Facebook’s announcement last week that it was creating a blockchain unit led by one of its most senior executives, David Marcus, is raising speculation among those in the blockchain world — because the social media company said little in public about what the group will be doing.
The Financial Times reported that those within the blockchain community have been studying Marcus’ resume to get clues to the direction the blockchain efforts could take at Facebook. Marcus had been in charge of Facebook Messenger for a period — and prior to that, was president of PayPal. He also sits on the board of Coinbase, the cryptocurrency exchange. Experts told the Financial Times that Facebook could be using blockchain to enable payments on the social network by developing its own cryptocurrency. Another option is that it could use the technology to improve privacy for its legions of users, providing them with a way to prove they are who they say they are. The paper noted that a potential threat to Facebook’s social media dominance is if a competitor builds a blockchain social media platform that rewards people for posting on it.
According to the report, Facebook’s motivation to embrace blockchain could be a competitive move to be ahead of any threat that comes from a rival. The company has been adept at quickly moving to kill the competition, whether it’s with Instagram or WhatsApp. In those two cases, it made purchases to bring them under its umbrella. It can’t buy blockchain, but it can create a unit to start working on it.
Sheila Warren, head of blockchain at the World Economic Forum, told the FT it was smart of Facebook to start looking into blockchain. She said Facebook could develop a digital token to enable micropayments on the social media platform. That could, in turn, result in a slew of new applications. It could also provide more control over the data for its users, which would be welcome in the wake of its data scandal with now-defunct Cambridge Analytica. “One of the things blockchain is good at doing is creating trust where trust doesn’t exist,” Warren said in the report. For instance, the technology could be used to create contracts as to who can receive information over Facebook. “You set the permissions in such a way that if you say for cat videos, you can take all my data, but for music videos, you can only take my screen name, it is self-executed automatically,” Warren said. She noted it could also use blockchain to create a public key to match a user’s private information.