A Barclays Bank analyst is predicting that the Facebook Coin that is being launched in the course of the first half of the year will earn the social media giant between $3 billion and $19 billion. The range depends on the marketing strategies that will be used to spur adoption by targeted clients.
The Coin is set to be unveiled on the WhatsApp platform and later on Facebook Messenger, and eventually Instagram.
The Barclays analyst, Ross Sandler, was speaking to CNBC on Monday when he divulged this vital forecast to Facebook shareholders and potential users of the Facebook Coin.
The period that Ross Sandler is reviewing is the next three years from the launch-between 2019 and 2021.
Facebook Is Redeeming Its Image After A Series Of Bad Press
After the disputed 2016 US Presidential Elections where Facebook is being blamed for not playing its part to stop the alleged Russian Bots from interfering with elections, Facebook appeared to be headed for a rocky patch. Later, reports about the Cambridge Analytica scam where data of tens of millions of users was misused also placed the company under criticism.
The issue has also been exacerbated by right-wing ideologists who are blaming Facebook for censoring their content which means that the Menlo Park-based firm is under controversies from many quarters.
For a change, the positive press from CNBC will help push the Facebook shares upwards once again as it is a new revenue stream for the embattled giant.
The Facebook Coin Is A Stablecoin
Facebook Coin is reportedly pegged against the US Dollar on a 1:1 ratio to guarantee stability. Wild price swings have the potential to erode all gains and Facebook is aiming to proffer an ideal Cryptocurrency.
Although less volatility, also means less gain from the perspective of Digital assets, Stablecoins are becoming increasingly popular for both merchants as well as users as they guarantee privacy, stability, as well as security.
Further, the Digital Token is a single purpose coin that will be applicable for domestic p2p money transfer and micro-payments.
The Revenue Will Diversify Facebook’s Revenue
Records show that Facebook has an unbalanced revenue stream. For instance, in 2017, the Californian company raked in $40.6 billion in total revenue. However, $39.9 came from Facebook on-platform advertisements.
Hence, according to the Barclays analyst, any shock related to the abuse of user privacy can have adverse effects on the firm’s financial health. This is the reason why any revenue stream outside of advertising is well-timed.
Facebook Has Attempted Similar Initiatives In The Past
Without success, Facebook had a similar project in 2010 where the platform offered Fiat redeemable ‘Facebook Credits’. The virtual currency could be used in apps and games.
However, the project failed as the company had to incur currency interchange cost. There was a high volume of low-value transactions leading to the abandonment of the product.
Therefore, 8 years down the line, Facebook has learned from its past and also has a precedent from other firms to build on.