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Facebook going all in on crypto: can we expect an even more bullish 2019?

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David Marcus Facebook Head of Blockchain Messenger Apps

It’s been hectic lately at the blue giant’s headquarters in Menlo Park. While cryptocurrency and blockchain ads are being widely blocked, in the shadows, Facebook has been working on their own blockchain tech.

David Marcus is vastly experienced in the tech world as he is a former president of payment platform PayPal and previously served nearly 4 years as vice president for Facebook’s Messenger app division. Since May, Marcus has had the task of bringing Facebook into the era of blockchain – an endeavour he is targetting aggressively, evidenced by the recent surge in blockchain-related hires.

Facebook-blockchain-related-hires-jobs

Source: The Next Web

Marcus is not a newbie in the blockchain world

Prior to Facebook’s pivot toward the blockchain space, Marcus spent 9 months on the Members Board of Directors at Coinbase, a wallet and exchange platform. Consequently, it can be assumed that his understanding of the technology and its potential applications is quite sophisticated – good news for the Facebook tribe.

To avoid conflict of interest, David Marcus had to resign from the Coinbase board. During an interview, Marcus stated that he was glad to have worked with Coinbase and its founder, claiming “Getting to know Brian [Armstrong], who’s become a friend, and the whole Coinbase leadership team and board have been an immense privilege. I’ve been thoroughly impressed by the talent and execution the team has demonstrated during my tenure, and I wish the team all the success it deserves going forward.”

Marcus is bullish on Blockchain technology and cryptocurrencies. While steering  Facebook’s messenger platform, he claimed that the world’s leading social media platform was open to the idea of embracing cryptocurrency payments, though the blockchain community would need to fix all its issues before it moved toward adoption.

Mark Zuckerberg blockchain Facebook

What can we expect from Facebook in the Blockchain area?

We’ve been brainstorming some potential blockchain applications for Facebook – maybe we’ll see some of them implemented in the coming year.

Enhanced data security

In September 2018, Facebook once again failed to protect user data. A vulnerability in the platform’s source-code allowed hackers to steal access tokens that are used to keep users logged in when they switch over to a public profile view. Around 50M accounts were affected.

Moving all the data to blockchain could help to avoid such problems. For example, a decentralized social media model could work in such a way that all the users’ data would be available in public without revealing their identity. Only users themselves could have access to their accounts and they are the only one to have control over their personal data.

On the other hand, the scenario of Facebook rejecting its monopoly on user data and switching to the decentralized model is unlikely.

P2P micropayments in crypto

Facebook already allows users to send funds to your friends through Messenger for free, though there are limits as the minimum amount that you can send is equal to 3 USD. If crypto payments were to be adopted, Facebook could opt to allow much smaller amounts to be transferred – remember, tokensare infinitely divisible! This solution could then be used by game streamers and other video stars as a way to raise micro-donations from their fans.

Facebook would have to be careful on their choice of crypto platform, however, as certain blockchains (including Bitcoin) are currently plagued by high fees and consensus-congestion. Until these problems are resolved or an alternative blockchain with better scalability and fee structure, such as EOS, enters the mainstream, crypto payments are unlikely to come to Facebook.

Enhanced profile verification

For years, Facebook has wrestled with the issue of spam and fake user profiles on their platform. This unfortunate reality not only causes frustration among its own users but also makes the platform vulnerable to saturation by unverified claims and activity. With a blockchain powered verification solution, users could easily be checked and subsequently stamped as  “Blockchain Verified”. Of course, the security and verification of authenticity that could accompany such a process would be a net-positive. A disadvantage, however, could lie in the onerous identification requirements which would necessarily underpin a blockchain verification solution. Further, users might be hesitant to provide Facebook with such rich information – especially considering the company’s history of data security missteps.

Monetized content creation

Facebook could implement the Steemit model. This is a decentralized social media platform based on the blockchain. Here users create content on various topics and earn real money if the audience approves of what they write and upvotes their articles. Steemit utilizes its own currency ‘Steem dollars’ that users can withdraw to an exchange and convert them into real dollars with 1:1 rate.

In order to adopt a similar system, Facebook would need to create a full blockchain-based infrastructure with its own stable coins and off-ramps for users to convert them into fiat money. This would necessitate a total redesign of the entire platform and is thus unlikely to be pursued in the short-term. Instead of pursuing this comprehensive model, Facebook could opt for a ‘quick-and-dirty’ solution and simply offer utility tokens which are constrained to use on their own native platform.

A single-sign-on solution for dApps

A major problem with most of the decentralized apps (dApps) on the blockchain is their difficult onboarding process for new users. With traditional centralized services, you usually have to provide your email address, invent a password and choose a username. dApps have a further hurdle in that you are generally required to link your online wallet to the application. This extra step makes the process much more complicated and therefore reduces ultimate conversion rates.

Facebook SSO (single-sign-on) solution that is used by many centralized platforms facilitates the process as it allows users to create an account with just one click of a mouse; a similar solution for dApps might work to expedite their mass adoption. We’ll have to wait and see if Facebook will react to this new phenomenon – more easily navigable processes would surely be welcomed by the community.

Will there be surprises at F8 in 2019?

Several weeks ago, Facebook revealed the date of their upcoming annual F8 developer conference: April 30th, 2019. During 2018, the focus was placed on dating platforms and VR, though enthusiasts are wondering whether this might shift in 2019 and result in Zuckerberg and Marcus showcasing some crypto-related projects at the conference.

In our opinion, Blockchain powered profile verification or single-sign-on solutions constitute the most readibly actionable options. The company is advised to act quickly as recent research by Cambridge Analytica suggests that such technologically-informed moves could allow Zuckerberg and Co. to regain some much-needed user trust.

P2P micropayments and monetized content creation are both viable ideas, however meaningful realization prior to F8 2019 is a near impossibility. Proof of concept of similar initiatives has been achieved on other platforms, though it would be prudent for Facebook to allow the kinks to be worked out before they jump in headfirst.

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