Crypto world has woken up to a surprising update which has the social networking biggie Facebook at its center. Apparently, Facebook is contemplating to accumulate venture capital in a huge proposition for its new crypto project.
As per the recent updates shared by veteran crypto writer and NYT reporter Nathaniel Popper, Facebook is looking to raise capital investment in a large sum for its digital currency project. On 4th of April, Popper posted a tweet that read,
Update on Facebook's cryptocurrency: Sources tell me that Facebook is now looking to get VC firms to invest in the Facebook cryptocurrency project we reported on earlier this year. I hear they are targeting big sums — as much as $1b.
— Nathaniel Popper (@nathanielpopper) April 8, 2019
Popper has penned a book titled ‘Digital Gold’ on the early cryptocurrency history which released back in 2015. He has an interesting point of view about how Facebook can utilize yielding the investment capital for its stablecoin project to outreach and improve its appeal to the wider crypto industry.
Popper feels onboarding outside investors for funding its project will be a means for the social media platform to maintain their coin’s consistency with that of decentralized ethics of the digital currency. He writes saying,
“Given that one of the big allures of blockchain projects is the decentralization, getting outside investors could help Facebook present the project as more decentralized and less controlled by Facebook.”
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In addition, Popper has come to know through a source that there are chances of this venture capital to be utilized for the project’s collateral. When compared to other digital currencies, what Facebook is trying to do is developing a stablecoin that operates on its popular messaging services. On the other hand, cryptos like Ethereum and Bitcoin function similar to other digital assets, prices of which tend to fluctuate.
While there is no doubt that coins based on such technologies offer a price-stable and lucrative coin which is user-friendly to a great extent, at the same time, it also needs significant backing that guarantees the currency’s value. Consider the case of Tether. While it has introduced USDT, the market-leading stablecoin, it is often targeted for its exact coin backing ratio of 1:1.
So with the social media biggie with a market cap of 500 billion, one billion dollars in VC to back the stablecoin will eventually end up being a wise move in the future. After all, it will secure the goodwill of both its investors and coin users.
One person I spoke with said that Facebook is talking about using the money as collateral for its cryptocurrency. Facebook has been designing the coin to keep a stable value, pegged to a basket of foreign currencies held in bank accounts.
— Nathaniel Popper (@nathanielpopper) April 8, 2019
Another of Popper’s tweet exclaimed that it was fascinating to think about a prominent firm attempting such kind of (outside) fundraising.
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Currently, crypto users are seen celebrating the bullish market trends while stablecoin is continuously expanding its horizon. The primary draw for stablecoins is that it lets users make the most of the decentralized and digital currencies all while protecting them against the price fluctuations of conventional cryptos.
