Facebook into Crypto-Currency: The Strategic Intent and the Barriers to Entry

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Introduction and background
Facebook announced that it will create its own crypto-currency the Libra in 2020 to rival other crypto-currencies. The stable coin is, a stable crypto-currency that keep their value in parity to other currencies, such as the dollar or pegged to an asset unlike the Bitcoin crypto-currency (Lee, 2019, p. 36). This is important because Facebook as the social media networking site, it is one of the most user-friendly platforms in the world, which would mean that a large portion of the world's population has the opportunity to use crypto-currencies. Investing in crypto-currencies is high risk given to market volatility and can lead to money losses, but there have been growing demand for these virtual currencies. There are more transactions through crypto-currencies, but anonymity means that rogue elements increasingly use the virtual currencies for criminal activities (Paul, 2019, p. 3). This is an evaluation of the use of digital currency technology, Facebook’s external environment, strategic intent and barriers in using crypto-currencies.
Facebook external environment
Facebook is one of the leading advertising and e-commerce platforms, which makes the company competitive. There are many active users using platform compared to other social media sites and there are opportunities for various brands to reach out to consumers (Duffett, 2015, p. 500). However, the platform needs to strategic barriers to improve advertising, and since the company has international presence: it is possible to take a leadership position in social media branding, advertising and marketing. Furthermore, Facebook uses lots of data, algorithms and other technology tools to determine physical location and shopping habits to better understand the users’ behavior. For social networking platforms, reach is a critical dimension where Facebook and similar platforms create value for the users by connecting them to other users (Hanson et al., 2014, p. 113)
Even though, Facebook is the most popular social networking site that allows interaction among people, there are political implications that need to be considered as there are attempts to control access to Facebook and users’ data in different countries. In China, the most populous country, Facebook is not easily accessible because of demands and restrictions on the platform by Chinese leaders and regulators. This is further complicated by the US China trade wars, which makes it difficult for America companies to operate in China (Liu, 2018, p. 308). There are also calls for control over social media platforms in China and other countries like Russia. The Cambridge Analytical scandal, which allegedly used millions of voters’ data illegally in the 2016 United States elections, and may have engaged in manipulation and caused concern about Facebook failing to protect users’ data.
Crypto-Currency Strategic Intent
Facebook is set to launch the Libra crypto-currency in 2020, where the sable coin will guarantee stability unlike the Bitcoin crypto-currency, and this will diversify the company’s operations more. Libra will allow Facebook to be one of the biggest internet payment platforms, if the regulators accept and the company works with payment platforms. Facebook first partnered with companies such as Visa, Mastercard and PayPal, but the companies have recently raised concerns about the digital currency project and even pulled but all together (Hern, 2019). Partnership with various financial companies, investors and telecommunications companies provides an opportunity for Facebook to expand the use of the digital currency.
Success in implementing the crypto-currency would make WhatsApp a platform for payments and money transfers to allow transactions within the platform. Facebook purchased and acquired WhatsApp the mobile messaging platform, and WhatsApp is potentially useful to facilitate transactions (Doyle, 2015, p. 52). Facebook was intent on Libra being a crypto-currency and digital currency to help people send money and may improve on international transfers. Since both Facebook and WhatsApp have millions of users entering the money transfer market has great potential for the company to grow. Libra runs on blockchain, but has no chain of blocks unlike Bitcoin and other crypto-currencies (Taskinsoy, 2019a, 2014). Facebook is developing the Blockchain division of the company, and even as it is the early stage of development, the company will likely leverage the use of technology tools to make online transactions.
In February 2019, Facebook acquired Chainspace a blockchain startup with the intent of expanding operations in the virtual currency market. The value of many crypto-currencies has changed in the past few years and creating a platform for a stable coin was an opportunity to diversify away from advertising revenue. Facebook has thrived leveraging users data, which is centralized, but with...