Quite a lot of news has appeared in the past six months that a social network is about to launch its own cryptocurrency. When it comes to the use of blockchain technologies in social networks, most often you can hear that they are trying to jump into the outgoing train.
However, in the conditions of modern development of technology and applicability of the blockchain, one can certainly say that this will most likely be a new stage in the cryptocurrency market than a missed opportunity. I will try to understand in this article what cryptocurrencies may be interesting for social networks, their users and how this will affect the cryptocurrency market.
The launch of VKCoin’s internal service from the social network VKontakte, which took place in April of this year, came as a surprise to market participants. Rumors that the social network is developing its own cryptocurrency and payment system based on VK Pay have been going on for a long time, but the launch of the “mining application for VKontakte” was a surprise and only some time later, users were able to determine that this application has to put it mildly, mediated attitude.
However, the high popularity of this application within the social network can not be written off. In my opinion, with its help, VKontakte takes a confident step towards improving users’ literacy not only with respect to the basic concepts of blockchain and cryptoactives, but also with respect to the use of cryptocurrencies (accumulation, exchange, purchase of certain resources).
If we assume that VKontakte, without warning, would launch its own stable coin, which would allow users to conduct financial transactions through the VK Pay internal payment system, then the result of such a launch would be directly proportional to the users’ awareness of what cryptocurrency is.
The correct plan, from the point of view of the development of internal (and, possibly, external) financial transactions using cryptocurrency, could lie on the bad soil in this case.
By launching a gaming application that was instantly picked up by the most visited and popular social network, Vkontakte achieved an initial acquaintance of users with the world of mining and the blockchain, simultaneously analyzing how many users are really interested in this topic.
It can be expected that, based on the analysis carried out, VKontakte will draw the right conclusions regarding the moment and method of implementing its own stable coin to the social network, which will allow to transfer domestic financial operations to a private blockchain.
Speaking about the practical side of using cryptocurrency in social networks, you need to understand that creating tokens for the fact of using them is a waste. Much more important is the factor of applicability of cryptocurrency in the internal business processes of advertising, commodity circulation and interaction of social network users.
Despite the fact that at the moment there are no exact financial indicators of the turnover of social networks, advertising and marketing are the main source of income, and with the increase in the cost of advertising, revenue is increasing every year.
The logical method of using stable coin in social networks will be the transfer of settlements for advertising and products from Fiat to their own cryptocurrency. Moreover, the changes will be painless and beneficial for users who can either withdraw the received cryptocurrency in Fiat or use it for the purpose of earning, for example, by investing in the most promising assets of the cryptocurrency market.
As for the social networks themselves, the obvious advantages for them are entering the cryptocurrency financial market, making money on the commission of their own blockchain network, reducing the costs of internal and external settlements, as well as earning income from the issuance of a secured cryptocurrency, part of which will be distributed within companies. However, the main task to be solved by social networks is centralization, which will inevitably prevail over the decentralized nature of cryptocurrencies.
An audience of 2.5 billion people is a serious base for the development of cryptocurrency within Facebook and WhatsApp messenger. Recently it became known that the social network is working on its own stable coin and private blockchain project called Project Libra, and, as reported, Facebook now intends to raise $ 1 billion to secure its cryptocurrency. The project itself will include not only the infrastructure for the stable coin, but also the new payment network, and not just a tool for making settlements.
Telegram can not boast the same number of users and audience coverage as Facebook and WhatsApp (about 300 million users against 2.5 billion), however, the information about the blockchain infrastructure we receive from such an informationally closed project is really impressive.
Unlike Facebook, the TON project plans to move away from the model of accepting tokens as a payment for a specific service (for example, advertising) and is going to offer ready infrastructure to network users. With the help of the Gram project currency, it will be possible to pay for access to the file storage, create smart contracts, develop decentralized applications.
The economic model assumes the turnover of tokens between users and the Proof of Stake system ensures democratic governance, on the border between centralization and decentralization.
Compared to Facebook, Telegram has much more legal opportunities to fully launch the product, since the jurisdiction in which the project is registered is comfortable for launching blockchain solutions, while Facebook and other social networks and instant messengers will inevitably face legal issues, since developed countries currently took a wait-and-see stance in matters of the regulation of the cryptographic market and are in no hurry to loosen the regulation of the new economic sphere.
Objectively, social network tokenization is the fulfillment of the principle of win win for both companies and their users. By providing a convenient settlement system based on modern technological solutions, social networks open up new tools for their users to use their usual resources and take an important step towards the digital economy.
The most important aspect of this issue is that the integration of cryptocurrencies into social networks will inevitably lead to an increase in the popularity of cryptocurrencies and blockchain products. Despite the diversity of opinions about the reasons for the rapid growth of the crypto market in 2017 (for example, the reason for the growth was the fraud with Tether’s stable coin), it should be noted that the arrival of many retail traders and investors on the crypto side became an important reason for the exponential growth of Bitcoin and altcoins.
No doubt, as soon as the world’s leading social networks offer their users tokens and cryptocurrencies, the market will respond accordingly, as hundreds of millions of users around the world will become unwitting participants in the crypto market, which has long been expecting a similar reason for further growth.