• Where Can I Find Facebook’s Cryptocurrency?

  • While everyone was talking about Bitcoin futures ETF approval and other real-world crypto news this week, Facebook’s crypto project quietly lost two more employees.

    Riyaz Faizullabhoy and Nassim Eddequiouaq, who both left crypto custody firm Anchorage two years ago to work on Facebook’s crypto wallet, have left to join Andreessen Horowitz’s crypto division (a16z). There’s an irony here: a16z is a founding member of Facebook’s Diem (formerly Libra) Association. Perhaps you can interpret this as a16z wanting to bring these guys in-house to ensure the success of Novi, as it’s now known.

    But it’s difficult not to see this as yet another loss of talent from Facebook’s ill-fated, half-baked attempt at crypto.

    Libra was first announced by Facebook in June 2019, which seems like an eternity in cryptoland. It was initially marketed as a “borderless global currency” backed by the Libra Reserve, a “collection of low-volatility assets such as bank deposits and government securities denominated in currencies from stable and reputable central banks.”

    All of that is now history.

    The Libra Association lost eight of its founding members in its first four months, including PayPal, eBay, Stripe, and MasterCard. Libra was renamed Diem, and Calibra (Facebook’s wallet app for holding Libra) was renamed Novi. According to Decrypt’s Jeff Benson, Diem has “downgraded ambitions” to a simple US dollar-pegged stablecoin. And the crypto market already has a slew of them, from reputable companies such as Circle, Paxos, and Binance.

    Now, in Q4 2021, it’s worth wondering if anyone wants a cryptocurrency from Facebook. By the way, Facebook despises it when the media refers to it as “Facebook’s cryptocurrency” (or “Zuck Bucks,” or “Facebookcoin”), because Diem isn’t just a Facebook thing; it’s backed by a consortium of member companies, the consortium is based in Switzerland, the coin will gradually decentralize, and so on. However, Facebook announced the project, a Facebook executive is the face of it, and it will succeed or fail because Facebook’s name is on it.

    Ironically, Facebook may deserve some credit for igniting interest in a Fedcoin (central bank digital currency) in the United States, because Mark Zuckerberg tried to use China’s digital yuan as a carrot when he testified in front of Congress in support of Libra in October 2019. If the United States interferes with Libra, he warned, we risk losing ground to China in digital payment innovation. But, these days, Zuckerberg appears to have found a new passion: the metaverse!

    There’s a parallel here to the reaction among crypto pioneers to the approval of a Bitcoin futures ETF. While many applauded the news because it may boost the price, others questioned the utility of an ETF linked to Bitcoin futures contracts. Why not just buy Bitcoin if you want exposure to it?

    The same can be said for a Facebook coin: if people want a dollar-backed stablecoin to hold or use as a vehicle into and out of other cryptocurrencies, they have a plethora of reliable options. What would be the appeal of one bearing Facebook’s name? Facebook appears to be aware of this. In August, Frank Chaparro of The Block reported that Novi was in talks with Circle and Paxos about partnering with them instead of Diem.

    On the other hand, no one can deny that Facebook has a massive built-in advantage: 2.9 billion users. Whatever stablecoin Facebook adopts, a sizable number of people will experiment with it. There were 30 million Bitcoin addresses with funds in them as of last year. If even 2% of Facebook users purchase Diem in their Novi wallets, there will be 58 million Diem users.

    However, it is now entering a crowded market with an uninteresting product.

    In August, Facebook executive David Marcus stated that the Novi wallet was “ready to go to market.” So, where is it?

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