After conversations with regulators, Facebook is setting up an independent foundation for the governance of Globalcoin – its cryptocurrency, according to a report in the Information. The online publication reports that the Menlo Park-based company has “courted dozens of financial institutions and tech companies” for its foundation. The plan is to raise capital from these institutions and have senior officials as members of the foundation’s board.
Most cryptocurrencies are governed by independent foundations consisting of stakeholders and board members. They are responsible for taking key decisions, such as schedule of disbursement, and marketing the coin. For example, the Ethereum Foundation is headquartered in Switzerland and is largely responsible for building community for the blockchain and advocating on its behalf with regulators.
In Facebook’s case, earlier reports stated the company has approached credit card behemoths like Visa and Mastercard to raise capital for Globalcoin – its cryptocurrency.
Other stakeholders involved in decision-making for Globalcoin are operators of nodes, which will be used to generate the cryptocurrency. According to the Information’s report, Facebook plans to charge $10 million in licensing fees for the right to operate Globalcoin nodes. Some commentators have opined that the high licensing fee is charge for access to Facebook’s blockchain node, which records and approves all user transaction data. In effect, node operators will be able to access data relating to sales and marketing on Facebook’s platform. The Information reports that Facebook will launch with 100 nodes on its blockchain, generating $1 billion in fees from operators.
There are no charges associated with running a node for most prominent cryptocurrencies, such as Bitcoin and Ethereum. Facebook plans to use the licensing fees as backing for its currency to ensure that its value does not fluctuate with respect to the dollar. Such coins are known as stablecoins and are generally backed by a basket of goods for parity.
Facebook’s plans for Globalcoin span e-commerce and money transfers. According to earlier reports, the company plans to offer goods and services on its platform that users will be able to purchase using Globalcoin. It is also said to be talking to retailers for partnerships to spread the use of Globalcoin. Users will be able to earn the crypto by watching or clicking on ads. They will also be able to withdraw it from physical ATMs.