Sorry GlobalCoin: Facebook users ‘too old, too broke’ for cryptocurrency

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Sorry GlobalCoin: Facebook users 'too old, too broke' for cryptocurrency

New research suggests Facebook’s cryptocurrency GlobalCoin will face demographic challenges from the social media giant’s rapidly aging user base.

The ambitious cryptocurrency – a stablecoin tied to a basket of assets – is reportedly set to launch in 2020.

But cryptocurrency research firm Diar’s just-released report suggests that the demographics don’t favour the Facebook cryptocurrency’s chances.

“Facebook will be facing an uphill battle on multiple fronts, primarily starting from an aging user base whose knowledge of cryptocurrency is likely to be near nil,” Diar said.

You’re too old, let it go, it’s over, nobody listens about crypto

The report cited data from the Pew Research Centre showing that less than half of Facebook’s users are under 35 years old.

Only 50% of US teens use Facebook, with many preferring youth-focused competitors like Snapchat.

On the other side of the spectrum, the number of retirees who’ve joined the platform has doubled since 2012. This doesn’t bode well for Facebook’s cryptocurrency.

Will Facebook users 'like' GlobalCoin?
Will Facebook users ‘like’ GlobalCoin?

Teens don’t have the cash for Facebook cryptocurrency

Somewhat ironically the analysis also suggests those users who are young enough to “get” crypto are probably too broke to enable GlobalCoin to drive significant amounts of economic activity.

“The small userbase of young people who are likely to be abreast with current technological developments has a fairly weak purchasing power,” the report stated, quoting Pell’s finding that lower-income teens are far more likely than those from higher-income households to say Facebook is the online platform they use most often.

Still, a quarter of users are 25-34

Facebook’s best chances for GlobalCoin adoption are with the 25% of its users who are aged 25-34.

Although Facebook has a giant user base, most come from developing countries with low incomes.

Of the ten countries with the most Facebook users, only the US and UK are developed countries in the West where users have large disposable incomes.

The remainder of the list includes India, Brazil, Indonesia, Mexico, Philippines, Vietnam, Thailand, and Turkey.

Financial infrastructure lacking

This could also be an opportunity, as the financial infrastructure in these countries is lacking.

India is Facebook’s largest market and it has already introduced WhatsApp pay there.

“FT figures place WhatsApp payment flows at a mere $2 billion per month into its pilot launch,” Diar said.

Adding to the challenge is the fact that India has clamped down on digital currencies of late and is considering a total ban – although Zebpay’s Ajeet Khurana recently told Micky he thought that was unlikely.

The analysis suggests that the only real hope of making GlobalCoin a success is to radically improve the user-friendliness of cryptocurrency.

Crypto infrastructure lacking too

Diar states that it is unlikely that Facebook will be able to educate 25% of the world’s population about the current crypto infrastructure involving private key management and the possibility of the total loss of funds.

“For any real success, the integration of custody and settlement finality would have to be a seamless operation that users have grown accustomed too – a feature current user-facing blockchain infrastructure fails at for the most part,” it said.

Having launched two failed digital currencies before, Facebook has shown signs that it is working on these exact problems with its latest effort which is nicknamed Project Libra.

Facebook trying to get it right this time

The company has reportedly held discussions with Western Union, the Bank of England governor Mark Carney, and the US Treasury, with whom it discussed identity verification and the risks of money laundering.

Last week the Financial Times reported that Facebook held talks with crypto exchange and wallet service Coinbase, and the Gemini exchange – founded by Mark Zuckerberg’s former Facebook pals the Winklevoss Twins.

Earlier this month the US Senate and Banking Committee wrote an open letter to Zuckerberg questioning how the currency will work, what consumer protections it will include, and how the data will be secured.

Garrick Hileman, a researcher at London School of Economics, told the BBC the GlobalCoin project could be one of the most significant events in the history of crypto.

He estimated that around 30 million people use cryptocurrencies today, which pales in comparison to Facebook’s 2.4 billion monthly users.