A balanced discussion of the rumored cryptocurrency from Facebook.
WHAT'S THE VALUE OF A FACEBOOK CRYPTOCOIN?
JUST BEFORE THE Civil War, and long before the Federal Reserve, the United States had 8,000 kinds of money. It was a chaotic, confusing time to buy your groceries. Private banks issued notes with the promise of backing in gold and silver, but their actual value was anybody’s guess. Soon other companies—drug stores, coal mines, and of course railroads, the wealthy connectors of their day—jumped into the fray.
What’s old is new again in the hands of today’s barons of digital infrastructure.
On Thursday, The New York Times reported new details about Facebook’s efforts to produce its own digital coin. Facebook’s first foray into blockchain will reportedly take the form of a so-called “stablecoin,” where the value of its digital currency is backed by the physical kind—in this case, a basket of global currencies. The idea is to tamp down the rampant speculation and tumult that have plagued other cryptocurrencies, like bitcoin, making the coin easier to someday use to buy your gas and meals (or, who knows, your neighbor’s cat tower on Facebook Marketplace).