Satoshi Nakamoto can’t have known the colossal affect their creation, Bitcoin, would have caused back when it was launched in 2009. Since then, it has driven up unprecedented speculation and popularity. And now the world’s eighth richest man is delving into the crypto world, as Mark Zuckerberg leads Facebook towards releasing GlobalCoin. But what is it, how will it work, and will it be successful? Here’s everything you need to know about GlobalCoin.
What is a cryptocurrency?
Before getting into the specifics of GlobalCoin, it’s worth touching upon exactly what a cryptocurrency is. A cryptocurrency is a digital currency where transactions are verified via encrypted cryptography, that also acts as a regulator for the generation of units. In essence, they are usually decentralised (have no regulatory central bank) and are primarily used for online transactions.
What is Bitcoin and why has it been so popular?
Bitcoin was the first cryptocurrency to be developed. It was created in 2009 by someone using the alias Satoshi Nakamoto – to this date their exact identity is a mystery. How Bitcoin actually works is very clever. All Bitcoin transactions are sent to the blockchain network, where they become widely visible. Powerful computers are then able to validate the transaction, and once completed it becomes part of the blockchain and cannot be altered in any way. The reward for validating a transaction is a certain number of Bitcoins – currently 12.5 Btc. This number is halved as the supply of unmined Bitcoins falls, with the mining reward initially being 50 Btc.
Bitcoin has been so popular due to its unique nature as a currency that is not centrally regulated. As we saw when the 2017 bubble burst, its price can completely crash at any moment, and there’s little anyone can really do about it. Bitcoin is at the entire mercy of natural market forces in the form of investor sentiment and nothing else. This is similar to other Altcoins, but the fact that Bitcoin was first to the party means it’s seen as the staple cryptocurrency. As a result of these factors, it’s by far the most valuable crypto, with a current market price of around $8,700 for just one Btc.
What is GlobalCoin?
GlobalCoin is the proposed cryptocurrency that Facebook are releasing. Although not too much has been revealed at this point about GlobalCoin, it’s clear the social media giant is well into the process of making this idea come to fruition. Zuckerberg has recently had a meeting with Bank of England Governor, Mark Carney, regarding the plausibility of the imminent crypto. Meetings have also taken place regarding operational and regulatory issues with US Treasury officials, as well as payment providers Mastercard and Visa.
The plans have long been in the making though, and Facebook have even tried (but ultimately failed) to launch its own digital currency before in the form of Facebook Credits. Unbelievably, the initiative was launched just a few months after Bitcoin recorded its first client. Given the fact that Facebook Credits are not worthless, it’s not as surprising to hear they company pulled the plug on its digital currency just a couple of years after its inception.
When is GlobalCoin going to be released?
GlobalCoin is planned to be rolled out in 2020 in ‘about a dozen countries.’ Testing for the crypto is scheduled to begin in the fourth quarter of 2019. Little else is being said about Facebook’s plans with what’s internally being referred to as Project Libra, but more information is expected to be released over the summer.
What is the purpose of GlobalCoin?
The purpose of GlobalCoin is to allow for easy payments within Facebook, WhatsApp and Messenger, as well as payments outside the Facebook ecosystem. Given the name implies scalability on a ‘global’ basis, the ambition at Facebook is evidently high. It seems Zuckerberg and co. are seriously looking to challenge the likes of Bitcoin and establish GlobalCoin as a more efficient and safer form of the popular cryptocurrency.
GlobalCoin v Bitcoin: What’s the difference?
A main, and highly significant, difference between GlobalCoin and Bitcoin is centralisation. Where Bitcoin is purposely not centralised or regulated, Facebook is looking to be transparent, backed by banks and governments and pegged to actual currencies such as the USD or JPY. This means that sentiment alone will not alter price, as 1 GlobalCoin will have corresponding amount to regular currencies and that amount won’t change as freely as Bitcoin’s price.
Has Bitcoin been disrupted by GlobalCoin and will it affect it in the future?
At this preliminary stage, we can only speculate over exactly what it will be and how successful GlobalCoin may become. Due to the fact that there is no product as of yet, Bitcoin has not been affected negatively as some might expect; with GlobalCoin looking to directly compete with Btc by offering a ‘safer’ coin that will be less volatile and yet still offers all the benefits of a cryptocurrency.
In fact, Bitcoin’s price jumped nearly 10% from when the market closed on 24 May, the day Facebook made its GlobalCoin announcement, to when it reopened on the 26 May. With 2.4 billion monthly users, perhaps an increase in exposure of cryptocurrencies will enhance Bitcoin and drag it further into the mainstream. If the scale of people that use Facebook become more educated in cryptocurrencies, some suggest there’s a strong indication that Bitcoin might benefit as people begin to embrace cryptos as a form of payment in wider society.
Of course, there’s a fine balance between enhancing the status of all cryptos and destroying all other existing cryptos altogether by GlobalCoin’s sheer volume of backers and efficiency of use. If GlobalCoin’s rise is drastic, who’s to say Bitcoin won’t become redundant? It’s a regulated cryptocurrency that is not only backed by major payment providers, but also pegged by valuable centralised currencies, and has been created by one of the largest corporations in the world. So, it’s not too far-fetched to say GlobalCoin could one day replace Bitcoin as the most valuable and widely-used crypto.