Will Facebook’s Secretive Blockchain Plans Lead to the Creation of a Digital Coin?December 20, 2018 No Comments
Featured article by Chloe Hodges, Independent Technology Author
Having become the most influential form of social media, many of Facebook’s business strategies since have been based on the maximization rather than the initiation of trends. This is exemplified by some of the company’s largest acquisitions, such as the $1 billion purchase of social media competitor Instagram and its $19 billion investment in the messaging service WhatsApp. Therefore, it is little surprise that Facebook is looking to gain a foothold in the world of cryptocurrency, with the enduring popularity of blockchain countering early suggestions that it could be nothing but a passing fad.
Facebook launched their own blockchain division in May 2018 without stating any clear intentions of its purpose. Considering that every other member of the Big Four (GAFA – Google, Apple, Facebook, Amazon) had previously made explorations of varying extents into the possibility of developing blockchain technology, Facebook couldn’t risk being left behind.
A natural fit?
This is despite cryptocurrency appearing to be conceptually conflicting with the Facebook brand, with the social media giant having at one point banned cryptocurrency advertising and having been criticized for its use of private data. The strength of cryptocurrency is in its decentralization and anonymity, so blockchain and Facebook perhaps don’t make the most natural of matches.
Yet business is business, and Facebook’s blockchain development has evidently continued throughout 2018. Its blockchain division started small but now boasts an estimated 40 individuals, tasked with some publicly undetermined blockchain objective. This is according to an investigation undertaken by Cheddar, with the burgeoning business news outlet shining a spotlight on the blockchain group’s secretive work.
Cheddar’s report notes how that emphasis on secrecy is at odds with the transparent nature of blockchain, but what is certain is that whatever the division is concocting will have far-reaching impacts on the world of business. Facebook trialed a version of native payments with its introduction of Facebook Credits in 2009, rolled out to allow users to purchase items in games hosted on the site, such as Farmville and Dragon City.
Paying homage to PayPal
Facebook Credits were soon revealed to be an unsustainable notion, with the world perhaps less receptive to the potential of cryptocurrencies than it is now. Facebook did make a compromise in its introduction of PayPal into its Messenger app. The widespread acceptance of PayPal provides a framework for Facebook to seek to emulate with whatever blockchain technology that it is developing.
PayPal is now an almost ubiquitous option when making online transactions; e-commerce sites, forex brokers and Netflix are just a small sample of the diverse types of services that accept PayPal. Available in over 200 countries and perceived as a reliable form of payment, it also makes it very easy for individuals to open a new account. This seamless integration of PayPal is something that a giant like Facebook will be aspiring towards with any payment system.
That aspiration is transparent; around half of the 40 members of Facebook’s blockchain division are rumored to be former PayPal executives, including PayPal’s one-time president, David Marcus. Such a comprehensive poaching of PayPal talent is no coincidence. Facebook’s blockchain intentions will be substantial and – given that secrecy has become paramount – potentially revolutionary in their consequence.
The most persistent rumor pertaining to this is that the team are developing a digital coin for Facebook, appropriately given the moniker “FaceCoin”. Josh Constine at TechCrunch has posited that a FaceCoin would have genuine designs on securing a relatively rapid mass adoption, given Facebook’s vast user base. By capitalizing on how blockchain streamlines and makes the process of making online transactions cheaper, Facebook could feasibly offer users an initial discount on purchases made with its digital coin. As with all forms of industry, that introductory offer may prove compelling enough to tempt repeat custom from consumers.
A vast global reach
For many people who are as of yet unaware of the potential of cryptocurrencies, Facebook could provide a gateway into this world. Whatever Facebook develops, there is no doubt that it would be created to be as intuitive as possible to cater to its diverse and extensive population of users. Out of a global population of around 7.7 billion, a staggering 2.27 billion of those were active on Facebook in the third quarter of 2018. In other words, 29% of the world’s population was exposed to Facebook in that particular period, and that market share shows no signs of shrinking. The scope of Facebook’s influence in possibly implementing global adoption of its own digital coin is monumental. Many apps already deploy digital coins; some even pay their users in them in reward for completing certain tasks. Depending on the app or platform in question, those may be redeemable only within it or allow for use outside the app.
However, Facebook’s sphere of influence is on another level. If any company is going to make the use of a blockchain-based cryptocurrency mainstream, it will revolutionize how people perceive their everyday life. At a time when Facebook’s integrity is being justifiably and severely questioned, many could cynically perceive this venture into blockchain as an attempt to construct a welcome diversion.
That claim may not be without substance, but the power and influence of Facebook is currently at such a level that if Mark Zuckerberg wants something to happen, it will invariably happen. 2019 will be of great significance, as it seems untenable for Facebook’s blockchain division to remain shrouded in secrecy for much longer. Either the company’s intentions will be revealed, or the division will quietly dissolve in acceptance that blockchain has no future in Facebook.
Such is the expertise available to the group, with all of that PayPal experience, that the former seems far more likely. Whether that is in the establishment of a digital coin or something else entirely remains to be seen, but Facebook’s jump into the world of cryptocurrency is now surely inevitable.