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We might very well be seeing the first instance of large scale cryptocurrency adoption for a real business problem, driven by a technology giant. We are not talking about crypto-skeptic-turned-closet-believer Jamie Dimon’s JPMCoin. We are talking about Facebook’s crypto efforts, which we covered in some detail a while ago. Speculation has been rife around Facebook’s plans to a digital currency for p2p transfers, and reports indicate that India could be the first country in which the technology giant’s cryptocurrency project could kickoff. In case you are wondering why, it makes eminent sense as India is among the biggest beneficiary of remittances globally with more than $80 Billion received every year and it also has one of the biggest user bases for WhatsApp, with 200 million users.

Top 5 Remittance Corridors

Currently India-US remittance infrastructure is still primarily dominated by legacy banks, with fintech companies vying for market share growth by offering faster and cheaper alternatives. This is where Facebook sees the potential to undercut existing players and become a leader in this geographic channel.

Let us assume that Facebook’s private cryptocurrency is a stablecoin, called let us say FaceCoin. FaceCoin is likely to be a fiat-backed stable currency at least in the first instance, to keep things simple; check out our analysis on the various types of stablecoins here. It is very likely going to be pegged to 1 USD, and it can offer instant confirmation leveraging blockchain technology and also charge a very low fee, or even no fee; Remember, Facebook has some experience giving away stuff for free and monetizing data. We are not even talking about borderline grey are, privacy-violating data exploitation here that all the tech giants have in the past been accused of. There is a humongous amount of personal data that can be analysed and dissected in an ‘ethical’, acceptable manner by Facebook. At scale, payment services are likely going the way of checking accounts, with the service providers paying users some interest for the privilege of carrying the float.

Moreover, integrating payments into WhatsApp also puts Facebook along the path of sort-of-peers such as Tencent and Alipay, which have both revolutionized p2p payments by integrating them with instant messaging in China. If the cryptocurrency were to launch globally, it would not be an overstatement to say that Facebook can probably drive more adoption in a few months than what other MoE cryptocurrencies have managed to achieve until now.  

India Remittances By Quarter
India Remittances By Quarter (In $Millions)

The payments space is truly changing. One the one hand, we have cryptonative solutions like LN, Raiden, Plasma etc. On the other hand we have hybrid solutions like that of Facebook. While it is too early to call a winner, in the medium term, we can surely see efforts like Facebook’s (and in a different context, JPM), gaining significant traction, just because of the entrenched user bases that they can bring to bear and scale any offering; Even if the offering is not a completely open, decentralized blockchain, much to the dismay of many crypto purists. Arguably, the second iteration of private blockchains would also have learnt from the mistakes made by the likes of first-gen efforts like Ripple.

Meanwhile in Crypto Wonderland….

“You Can’t Regulate Crypto” A supreme court advocate has explained the limitations of the Indian government’s power to regulate cryptocurrency, determining that the court should not get involved. Meanwhile, the crypto community awaits the government’s regulatory framework and the supreme court hearing of the petitions against the banking ban by the central bank. The advocate explained his position by stating that crypto regulation simply cannot be enforced due to the “alarmingly low” probability “of the coins being recovered or the perpetrators being discovered” when an exchange is hacked. He emphasized that “Nothing that the government introduces or requires can change this fact”.

“Bitcoin Scam in Korea” Kenyan Bitcoin investors have fallen prey to a Brazilian pyramid scheme which has gone down with millions of shillings they had invested in it. The company known as Velox 10 launched operations in Kenya on September 20, 2017 and was run by a Brazilian international known as Ricardo Rocha.Although investigations are still on-going, a report by the Daily Nation has revealed how innocent Kenyans were lured into the Velox 10 scam with some victims losing up to Sh3 million in the pyramid scheme.

“Tagomi Raises $12 Million” Tagomi Holdings Inc., a digital asset brokerage founded by a former Goldman Sachs Group Inc. executive, raised $12 million in its second round of funding. Investors include Paradigm and Pantera Capital Management and other users of the electronic brokerage that buys and sells Bitcoin, Ether and other digital assets on behalf of customers, Tagomi said Monday. A previous round netted $16 million, according to the company. Tagomi joins a list of startups aiming to bridge the gap between what investors expect from market infrastructure and the Wild West nature of cryptocurrency trading where basic oversight is absent.

“BlockFi’s Lucrative Interest”Crypto wealth management and lending company BlockFi has launched new cryptocurrency accounts supporting Ethereum (ETH) and Bitcoin (BTC) bearing 6 percent annual interest paid monthly in crypto. The company announced the launch through a post published on its website on March 4. In July last year, crypto-focused merchant bank Galaxy Digital led a $52.5 million fundraising round for BlockFi. Furthermore, according to the March announcement, interest earned in BlockFi’s interest accounts compounds monthly resulting in an annual percentage yield of 6.2 percent. The accounts also reportedly are not entirely new, since they have been in private beta since the beginning of the current year and already hold over $10 million in assets.

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