Get ready for a Facebook-sponsored cryptocurrency

This approach could give the new WhatsApp coin greater stability without tying it too tightly to any specific country's financial system.

According to the Times, Facebook has gotten far enough in the project to approach cryptocurrency exchanges about potentially listing the currency.One thing that isn't answered by the Times reporting, however, is how Facebook will resolve the fundamental tradeoff between decentralization and accessibility that has bedeviled existing cryptocurrencies.

Blockchain networks like Bitcoin and Ethereum don't have any central authority, which means that users bear 100 percent of the burden of securing their coins against loss and theft.

There's no Bitcoin company with the capacity to reverse fraudulent transactions, restore lost coins, or shut down fraudulent service providers. This means that participation in the Bitcoin ecosystem requires a higher level of sophistication than the average Facebook or WhatsApp user has.

Presumably, Facebook will attempt to address some of these shortcomings by integrating secure payment software into WhatsApp, by supporting the value of its cryptocurrency with Facebook's own financial resources, and by policing the WhatsApp payment ecosystem for fraudulent activities.

A big selling point of cryptocurrencies is that they're open platforms that anyone can build on top ofwithout the red tape that accompanies conventional payment platforms.

So for now, it's not clear why Facebook doesn't just build a conventional, closed payment service like PayPal or Venmo, avoiding the complexity and scaling problems that come with a blockchain.

Original article