Whatever Facebook does with blockchain, given the massive size and reach of its platform it would be huge for the blockchain industry.
How Facebook Can Implement Blockchain?
As blockchain moves from a widely unknown emerging technology to a widely adopted underlying tech, one would wonder why we are not hearing much about it from Facebook, one of the biggest internet platforms and one that could use a lot of help from blockchain.
For starters, Facebook’s mission starts with the words, “to give people the power to build community and bring the world closer together.” This phrase is what one will find in any blockchain guidebook. This core tenet of decentralization is what blockchain is all about.
Facebook meets Blockchain
Blockchain is basically a distributed ledger of transactions which due to its nature cannot be easily manipulated. It has applications in several sectors including fintech, health-care, and media.
Although Facebook did announce its blockchain division and a couple of openings for blockchain staff, its blockchain strategy is pretty much been kept under wraps, leaving blockchain enthusiasts to speculate.
Whatever Facebook does with blockchain, given the massive size and reach of its platform it would be huge for the blockchain industry. With over 2 billion users, Facebook will easily draw attention to emerging technology. This raises the question, what is the Silicon Valley tech giant actually doing with regards to blockchain?
Facebook recognizes the importance of Blockchain
Facebook’s leader Mark Zuckerberg acknowledges the importance of decentralization and the struggle against centralized systems. In his New Year post last year, the Facebook founder and CEO mentions blockchain systems and cryptocurrency particularly as trends that put the individuals and not big organizations in control.
“There are important counter-trends to this — like encryption and cryptocurrency — that take power from centralized systems and put it back into people’s hands,” Zuckerberg wrote.
Making veiled reference to the manipulation of the platform by bad actors, Zuck said he was devoting his personal goal for the year to solving issues of misuse of Facebook and “defending against interference by nation states.”
However, the same year Zuckerberg and Facebook made the decision to fix problems of abuse in its platform, a can of worms was opened in the form of the Cambridge Analytica data scandal. Quite a number of these problems, one would assume, could be solved using blockchain technology.
What Facebook Can Do With Blockchain
Facebook is always looking to expand its offerings and improve its services. There is no doubt that its blockchain division will be working with instruction to improve the system using emerging technology. There are a number of ways blockchain can help; some use cases of blockchain Facebook could leverage to better its system or even create new products.
Here are some areas:
Use Case 1: Cryptocurrency
Feelers from around Facebook has it that the company is developing a digital token (or stablecoin) that will be used for payments starting from its instant messaging app WhatsApp. The internet giant can develop a cryptocurrency much like bitcoin which will empower payment within its ecosystem. This cryptocurrency can be used to purchase ads from Facebook or purchase goods and services from businesses on the platform. Facebook had reportedly considered a virtual currency system according to a 2013 patent document.
Use Case 2: Payment Framework
Blockchain may choose to improve the efficiency of payments within its system through the use of blockchain. The technology is known for faster and cheaper cross-border transactions. Being a network of individuals, a peer-to-peer payment system would allow users to exchange funds directly during interactions. Facebook’s Messenger already has cash transfer feature but Facebook could implement a blockchain-based payment system.
Use Case 3: Identity Management, Privacy, and Security
In a recent chat, Zuckerberg hinted at a blockchain-enabled user login system. One of the most significant uses of blockchains is its ability to ensure the security of the data of its users.
Probably the most likely use case Facebook will adopt will be decentralized authorization that takes away the intermediary. As Zuckerberg explained, “You basically take your information, you store it on some decentralized system, and you have the choice of whether to log in in different places, and you’re not going through an intermediary.”
Use Case 4: Incentivize Content Moderators and Community Managers
Facebook could create a token that will be used to compensate moderators and community managers who help rid the platform of bad content.
Facebook says it is working hard to rid the system of abusive content including hate speech, fake news, and manipulative content and has employed thousands of workers to help sniff out these content. One way it can incentivize the entire community to report these content is through a compensation plan which could involve a blockchain token. It has already started Facebook For Creators to reward user efforts.
Use Case 5: Digital Banking
Facebook could also decide to embrace banking and other financial services; drawing on its large base of individuals and businesses. According to some reports, Facebook is already asking for data partnerships with banks. If Facebook built a branchless bank or any other borderless financial service, it could use blockchain to facilitate cross-border transactions.
Use Case 6: Crypto Hub
Facebook could choose to be an out-and-out crypto operator. The internet giant could create a platform that allows individuals and institutions to buy and trade cryptocurrencies just like Coinbase. Though this seems farfetched, Marcus did mention “conflict of interest” as the reason he was leaving his role at Coinbase to focus on Facebook’s blockchain endeavors.
Why Facebook is Reluctant to Implement Blockchain
“Using blockchain is something I’ve been thinking about. However, I have not figured out how we can make it work,” Zuckerberg said recently. For a company that reportedly started experimenting with blockchain in 2016 and now has a dedicated blockchain team, it seems to be taking too long to announce its first blockchain solution. NYTimes claims Facebook is to launch its own crypto in 2019
In December, Facebook spokesperson Travis Reed told Business Insider that “Facebook is exploring ways to leverage the power of blockchain technology…just like many other companies…exploring many different applications”
Zuckerberg has also stated severally that the company is studying the negative sides of blockchain also. Though he agrees it will empower individuals, he is also wary that complete decentralization could lead to widespread abuse.
Facebook can have a great impact on the mainstream adoption of blockchain/crypto with its power in leading the sector and the current user base.
My guess will be that Facebook is not simply trying to stay in tune with the technology so it doesn’t get left out when the technology goes mainstream. But it is trying to lead the technology if you look at how powerful a team Facebook is building.