Just How Real are the Rumours of Facebooks Interest in Coinbase?
Relatively small movements in the cryptocurrency markets overnight for a change – the global cryptocurrency market cap is at $245 billion, only $1 billion off yesterday, Bitcoin at $6105, just a $4 dollar drop and Ethereum also faring well at $432 from yesterday’s price of $437. Whilst it could be an early sign of some possible market stability, I think we all know this is in reality is probably a one-off for now.
Following the decision by Facebook yesterday to relax policies on crypto-related advertising, the news streams are beginning to fuel a rumour that Facebook are potentially interested in buying Coinbase. Looking at today’s news feeds the leading article appears to stem from the UK news publisher the Independent who appear to have reached their suggestion from a lengthy article published by The Economist earlier this month on June 2nd that covers the subject of large tech companies buying up start-up companies. Takeovers startup companies by large tech firms are nothing new of course, but the only reference to the subject of Facebook looking to acquire Coinbase is little more than an afterthought almost at the end of the article – no citations of any source of the rumour, no names are mentioned, not even the old “anonymous source close to the company” just “There are rumours Facebook wants to buy Coinbase, a cryptocurrency firm”.
Whilst there is little doubt Facebook could afford to buy Coinbase (if Coinbase were open to offers) and provided Facebook didn’t just asset strip and shut it down (unlikely, but possible) it would potentially speed up cryptocurrency adoption into the mainstream significantly to say the least – the prospect of such a deal also has some downsides. We only need to look at Facebooks recent business practices over the Cambridge Analytica scandal and their handling of data security – granted, Facebook have made changes to rectify that, but the public tend to remember things like that, especially when it comes to personal finances and the management of them.
Personally I doubt Facebook are anywhere near being able to cope with the responsibility of running something like Coinbase, and even less able to integrate it into Facebook itself (if that were the aim). Mark Zuckerberg has expressed interest in cryptocurrency and blockchain on several occasions, setting up teams and so on – all very much early development stage teams focused on incorporating more use of blockchain within their platform – even these statements led to headlines suggesting Facebook might be launching its own cryptocurrency – headlines which funnily enough also emanated from the same UK newspaper, the Independent.
If a deal were done and Coinbase were to be integrated well and properly into Facebook the future could be very bright indeed for the entire crypto and blockchain world by providing a substantial stepping stone to mass adoption – on the flip side however, it could turn into a nightmare rather like the Facebook acquisition of Whatsapp and subsequent Cambridge Analytica debacle that led to the former owner of Whatsapp encouraging users to abandon Facebook.
As the old stock market adage goes – “buy the rumour and sell the news” – it only applies if there is at least some substance to the rumour and not just a throwaway comment in financial publication used by a newspaper to gain eyeballs.
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Created: Thursday, June 28, 2018
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