Facebook executive David MarcusBrian Ach/Getty Images for Wired
- Facebook is launching a new team dedicated to developing blockchain technology.
- Business Insider spoke to crypto industry insiders about what Facebook could be working on.
- The social network is staying quiet about its ambitions, but there are a number of possibilities — from improving payments infrastructure to new tools for developers.
- "Facebook showing up to the party is like the New York Yankees showing up to play high school baseball," said one former Facebook employee who now works in crypto.
Facebook is getting into the blockchain business.
On Tuesday, the news broke that the social network was having a major re-organisation. The company's assorted product execs were reshuffled into three major categories, and a handful of apps got new leaders.
But perhaps most intriguingly, the company now has a dedicated team focused on blockchain, the decentralized technology that underpins bitcoin and other digital currencies and cryptographic assets.
The experimental team is small — less than a dozen people, according to a source familiar with the matter. But it's a significant step for Facebook into a new and much-hyped field. It's being led by David Marcus — the former president of PayPal who most recently was in charge of Facebook's Messenger app. He's a seasoned company executive, with real experience in the traditional finance and cryptocurrency sectors; he's also on the board of buzzy bitcoin startup Coinbase.
"They're definitely serious, this isn't a big company saying 'hey let's try and get some press coverage,'" a former Facebook employee now working in the crypto space told Business Insider. "They're taking legitimate people in the organisation who are very high quality." (Instagram execs Kevin Weil and James Everingham are also joining the team, Recode reported, and Facebook corporate development executive Morgan Beller has previously been investigating blockchain.)
So what is Facebook's blockchain team actually doing? The company isn't saying, and in his Facebook post announcing the new role, Marcus said only he is "setting up a small group to explore how to best leverage Blockchain across Facebook, starting from scratch."
One possibility is that the social network may use the tech behind the scenes to somehow improve the efficiency of its payments and existing infrastructure. It's a possibility — but unlikely, said Ned Scott, CEO of blockchain-based social network Steemit. "I think it's a very limited use-case for what's possible with blockchain," he said, suggesting Facebook may have ambitions beyond payments. So what might that look like?
Instead, he suggested Facebook might use blockchain tech to create a new platform for developers to utilize, "as a tool for building apps and integrating the services of smart contracts" (contracts powered by the blockchain that can run themselves), with digital tokens and currencies built into apps. In this world, Facebook's finished blockchain product would look a lot more like Ethereum, a decentralized computing platform powered by crypto, than traditional digital currencies like bitcoin.
Facebook CEO Mark ZuckerbergJustin Sullivan/Getty Images
A more currency-orientated route suggested by the former Facebook employee is that the company might build a digital currency for its users, in the vein of FairCoin — a bitcoin alternative with a focus on building a "fair" economy. Apps and businesses could then accept the digital currency, and it could also help provide financial products in emerging markets to the "unbanked." Writing in cryptocurrency news site CoinDesk back in January 2018, crypto consultant Michael J Casey speculated on how such a token might work: Users (and shareholders) would be given tokens in return for traffic on posts, and all Facebook advertising would need to be bought with the tokens, giving them value.
Of course, Facebook has tried its hand at an in-house currency before with Facebook Credits, a system rolled out in 2011 to help people pay for virtual goods and games on Facebook. The credits proved to be more trouble than they were worth however, particularly given the fluctuating exchange rates, and Facebook killed Credits in 2013.
A fourth option: Facebook could use blockchains to store and control users' personal information. Scott viewed this option as unlikely: "It would be difficult to suggest that all their data should go onto the blockchain, because blockchains are inherently pretty public, and that's sort of the antithesis of the Facebook model which is to provide people with closed social networks."
In short, it's not obvious what Facebook is up to right now. It's also entirely possible that at this point, even Facebook doesn't know what it will end up building with blockchain — if anything at all.
Writing in Wired, reporter Erin Griffith suggested that to some extent, Facebook may just be trying to protect itself against any unforeseen eventualities: "The risk of missing out—just in case the crypto evangelists are correct and blockchain technology turns out to be bigger than the internet revolution—is too great to ignore."
But those working in the crypto space argue Facebook is being realistic about the tech's potential. "I think on a long enough horizon they're probably seeing a vast potential for this technology and understand it could cut into their market share of community management," said Scott. "They want to be ahead of the game, for sure."
The former Facebook employee predicted rapid growth from the team: "My guess is they'll explode ... If you look at what [David] Marcus and Stan [Chudnovsky, the new head of Messenger] did with the Messenger team it just exploded in size ... Facebook showing up to the party is like the New York Yankees showing up to play high school baseball."
Do you work at Facebook? Do you know more? Contact the author at rprice@businessinsider.com, via Twitter DM at @robaeprice, or via Signal/WhatsApp at (650) 636-6268. Anonymity is guaranteed.
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