumper-sticker but it's not how I'd describe something which requires operating a complex multi-party system. Similarly, “large amounts for ridiculously cheap” has historically not been true and given how much highly-visible and easily blocked infrastructure a blockchain requires to be online in order to operate, “uncensorable” is more of a hypothetical aspirational goal than a given (an envelope of USD is much safer).
“hostile monetary policy” is especially dubious in this context where it's supposedly pinned to the USD but even in other cases it's a hard sell for most people: do you a) put your money into a bank account, investment, or other asset you expect to do better than inflation or b) put everything into a complex system with no guarantees that it'll be operating in 5 years, fraud protection, etc. and hope that the conversion fees you pay on both sides will be lower than the difference?
“keeps working when you travel” could potentially be an area where it could match the credit card system except that it either means that you're traveling with a ton of cash and no recourse if someone steals it or, if like most people you use a managed service somewhere else, hoping that you don't trip the same kind of security measures which banks use for the same reasons. Given that most people do not travel that frequently and most travelers do not have significant issues using credit cards while abroad, it's unclear to me that this will be enough of a compelling advantage.
I'll bite on the first one. Cash has a complex infrastructure underpinning it - legislating, printing, securing, distributing, managing policy / rates, etc. It keeps the dollar you get today (mostly) spendable tomorrow. You're simply so accustomed to it you ignore it. Same way most people don't think about the pistons on their car, now that the user experience of driving is straighforward. Eventually folks will do the same for the complexity underpinning crypto.
Case in point: I bought a new phone from overseas a few weeks ago. Paypal / wire fees were expensive, and after three days TransferWise (suggested by the seller) still couldn't make my new account work. I wound up paying in crypto, took about 5 minutes and cost me less than a buck. So yeah: cash I emailed.
But it really depends on being able to transact at one of the very limited set of vendors who would accept crypto, especially overseas.
It’s a chicken/egg problem because without an extensive ongoing economy which would allow one to conduct a significant portion of total spending in crypto, it will be required to buy and sell back and forth to fiat.
So far costs of exchanging crypto to fiat are significant. I tried to figure out a way to use it to transact with a vendor I do business with overseas. We don’t care about bitcoin, we were just looking for a cheaper way to make the remittance.
Doing it with crypto was harder and more expensive than even PayPal. Especially because it subjects you to volatility risk and information blocks due to transacting between 3 currencies: USD-BTC-EUR.
You could argue that as “adoption” increases (using crypto as real currency) this problem would lessen.
I doubt this will be the case, even if the “scaling issue” is solved.
I don’t see any reason that crypto will lower the cost of securing transactions. Currently, the cost of digital transactions include fraud protection and regulatory compliance.
A currency that operates out of the jurisdiction of government cannot scale, as being a “black market” currency is inherently limited is scope.
The biggest problem is that distributed, peer to peer, currencies provide a vastly larger attack surface for hackers. They also require large scale duplication of security practices, implemented by relatively inexperienced (at providing security) users.
This is the worst of all worlds. The drastic consequences of being hacked either require the user to undertake the costly risk mitigation strategies and accept the risk of losing funds or...use custodial solutions like exchanges or banks.
That means at least a lower cost per user for security, but it shouldn’t be any lower than cost of bank security practices, at best.
For proof-of-work coins the cost of securing the network must also ultimately be borne by users. There are not infinite speculators willing to cover the mining costs.
Ultimately, this leads to a currency that has a high cost. It therefore will lose out to centralized currencies.
Crypto currency has two properties competing digital currencies lack.
True peer to peer transactions and censorship resistance.
They also have some properties that make them useful as a vehicle for pure speculation, which is a perennial interest of humans.
But the type of transactions that benefit from the peculiar properties of these digital token systems are not that numerous, and are mostly black or gray market activities.
When you add in the fact that it is trivial for governments to crackdown on crypto currencies, just by making them illegal, or even just enforcing existing tax regulations that make each transaction a taxable event,it’s clear the odds are stacked against crypto currencies becoming widely adopted.
Facebook is not going to be able to avoid the costs that other digital cash systems have. So they may succeed, but their token will not really be in the same category as the “real” crypto currencies.
They will be subject to as many regulations as PayPal, Apple, Venmo, etc.
They will also have the same need for security and fraud protection.
"prevents hostile monetary policy" -- except this isn't true. Crypto has just taken monetary policy decisions out of the hands of the electorate, however tenuous a chain of authority that is (voters -> president -> Fed chair), and placed it in the hands of either "the original developers" or "whoever has 51% of network computation".
That is an absolutely horrible trade-off for anyone who wants a democratically run currency.
That and the irreversibility in cases of fraud make crypto a complete non-starter for me. I want to be able to reverse transactions if someone starts siphoning off my coin; and I want to be able to use the force of law to do so, if I win a lawsuit or even just don't want thieves to steal my money.
What is the crypto answer to "someone stole your private key and is stealing your money"?
I'm not a crypto fan so don't take this the wrong way, but I think the crypto answer to "someone stole your private key and is stealing your money" is the same as the non-crypto answer to "someone stole your ATM PIN and is stealing your money." Namely, you ask police and prosecutors to track down the perpetrator to get your money back.
ATMs have security measures like daily download limits, unusual locations triggering denials or ID checks, etc. which cryptocurrencies lack.
There's a really big difference between your potential losses being capped zero to a few hundred dollars vs. “everything you own and half of the community will say it was your fault”.
No reason you couldn't have some of these features in a crypto wallet. Lots of schemes are being created with with multisig, smart contracts, and social recovery methods. Here is one around freezing transfers not to a known address.
https://www.coindesk.com/ethereum-startups-team-to-offer-ban...
Probably have to wait for the whitepaper to come out to give a fair opinion/analysis (rather than an article about the future release of the whitepaper).
Once the actual use case/function of the token is know then one could answer if there is a benefit to users and if a Blockchain token makes sense over a database.
