Via online business online marketing online business opportunities Will Facebook’s GlobalCoin Impact Ecommerce?

Via online business online marketing online business opportunities

For years, rumors have swirled about Facebook’s entry into cryptocurrency while the social media giant worked quietly to figure out its approach. Details are emerging. In this post, I’ll explain Facebook’s plans and the impact on ecommerce merchants.

Facebook GlobalCoin

Facebook isreportedlyrolling out a digital payments system next year that will allow Facebook users (as well as WhatsApp and Instagram users) to pay for goods and services using Facebook’s own cryptocurrency, dubbed “GlobalCoin.”

GlobalCoin will be a so-called “stablecoin,” meaning low price volatility, especially in comparison toother cryptocurrenciessuch as Bitcoin and Ethereum. Low volatility will presumably encourage adoption and usage for transactions, where stable prices are essential to facilitate a common understanding of value for both buyers and sellers as well as to ensure consistent value over time.

GlobalCoin will be a so-called “stablecoin,” meaning low price volatility…

Volatile currencies are near useless for transactions. Such currencies become investments, encouraging consumers to hold until the price increases. Similarly, merchants would be less likely to accept GlobalCoin if there were a risk of it losing significant value after they sold their product but before they converted into local currency.

To ensure price stability, Facebookwill peg GlobalCointo a basket of international government-issued currencies, including the U.S. dollar, euro, and Japanese yen. If it follows the approach of other stablecoin projects, Facebook will use a large reserve of those international currencies to buy and sell GlobalCoin to offset price movements.

Facebook is attempting to ensure that GlobalCoin has broad financial institutional support by at least partially decentralizing the management of the currency among several organizations as part of an independent foundation. This not only distances Facebook from the regulatory obstacles of running its own currency but also enables and incentivizes adoption by bringing other large institutions, such asWestern Union, into the fold.

Ecommerce Merchants

To date, crypto payments for online transactionshave failed to securewidespread adoption, in part due to volatility. However, this will likely change, as consumers become more comfortable or do not realize their purchases involve crypto.

With GlobalCoin, ecommerce merchants can decide to engage, or not. Here are some advantages.

  • Early adoption promotions.Facebook will almost certainly reward merchants for early acceptance of GlobalCoin, while also heavily promoting it to consumers. Merchants can look for opportunities to participate if interested.
  • Developing countries.If an ecommerce business has customers in developing countries, GlobalCoin may be a fit. Facebook is reportedly pushing adoption in countries that are traditionally underserved by large financial institutions. Accepting GlobalCoin may provide a cost-effective way to expand a presence in those markets.
  • Lower transaction processing fees.Processing payments via GlobalCoin will almost certainly be cheaper than traditional credit card processing fees.

Conversely, accepting GlobalCoin has risks, including:

  • Privacy.Processing transactional data creates new privacy concerns for Facebook. Merchants and consumers should closely monitor how Facebook will use the data.
  • Conversion to local currency.Facebook is taking steps to help convert local currency into GlobalCoin (and vice versa) at ATMs and other exchanges. Merchants should evaluate the process, timing, and expense of the conversion to ensure it works for their capital needs.
  • Regulation.Facebook’s size could cause regulators worldwide to restrict or outlaw GlobalCoin. Merchants will need to monitor the legalities in their local markets.

via online business online marketing online business opportunities Brandon Bidlack

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