A Savvy Play on Facebook’s $19 Billion Crypto Ambitions

0 | By Michael A. Robinson

You’ve got to hand it to those folks on Wall Street- they have a knack for ignoring the obvious.

And in the case of Facebook Inc. (Nasdaq:FB) that meant actually digging below the daily headlines.

See, the Street has been concerned with the social media giant’s hassles with regulators and politicians over crackdowns on Facebook violations of user privacy.

To be sure, the firm is forecasting losses of up to $3 billion due to possible fines from the Federal Trade Commission.

Here’s the thing. It recently made a merger that greatly increases its move into a hot new field that could easily generate more than six times that amount – in less than three years.

That’s why news that came out back on Feb. 4 is so important for understanding Facebook’s true cryptocurrency ambitions.

See, the firm quietly began a blockchain project about a year ago. But with the recent purchase in February of blockchain startup Chainspace, Facebook is looking for the kind of scale that means Big Money.

And today, I’m going to reveal a great way to play Facebook’s blockchain and crypto currency moves…

Check it out…

Facebook’s Crypto Ambitions

Now then, to be fair to the Street, a purchase like that of Chainspace wouldn’t grab many headlines.

After all, this was no blockbuster deal. Facebook hasn’t disclosed the purchase price, but to buy a company with only a few dozen workers was a pittance.

But make no mistake, Facebook bought Chainspace because it wanted to hire the startup’s group of blockchain geniuses. The young firm’s entire focus was on making blockchain tech more scalable.

See, this technology is nothing short of a great distributed ledger that provides a permanent record of any transaction. It’s also transparent and hard to hack.

But in its native state, it just can’t scale up to handle the billions of transactions you see at payments firms like Visa Inc. (NYSE:V), Mastercard Inc. (NYSE:MA) or PayPal Holdings Inc. (Nasdaq:PYPL).

And that’s why Chainspace is Facebook’s secret weapon. With something like 2 billion monthly active users, Facebook has created one of the biggest-scale tech platforms ever.

In other words, the firm’s new crypto, dubbed “Facecoin,” could be a goldmine.

Barclays internet analyst Ross Sandler just told CNBC he believed a “Facebook Coin” could haul in as much as an extra $19 billion in revenue by 2021 for the storied social media platform. The idea is that, like Google, Facebook could generate income by charging the firm’s users a small fee for using such a service.

That’s a big new pool of potential revenue for a firm looking to pivot into a more privacy-focused business model.

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‘Facecoin’ Will Be Used For Payments

Facebook has been working on its crypto project, which it calls “Project Libra,” for more than a year, and has been recruiting dozens of financial firms and online merchants to help with its launch, according to the Wall Street Journal.

From the reports we have so far, Facecoin would be a type of cryptocurrency known as a digital stable coin that would allow people to send back and forth among one another, or to buy things on Facebook and throughout the internet.

And Facebook has been trying to raise $1 billion from firms like Visa and Mastercard to back the coin and thus avoid the ups and downs of the regular crypto market might have on it. A key feature of stable coins is that they’re often backed, one-to-one, with fiat currencies like the U.S. dollar, thus providing more stability.

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How to Get In

Now, exciting as this development is for the crypto investing world, I don’t believe buying up Facecoin when it becomes available is the way to get in on this opportunity. After all, the whole point of such a stablecoin is to maintain the same price over time – that’s hardly a recipe for investing success!

Instead, I want to point you today to Ethereum (ETH).

The world’s second largest crypto with a market cap of $20.5 billion, Ethereum’s price has climbed 44% so far this year. It’s still a better value than its larger rival, Bitcoin (BTC), with lots more room for big gains. In fact, I believe has a nearly limitless future.

Ethereum is being used to host a whole other layer of applications, known as “dapps,” to allow people to make wagers, play games, trade on decentralized exchanges and marketplaces, and make payments.

And if plans to upgrade the project to Ethereum 2.0 go forward as planned, I’m expecting the cryptocurrency to soon soar.

In a matter of weeks, the genius coders behind Ethereum are planning to significantly change how the nearly $19 billion network creates and verifies transactions on its blockchain.

That first step, dubbed Phase Zero, will involve a code release for the chain’s proof-of-stake algorithm by the end of June.

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For those new to this concept, proof-of-stake networks essentially attribute mining power – the computational work required to verify transactions, create new coins and secure the network – to the proportion of coins held by a given miner.

Instead of gobbling up large amounts of electricity as proof-of-work systems require, proof-of-stake miners are limited to mining a percentage of transactions reflecting his or her ownership stake.

Aside from using less electricity, proof-of-stake networks are difficult to breach as an attacker would essentially have to own a majority stake before doing so – meaning attackers attempting to destroy the value of the coin would also destroy his or their own position in the coin.

The next step will be tackling scalability issues – the ability for many people to use the network at the same time – through what’s known as sharding. Ethereum founder Vitalik Buterin has said sharding will make the network scalability increase by a factor of 1,000, allowing more and more transactions to be carried out.

These developments are great news for investors watching Ethereum evolve into a more useful, and widely used network.

And following up this good news for Ethereum enthusiasts is word from a senior official at the U.S. Commodity Futures Trading Commission (CFTC) that the agency is willing to approve an Ether futures contract, assuming it met all of the requirements, Coindesk said.

If the CFTC moves on such a proposal, that’d open up the market to a whole new range of institutional investors that to date aren’t permitted to buy underlying digital currencies.

And more institutional investors staking out larger positions will help send the price soaring.

If you decide to get in, don’t forget to check out my tutorial on how to buy Ethereum here.

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A Special Announcement

Now, before I go, I’ve got a special announcement. I just released the most exciting issue ever of my Nova-X Report, and I want to make sure you see it.

This is a special “cannabis” edition, in which my colleague, the executive editor at the National Institute for Cannabis Investors (NICI), Greg Miller, is participating.

And because I’m on the board at NICI, Greg has agreed to share what could be the most lucrative CBD company to buy right now. The profit potential we’re projecting for this stock is incredible.

Click here to read more.

Cheers and good investing,

Michael A. Robinson

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