18.2 C
Manchester
June 25, 2022
Image default
Bitcoin

3 Reasons Why Facebook Should Buy Bitcoin

Should Facebook Buy Bitcoin and Holdar?

Yesterday, one of the main subjects of conversation on Bitcoin Twitter was started when investor Alistair Milne stated that there is a rumor that Facebook will announce that it has bitcoin (BTC) in its books on Wednesday. There is a long history of false rumors and reports when it comes to big announcements that could affect the price of bitcoin, which could be the reason why the cryptoasset hasn’t changed much after Milne shared the rumor on social media.

While there is little point in speculating about whether the rumor is true or not, it is certainly worth pointing out the various reasons why it would make sense for Facebook to make this change.

Specifically, there are three main reasons why Facebook should consider allocating to bitcoin: it can help them with their reputation issues regarding user data and privacy, integrating bitcoin into Facebook makes more sense than their Diem project, and they are doomed to win back by buying bitcoin and then giving the asset its own seal of approval, publicly publicizing the purchase.

1. Facebook has a reputation problem

According to Statista, Facebook is the most used social media application in the world, but there is a certain segment of the population that absolutely detests this technology giant. And it turns out that there is a lot of overlap between Facebook critics and Bitcoin enthusiasts. This overlap makes sense because criticism of Facebook often sounds very similar to criticism by Bitcoin users of the legacy banking system. Bitcoin users love the ability to take full custody and responsibility for their money and eliminate the need for trusted intermediaries in the digital world. Likewise, Facebook critics prefer to have complete control over their data, rather than having it collected, stored and sold by a centralized third party.

In other words, Bitcoin supporters and Facebook detractors have common ground in the desire to maintain self-sovereignty on the internet.

Facebook’s problems around privacy and control of user data have been revealed through a series of scandals and controversies over the years. In addition, CEO Mark Zuckerberg referred to his users as “idiots” for handing over their personal data to him when the platform was still just a site known as Facebook. There have been many other confusions of user privacy that have emerged for the social media giant over the years, but the point is that all of these problems involve personal data being placed in the hands of a trusted third party, Facebook, which is a problem. Bitcoin proponents understand very well.

Facebook appears to have a renewed push for user privacy and data security every few years, but buying, using and promoting bitcoin can do wonders for its credibility when it comes to its claims regarding user sovereignty on Facebook platforms . The pressure on Facebook related to these issues is also likely to be increasing thanks to Apple, which has launched a wide variety of privacy-enhancing features in recent years that allow users of Apple devices to maintain more control over their data. Of course, Facebook’s official response to Apple’s privacy improvements has been to do things like claim that the change will hurt small businesses, so maybe we’re still waiting for the time to come to Zuckerberg’s Jesus.

2. Bitcoin makes more sense than Diem (formerly known as Libra)

Facebook is already connected to the concepts of cryptocurrency and blockchain technology through its Diem initiative, originally known as Libra. However, Diem is nothing like Bitcoin.

First of all, it would make no sense to refer to Diem as a pure cryptocurrency, as it is based on an allowed blockchain. The main innovation of Bitcoin was to allow dynamic and potentially anonymous actors to solve the double spending problem and order transactions. With Diem, the system is controlled by a federation of known and trusted entities. In addition, the purpose of Diem is to track the value of the US dollar, which means that it is very similar to many of the various online payment tools that already exist in the United States. In fact, the level of centralization involved in this project has already allowed for a series of delays and structural changes due to concerns from regulators.

If Facebook really wants to give its users more sovereignty and control over their data and money, then it would make a lot more sense to simply integrate bitcoin into their existing apps, rather than effectively recreating PayPal or Cash App on top of an allowed blockchain.

Even US Congressman Warren Davidson (R-OH) suggested that Facebook should opt for bitcoin instead of creating Diem in the early days of the project.

On the official website of the Diem project, there is a strong focus on the desire to bring financial services to non-bankers. But the reason that non-bankers do not have access to financial services is related to restrictions around Know Your Customer (KYC) and anti-money laundering (AML) regulations. If these requirements did not exist, people would already be transferring dollars, euros and other fiat currencies around the world with the ease of a tweet or an email. Yes, there are already stablecoins, but it is unclear whether regulators will allow pseudonymous digital transactions to persist on these dollar-denominated IOUs. And if they can persist, then why is a blockchain necessary in the first place?

The creation of another centralized system like Diem does not solve this problem because it is easily regulated and controlled. With bitcoin, anyone with a pseudonym can receive payments without permission. This is the main differentiator of bitcoin and the reason why it can operate as a form of digital money.

As a final note about Diem, it would make sense for Facebook to buy and keep a few bitcoins if they intend to go back to Diem’s ​​original vision (then Libra), where digital currency was supported by a basket of coins instead of just the US dollar, since bitcoin could also be added to Diem’s ​​reserves.

If Facebook continues to pursue Diem instead of Bitcoin, it will become clear that this step in the realm of digital currency is just another takeover, rather than a new way to empower its users. Instead, they should keep bitcoin on their balance sheet and start building new products and services around it.

For those who are ready to point out that Bitcoin (even with the initial development of the Lightning Network) cannot scale to handle the entire Facebook user base today, it is important to realize that each Facebook user will not immediately start making payments of Bitcoin on the day it theoretically goes live. And even though that kind of functionality is still a few years away, it still makes sense for Facebook to buy now, while it’s still early.

3. Possible Bitcoin Pump

The third reason why Facebook should buy and keep some bitcoin in its books is quite simple: Bitcoin Pump. If Facebook bought some bitcoin and then made an announcement about its position and intentions to build products and services around the world’s most popular cryptoasset, they would benefit financially from the likely increase in the price of bitcoin after the announcement.

Microstrategy CEO Michael Saylor was the first executive at a publicly traded company to outline this simple strategy when he recommended it to Tesla CEO Elon Musk via Twitter.

And, according to Square’s chief financial officer, Amrita Ahuja, “there is absolutely one case for each balance sheet to have bitcoin in it.”

Now, some may say that it would make more sense for Facebook to adopt an altcoin instead of bitcoin, as it might be easier for Facebook to pump and discard a much lower value cryptoasset to make a profit.

However, the point is not to pump and then dump. Instead, the goal is to buy and help build and support a native currency without Internet permission.

It is also important to note that simply pumping and discarding a low-capitalized altcoin would have the opposite effect in terms of Facebook improving its reputation. In addition, Facebook will need to have enough liquidity in a cryptocurrency to eventually convert some funds back into US dollars, if necessary. As Tesla recently proved, there is a lot of liquidity in bitcoin.

The decision to enter bitcoin may boil down to the time preferences for Facebook. The social media giant may continue to cling to centralized control or begin to embrace a future Internet that is more decentralized and enables the user’s true sovereignty. As Facebook increases its power through centralization today, there may eventually be a need to embrace the user’s sovereignty, as Twitter did with the bluesky. In the long run, a future where Facebook has not adopted bitcoin may seem somewhat dystopian, as it may indicate that the cryptocurrency has failed.

Source: Cryptonews

Related posts

Yearn Finance creates the new StableCredit loan protocol |

Aparnna Hajirnis

What is the expectation for Bitcoin in what remains of 2020?

Anupreet Kaur

Bitcoin half-life “Message engraved on # 629,999” Satoshi Nakamoto’s thoughts are repeated in the corona crisis

Aparnna Hajirnis

Leave a Comment