Facebook Allegedly Aiming to Raise $1 Billion for Its Crypto Project
Facebook is seeking support from venture capital firms to invest in its crypto-related project, targeting to raise as much as $1 billion. The news was revealed by NY Times reporter Nathaniel Popper in a series of twits on Monday, April 8.
The social media is allegedly designing its crypto as the native currency for all its major platforms – Facebook, Instagram, and WhatsApp. Reportedly, Facebook is also eyeing to make a splash on the lucrative remittance market in India with its cryptocurrency.
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
Pointing out the advantages of outside funding, Nathaniel Popper noted:
“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.”
Moreover, according to Popper’s sources, Facebook is planning to peg its digital tokens against “a basket of” fiat currencies, to create a so-called stablecoin, thus avoiding the crypto market fluctuations and making the coin more usable.
“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,” Popper stated.
It’s interesting to think of one of the richest companies on earth raising money. When was the last time they did outside fundraising?
— Nathaniel Popper (@nathanielpopper) April 8, 2019
Since 2018 Facebook has been covertly working on a cryptocurrency project and building a blockchain division within the company. The company has been tight-lipped about the purpose and progress of the coin, but Facebook has so far hired at least 30 people to the division with David Marcus—former head of Messenger, and the previous president of PayPal—leading the division as “Director of Engineering, Blockchain.”
Though Facebook did not announce anything officially about its cryptocurrency project, media reports revealed earlier this year that the company is eyeing to develop its own digital currency called “Facebook Coin”.
According to a Barclays analyst, Facebook’s cryptocurrency might generate as much as $19 billion a year in revenue.
The last time Facebook raised funding was through a venture round in March 2012 for an undisclosed amount. According to CrunchBase, the last public amount that Facebook raised was in January 2011 for $1.5 billion with the backing of firms including Goldman Sachs Investment Partners and DST Global.
The company generated $56 billion in revenue in 2018 alone, with a net income of $22 billion. These figures represent more cash than the market capitalization of every single cryptocurrency except Bitcoin.
For reference, the Menlo Park-headquartered company market capitalization is more than double the market capitalization of all cryptocurrency projects combined, sitting at $500 billion. Worldwide, Facebook reaches a massive 2.3 billion monthly active users.
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