“Facebook Coin” is forecasted to bring in an additional revenue of 19 billion US dollars to the social media giant by 2021.
CNBC reported on 11 March 2019 that this is what Barclays internet analyst Ross Sandler said in a note to clients.
Sandler said that if the digital coin that Facebook is reportedly developing is successfully implemented, it could result to at least 3 billion US dollars in revenue.
Barclays said that these revenue estimates are based off Google Play, which is Google’s digital distribution service and Android’s official app store that generates 6 US dollars in net revenue per user.
Sandler’s note follows reports that Facebook is developing its own digital coin for use on its WhatsApp messenger platform.
The said cryptocurrency would allow users to make direct transactions, and will be tied to the value of fiat currencies.
The development of Facebook’s digital coin coincides with the criticisms the social media platform received from consumers, politicians and advertisers over its business models, which included the collection of data from 50 million Facebook users without their permission by the British political consulting firm Cambridge Analytica.
The “Facebook Coin” is being seen as a “lifeline” for the social media giant if investments stop coming, despite the continued increase in Facebook’s earnings and the 30 percent rally of its share price.
“Merely establishing this revenue stream starts to change the story for Facebook shares in our view,” Sandler said, adding that the digital coin is “sorely needed at this stage of the company’s narrative.”
Sandler would go on to say that “any attempt to build out revenue streams outside of advertising, especially those that don’t abuse user privacy are likely to be well-received by Facebook’s shareholders.”
Facebook’s digital coin may lead companies to re-establish their strategic partnership with the social network, with Sandler saying that it would allow for more premium content on the platform.
Sandler said that the “Facebook Coin” might function as a single purpose coin for micropayments and person-to-person money transfers in its first version, adding that this is very similar to Facebook credits in 2010.
Facebook credits refer to the social network platform’s early attempts on virtual coins, which did not lead to profits due to interchange costs.
Sandler pointed out the size of Facebook’s digital coin project, which notably has former PayPal president David Marcus as the blockchain and cryptocurrencies leader, and its team that consists of employees from the blockchain startup Chainspace.
Sandler said that the challenges that Facebook would face with its digital coin includes the need to demonstrate to users that it would be “above what is available today in payments,” trust building after the criticisms it faced in 2018, and regulatory scrutiny.
However, Sandler believes that if Facebook could pull off the digital coin, the social network platform could also get itself involved in consumer lending, remittance and physical payments.