Facebook and Blockchain: what on earth are they up to?
In May, Facebook announced a re-organisation of their product teams. One of the key moves saw David Marcus - former President and CEO at Paypal - move…
Since then Facebook have been suitably tight-lipped about what exactly this “small group” are working on. Speculation has been rife over what that might look like, so we thought we thought we’d lay-out our five predictions for how Blockchain might change Facebook.
1 - Self moderating communities
Both Facebook and Twitter are burning millions on building teams of moderators (or, editors?) to police the content on their platforms. Neither have got this right over the past few years and are having to make up ground fast.
But this model for policing content is hard, and expensive to scale. Look at platforms like Steemit and Sapien - both social networks built on blockchain technology - who are testing de-centralised moderation in the hands of their hundreds of thousands of users. Reddit has had more success to date with user-led moderation (though they do have their own smaller central team too for oversight), and the system of up/downvotes helps police things fairly well, though it’s not built on blockchain so still relies on central control.
Certainly there’d be a public appetite for Facebook announcing de-centralised moderation built on blockchain technology, even if the reality might not actually improve things...
2 - The supply chain of content
Remixing and iterating content is a given on social media - it’s how things spread. This naturally means that ownership and copyright are grey areas, and the platforms haven’t really taken a bold view on yet.
One of the most interesting applications of the blockchain technology outside of cryptocurrency is in supply chains. Imagine tracing back the journey of a piece of meat, from field to plate, with clear proof at each stage of the chain.
There could be an interesting application in social media here. A blockchain solution could allow you to follow the supply chain of a piece of content, right the way back to its original source. This would eliminate any disputes about the provenance of a piece of content, allowing for remixing and iteration whilst giving the credit to the original creators.
YouTube recently released a feature that will alert creators if any of their content is stolen, by scanning all new content uploaded to the platform. Perhaps Facebook want to take that one step further.
3 - Ad transparency
One of many criticisms levelled at Facebook is the lack of transparency given to advertisers. Ad fraud is a real issue - Adloox predicted that it cost advertisers $16.4 billion last year. Put simply, there’s a lot of media budget that can’t be accounted for.
Facebook’s fortunes are tied to the success of its advertising product. So when the big advertisers pull spend, as P&G have done, Facebook need to listen.
Blockchain is a potential solution to this problem that is beginning to gain traction. Currently, Facebook operates as a walled garden - you need to put faith that what they’re telling you is correct. A decentralised Blockchain solution would allow advertisers to verify that all their impressions were impressions, from real people rather than bots.
Whether Facebook would want to open up the bonnet of their advertising network in such a drastic way remains to be seen - but it would be a strong move towards transparency and appeasing advertisers.
4 - Short-term payments as part of Messenger
Last year Facebook Payments launched in the UK within the Messenger app to vehement ambivalence from pretty much everyone. Despite the *low* uptake (let’s face it, have you paid anyone via Facebook recently?), it’s clearly a feature that has some logic to it. Blockchain has the potential to offer two things that could help them push this side of payments forwards - both of which are challenges Facebook Payments: better security (see: trust) and lower transaction fees.
5 - FacebookCoin launches
Of course, Payments - backed by blockchain or not - is just the tip of the iceberg. Facebook aren’t afraid to make long-term bets, so perhaps this isn’t about the technology that blockchain offers, but is the first step to launching their own cryptocurrency. Shall we call it, FacebookCoin? With Payments, Marketplace and their continued push into retail (e.g. Shoppable tags) Facebook clearly wants to see more money flowing around the Facebook platform.
How easy would it be for that to be FacebookCoin flowing? As above, blockchain reduces and sometimes wipes out transaction fees so FacebookCoin transactions could come at a lower cost to both businesses and consumers (TechCrunch estimate this could be up to 3%), which might be enough of an initial nudge to get us transacting. Why not?!
To add fuel to this particular fire, Cheddar ran this story a few months back alleging a similar idea. And just this week, David Marcus has stepped down from the board of Coinbase, the world’s largest crypto business to focus on his work with the Facebook blockchain team. You read into it what you want, we’ll start stockpiling FacebookCoins.
A bet worth taking
Perhaps one of our predictions will turn out correct. More than likely, they won’t. Whatever their intentions, the move into blockchain makes a lot more sense when you understand that Facebook no longer see themselves as a social network - they’re a fully fledged technology platform. The Facebook app is only a very small part of the Facebook ecosystem.
Investing in blockchain (as well as VR, AI, Drones and Satellites, as per their 10 year roadmap) is a bet worth taking for them. They’ve got more than enough cash to do it, and if they do make anything of it, it helps them to dig ever-deeper moats that others will struggle to traverse. If they don’t, no big deal. On to the next big bet.