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Why is Facebook on the blockchain?

Written by  May 19, 2018

It is tempting to think that, with the launch of its blockchain research group – helmed by erstwhile head of Messenger David Marcus – Facebook pulled a dead cat move on us.

After months of Facebook-bashing over the Cambridge Analytica scandal— and by extension over Facebook’s failings in terms of data protection and accountability – the company might have used some respite. A few days of bemused speculations on how Facebook could use a blockchain would have provided just that.

But while ongoing psychological-mindfuck-related troubles on both sides of the Atlantic might have played a role in the timing of the launch, Facebook was always bound to dabble in blockchaining at some point. Partly, that’s because everyone else in Silicon Valley is, too. Amazon, Google and Microsoft all have recently launched some projects involving blockchain technology; even Apple, in 2017, filed a patent that hinted at its interest in distributed ledgers.

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Facebook had tasked a lone corporate development staffer – Morgan Beller – with looking into the subject almost one year ago; this must have seemed a good time to scale up the effort. Yet, there is something jarring about Facebook embracing this technology. First designed as the digital scaffolding for cryptocurrency bitcoin, a blockchain is a permanent, public, online ledger that processes transactions relying on a swarm of users’ computers rather than on any single central mediator.

Pseudonymous bitcoin inventor Satoshi Nakamoto was very explicit about his goal of using the blockchain peer-to-peer system to do away with central banks and credit card companies.

It goes beyond the financial: people in the blockchain sphere have long been talking about decentralising the web itself. They yearn for the fall of centralised technology platforms like Facebook or Google and the rise of online communities that would allow users to connect without entrusting their data to corporate middlemen. The benefits of this model would go from resistance to censorship, to more control for users on how their personal information are utilised (think of users controlling their data as if they were units of cryptocurrency on a ledger).

In April, defying irony, former Cambridge Analytica director Brittany Kaiser joined IOVO, a blockchain venture that plans to allow people on social media to decide whom they share data with. (Fun fact for conspiracy theorists: essentially all dramatis personae in the recent scandal, from Aleksandr Kogan, to Steve Bannon, to Cambridge Analytica itself, have some sort of cryptocurrency backstory.)

Other blockchain-based social network projects have actually been launched – chief among them Steemit, a platform where users are rewarded with cryptocurrency units instead of Likes – even if none of them has so far risen beyond the status of blip on the chart.

While it sounds far-fetched that Facebook would opt to commit suicide by decentralisation (by either relinquishing control of its users’ data, or smashing its monopoly to smithereens) the company might have decided to know its enemy better, and maybe take a leaf or two out of the blockchain’s book, before a real challenger emerges.

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Only one thing suggests there might be more brewing here than a defensive sideshow: the high calibre of people involved. David Marcus is the man that made Messenger the war machine it is today; Kevin Weil and James Everingham, two senior members of the new blockchain division, were key Instagram executives. Why would Mark Zuckerberg have this trio of star employees work on an otiose experiment? 

This could be another PR obfuscation blinder, or it could be a juicy bit of office politics. Both Messenger and Instagram could have improved too much, ceasing to present an intellectual challenge for Marcus and his Instagram colleagues. By creating this new toy for them to play with, Facebook might have staved off losing them to companies able to provide them with more excitement.

We know that Marcus (like, to a lesser extent, Everingham) is a blockchain believer: a payment specialist and former PayPal president, he has owned bitcoin since 2012, and has often spoken highly of its potential; he recently joined the board of cryptocurrency exchange Coinbase. He loves this stuff. Sure, in February, Marcus underlined that cryptocurrency payments were not coming to Facebook (and, specifically, to Messenger, which includes a payment feature) anytime soon: they were still too slow and expensive. Now Marcus will be able to have some fun trying out ways to crack the problem, or thinking up other blockchain-powered stuff, in his brand new skunkworks.

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Maybe something will come out of it after all. But you would be safe to bet against a much-rumoured FaceCoin: after its draconian ban on cryptocurrency ads, and its current fallout with governments all over the globe, Facebook does not need to get knee-deep into another regulatorily iffy matter. PR only works so far.

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