Rumor: Facebook Wants $1 Billion in Venture Capital for Coin Project
Facebook is looking at a hefty proposition in raising venture capital for its upcoming stablecoin project.
According to New York Times reporter and long-time cryptocurrency writer Nathaniel Popper, the social media giant is looking at an equally large sum of capital to raise for investment into its cryptocurrency project. Popper writes in a tweet published on April 4,
“Update on Facebook’s cryptocurrency: Sources tell me that Facebook is now looking to get VC firms to invest in the Facebook cryptocurrency project we reported on earlier this year. I hear they are targeting big sums — as much as $1b.”
Popper, who chronicled the early history of cryptocurrency in his 2015 book Digital Gold, had an interesting take on how Facebook could use raising capital for the stablecoin project as a way to improve its appearance to the broader crypto industry. According to Popper, getting outside investors to fund the project would be one way for Facebook to keep their coin consistent with the decentralized ethos of cryptocurrency, writing,
“Given that one of the big allures of blockchain projects is the decentralization, getting outside investors could help Facebook present the project as more decentralized and less controlled by Facebook.”
A source also tells Popper that the venture capital could simply be used for collateral on the project. Compared to most cryptocurrencies, such as Bitcoin and Ethereum, which function similar to digital assets that can appreciate and fluctuate in price, Facebook is looking to build a stablecoin to operate on its messaging services. While such technology provides an attractive, price-stable coin that is more friendly to the average user, it also requires a substantial amount of backing to guarantee the value of the currency. Tether, the company behind the industry leading stablecoin USDT, has repeatedly been targeted with concerns over the exact 1:1 backing of its coin.
Even with Facebook hosting a 500 billion market capitalization, $1 billion in venture capital backing the stablecoin would go a long way in securing the good will of coin users and investors,
“One person I spoke with said that Facebook is talking about using the money as collateral for its cryptocurrency. Facebook has been designing the coin to keep a stable value, pegged to a basket of foreign currencies held in bank accounts.”
Popper concluded his series of updates on Facebook and their stablecoin fundraising by posing a question many investors are probably asking themselves
“It’s interesting to think of one of the richest companies on earth raising money. When was the last time they did outside fundraising?”
While cryptocurrency investors and enthusiasts celebrate the most recent bullish price movement, with Bitcoin having its best day of trading last week since December 2017, the stablecoin market continues to be a big draw in terms of adoption. Price stable coins, such as the currency being developed by Facebook, provide users with the utility of digital, decentralized currencies while separating them from the daily price volatility of traditional cryptos.