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The Ledger: Facebook’s Endgame, Stablecoins’ Fight to Death, Ethereum Upgrade


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Facebook is undergoing a major transformation–the likes of which haven’t been seen in Menlo Park since since the company reinvented itself for the mobile era.

The revamp centers on Facebook’s messenger apps. The tech giant is reportedly in talks with cryptocurrency exchanges to list a Facebook Coin, a messenger-compatible stablecoin pegged to a basket of traditional currencies, like the U.S. dollar and Euro, as The New York Times reported last week. This virtual coin would presumably roll out across Facebook’s to-be-consolidated messenger networks: WhatsApp, Facebook Messenger, and Instagram messages. With 2.7 billion people using Facebook products each month, as chief executive Mark Zuckerberg disclosed on the company’s last earnings call, this deployment would instantly make Facebook one of the most important payments companies in the world.

This is a bet-the-farm moment for Facebook. The overhaul is one that Zuckerberg deemed so necessary that he has pushed it in spite of opposition from–and the departures of–the leaders’ of his most prized fiefdoms. (See the recent torrent of executive exits.) Zuckerberg is no doubt eyeing the success of Tencent’s WeChat, the everything app of the east, and he views it, rightly, as his company’s arch-rival. When Zuckerberg claims that Facebook should not be broken up under U.S. anti-trust laws because it will clear the way for Chinese companies to dominate, he’s right. He has his eye on the global Risk board, and the brewing battle could very well be a game of winner-take-all.

But why should a Facebook Coin succeed where Facebook Credits and Facebook Gifts, the company’s earlier attempts at virtual payments, failed?

Please indulge a bit of speculation. Aside from the obvious utility of a social payments app in the vein of PayPal’s Venmo, consumers could be swayed by monetary incentives. Read: Cold hard virtual cash. Picture digital wallets made available to large swath of the global population, but also a concomitant rewards program in which users can share in the value their Facebook data generates. Use Facebook? Here’s a kickback for your loyalty. This is an idea that extends well beyond the market for remittances; it could redefine the company’s relationship with consumers and become the basis for a new economic model for the company.

I am not the first person to float the idea of a “data dividend,” of course. Chris Hughes, a Facebook cofounder, proposed the idea in a column for the Guardian last year, comparing it to a fund in Alaska that offers residents compensation for mineral and oil extraction in the state. Earlier this month, California Governor Gavin Newsom made the proposal a tenet of first state address. The notion is gaining traction.

If regulators mandated that tech giants were to pay people a data dividend, the result could be a disaster. As former Facebooker Antonio Garc?a Mart?nez has pointed out for Wired, the system would likely end up being unimaginably, unmanageably complex. (How much is Nest temperature data worth? It’s unclear.) But Facebook could, reading the writing on the wall, preempt a bad regulatory decision and spin the mounting momentum against it into a positive attribute–priming the pump for a Facebook Coin market while simultaneously rebalancing its lopsided value exchange with consumers.

Facebook’s ultimate goal is to keep people using its products. That’s how the company makes money. That’s the endgame. What better way to entice people to stay than by offering a sort of Universal Basic Income?

Agree, or disagree? Write me, or send a tweet.


Send feedback and tips to, find us on Twitter @FortuneLedger or email/DM me directly at the contact info below. Please tell your friends to subscribe.

Robert Hackett


To the Moon… Despite a bear market, venture capital funds and others poured $1.6 billion into the cryptocurrency industry last year. Ethereum underwent a major network upgrade called Constantinople. JPMorgan Chase is testing new zero-knowledge proof privacy tech; meanwhile, CEO Jamie Dimon says JPM Coin could be used by consumers one day. Circle is reportedly seeking to raise $250 million. Maybe blockchains are good for government? Blockchain phones are a thing. LinkedIn cofounder Reid Hoffman joins the Bitcoin relay race. Pension funds are testing cryptoasset investments.

…Rekt. Revolut acted super slimy in pursuit of growth. Coinbase bought a blockchain surveillance startup whose founders have a disgraceful record, and people are upset. Crypto companies still can’t open checking accounts. Auditor says Quadriga’s crypto vaults have been empty for almost a year. Buffett dumps on Bitcoin, as usual. Square made more than $166 million in Bitcoin revenue last year, but just a measly $1.6 million in profit. Crypto-miner Coinhive is shutting down.


The Ledger: Facebook’s Endgame, Stablecoins’ Fight to Death, Ethereum Upgrade
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Jutta Steiner, CEO and cofounder of Parity, a company that’s building blockchain technologies, dropped by Fortune’s Balancing The Ledger studio to discuss Ethereum’s latest upgrade, how her company could possibly reclaim money it lost in locked-up crypto wallets, and a controversy involving a developer at her firm.


$67.5 million–this figure represents the estimated revenues providers of the top five so-called stablecoins, or price-fixed cryptocurrencies, are collectively set to reap this year, as calculated by the shrewd beancounters who run Uncommon Core, a financial blog that specializes in cryptocurrency. Companies such as Tether, Circle, and Gemini, which offer U.S. dollar-pegged virtual coins, make money by collecting interest on customer deposits. So figure, if the top five stablecoins have a total market value of $2.67 billion, multiple that by a back-of-the-envelope interest rate of 2.5% per year, and you arrive at the top line number.

As the analysts at Uncommon Core point out, the business model supporting stablecoins is a “fragile” one. Margins are likely to drop substantially as companies “will have to start paying interest to their holders or be outcompeted.”


About last year. Cryptocurrency investors had a rough go of it in 2018. The price of Bitcoin dropped about 80%–not to mention the plummeting market for all other virtual currencies. Steven Zheng, a researcher at crypto news startup The Block, summed up people’s pain concisely.

The Ledger: Facebook’s Endgame, Stablecoins’ Fight to Death, Ethereum Upgrade

Guess we’ll just have to wait and see what 2019 brings?


Don’t miss out: Sweat the small stuff, people. Here is TechCrunch’s Jon Evans explaining why even the slightest individual privacy setbacks affect everybody. As Evans puts it, “Anything that eats away at our individual privacy, especially at scale, is a risk.”

…privacy is not just a virtue, or a value, or a commodity: it is a commons.

You may well wonder: isn’t privacy pretty much definitionally “owned privately”? What does it matter to you, or to me, much less to society as a whole, if some 13-year-old somewhere (and her legal guardians) decide to sell her privacy to Facebook for $20 a month? OK, maybe you think rootcerting a teenager is sketchy — but if an adult chooses to sell their privacy, isn’t that entirely their own business?

The answer is: no, actually, not necessarily; not if there are enough of them; not if the commodification of privacy begins to affect us all. Privacy is like voting. An individual’s privacy, like an individual’s vote, is usually largely irrelevant to anyone but themselves … but the accumulation of individual privacy or lack thereof, like the accumulation of individual votes, is enormously consequential.

We hope you enjoyed this edition of The Ledger. Find past editions here, and sign up for other Fortune newsletters here. Question, suggestion, or feedback? Drop us a line.

Source: Fortune


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