Barclays internet analyst Ross Sandler wrote in a client note that a cryptocurrency could establish a new revenue stream for Facebook, aiding its share price that tanked amid a series of high-profile scandals last year.
In his forecast, Sandler pointed out that the crypto-based revenue option is something “sorely needed at this stage of the company’s narrative,” stressing that any advertising-free revenue streams are likely to be well-perceived by Facebook’s shareholders. Sandler said that his more conservative revenue estimate for the new coin is $3 billion.
The Barclays analyst recalled Facebook’s original payment project that was similar to what cryptocurrencies are today. Developed by California-based firm The Menlo Park in 2010, “Facebook credits” represented a virtual currency that allowed users to pre-pay those credits using domestic currencies and then use them for in-app-purchases.
Sandler added that Facebook will bear the brunt of interchange costs between fiat currencies and its possible new cryptocurrency, which could cut into the profitability of the business.
Citing analysis from Barclays, Sandler stated that the first version of “Facebook Coin” may be a single purpose coin for micro-payments and domestic peer-to-peer (p2p) money transfer, which is considered “very similar to the original credits from 2010.”
Sandler also assessed the scope of the project, noting that it is larger than previous ambitions of Facebook. The analyst pointed to David Marcus, the leader of Facebook’s blockchain and crypto team, who is former president of payment operator PayPal. Sandler also noted that Facebook has recently hired a number of employees from blockchain startup Chainspace.
Following a Bloomberg report on Facebook developing its own crypto back in December 2018, The New York Times (NYT) published another article alleging that the social media giant is “hoping to succeed where Bitcoin failed” with its highly secretive crypto project. According to NYT, 50 new employees are working on developing a stablecoin that would incorporate Facebook’s three fully-owned apps — WhatsApp, Facebook Messenger, and Instagram.