Facebook cryptocurrency could bring in 19 billion USD in revenues

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12 March, 2019

In a recent report on CNBC, the writer reports that Barclays has stated that Facebook could be developing an entirely new revenue stream with payments. Barclays see as much as $19 billion in additional revenue in its “upside case” for Facebook by 2021 if its cryptocurrency plans work out. Facebook has been reported as developing a cryptocurrency for peer to peer payments

The social network is reportedly developing a cryptocurrency that could be part of a multibillion-dollar revenue opportunity, Barclays internet analyst Ross Sandler said in a note to clients Monday.

Sandler forecasted as much as $19 billion in additional revenue by 2021 from "Facebook Coin." Conservatively, the firm sees a base-case of an incremental $3 billion in revenue from a successful cryptocurrency implementation. Facebook is reportedly developing a cryptocurrency for global payments that will be tied to the value of traditional currencies and available to use through its messenger "WhatsApp," according to Bloomberg and The New York Times. Facebook has not publicly commented on the reports.

Price volatility has been one major roadblock to bitcoin's widespread adoption as an everyday payment option. But Facebook's digital currency, a "stable coin," would likely be less attractive to speculators because of its fixed price tied to a currency like the U.S. dollar.

Barclays based its Facebook revenue estimates off of Google's digital distribution service, which is also the official app store for Android's operating system. "Google Play," as it's called, generates $6 in "net" revenue per user now. Facebook could see a "similar cadence," across its nearly 3 billion users in 2021.

A Facebook virtual currency would allow for more premium content to find its way back to Facebook, Sandler said, as companies re-establish themselves on the social network as a strategic partner.

Challenges remain. Facebook needs to demonstrate a value proposition for users "above what is available today in payments" and build trust after its laundry list of issues in 2018, Sandler said. Global payments systems also tend to bring more regulatory scrutiny.

But if the stable coin is successful, Sandler said, he sees no reason why Facebook couldn't get into consumer lending, remittance and physical payments "eventually."