Facebook May Be Seeking “as Much as $1 Billion” for Its New Crypto Project

Sources have told Nathaniel Popper, who covers blockchain for The New York Times, that Facebook is trying to get venture capitalist firms to invest “as much as $1 billion” in the tech giant’s cryptocurrency project—a stablecoin potentially pegged to a number of different fiat currencies to be used on the Facebook-owned messaging service, Whatsapp.

Popper disclosed this information in a series of tweets yesterday, adding that Facebook’s plan to attract outside investors could help the company position its crypto project as “more decentralized and less controlled by Facebook.” One source told the journalist that Facebook is considering using the investment money as “collateral for its cryptocurrency.” This could be similar to the way Tether, a stablecoin pegged to the U.S. dollar, said it had dollar reserves to back up its coin’s value (which Tether has since suggested it doesn’t actually possess in full).

As Popper pointed out, Facebook is “one of the richest companies on Earth.” The idea of it seeking outside funding is almost laughable. Perhaps the company isn’t willing to risk its own fortune on its crypto gamble. Or it’s really trying to use outside money to make its project appear less centralized, as Popper suggested.

Facebook has not confirmed the validity of Popper’s tweets, but let’s explore what this vision of Facebook Crypto might look like. If, say, several investors hold stake in Facebook’s crypto project, that would mean the company’s cryptocurrency is not entirely controlled by Facebook, but rather Facebook and a handful of wealthy investors.

Facebook itself is already controlled by a handful of wealthy shareholders, starting with CEO Mark Zuckerberg. According to an Investopedia article updated on February 7, Zuckerberg holds the largest share of the company, followed by cofounders Dustin Moskovitz and Eduardo Saverin and a few others, including COO Sheryl Sandberg. Does this make the company’s operations any less centralized? Not really.

One investment firm in particular keeps coming up in the reactions to Popper’s tweets. Andreessen Horowitz, aka a16z, told Forbes in February that it was registering its firm to become a “financial advisor,” which could expand a16z’s investment options. As a financial advisor, a16z can more easily put large sums of money in cryptocurrencies and tokens—as much as $1 billion, the sum Facebook is apparently seeking from investors. A16z is already an investor in Facebook.

On February 28, The New York Times reported that Facebook’s stablecoin may debut during the first half of this year. Facebook continued to post blockchain-focused job opportunities on its website (it now has more than 50 engineers working on its stablecoin project, according to the Times), and it acquired Chainspace, a company that seemed to be heavily focused on sharding technology. Sharding is a scalability solution that lets a decentralized blockchain process transactions faster by, to put it simply, breaking up the information that needs to be stored across different nodes in the blockchain (instead of loading all that information into each node). If Facebook wants to offer stablecoins pegged to multiple fiat currencies on its widely used messaging app, its blockchain better be scalable.

A16z’s change in status may very well have nothing to do with Popper’s latest news about Facebook Crypto. But regardless of which investors Facebook may court, their outside contributions won’t necessarily make Facebook’s stablecoin any less centralized. Decentralized funding is, after all, different than decentralized architecture.