What Is Facebook Going to Do with Blockchain Tech?
Facebook’s silence around blockchain was deafening. Louder still were the voices of speculation over its lack of comment. If one of the largest tech companies in the world wasn’t jumping on the blockchain train, perhaps the whole thing was smoke and mirrors after all. Then Bitcoin nose-dived, Facebook banned cryptocurrency ads, and blockchain skeptics had a field day. Until earlier this month, that is.
At long last, the social media giant responsible for putting the world on the web announced its intention to “explore” the possibilities of blockchain tech for its family of brands. It was an ambiguous statement which sparked understandable curiosity from the crypto community and technophiles alike.
What is Facebook going to do with blockchain tech? Here are some of the possibilities:
VERIFYING USER IDENTITY
Joel Vincent, CMO of ZEDEDA, believes that one important way Facebook can harness the power of blockchain is to verify its users’ identities. He says:
There are multiple aspects [which] blockchain can help with, the biggest being identity. Facebook has always had an intention of being “you on the Internet.” It’s done an oddly good job at it. Websites all over the internet accept the Facebook login as an automatic “you”, allowing you to quickly and simply create an account. I say “oddly good” because even entities that don’t create an account for you use Facebook to verify your identity.
If it’s on Facebook it must be true, right? Well, that sentiment is starting to shift. Using blockchain technology to verify that data belongs to you and is attached to a chain (rather than a data clearinghouse) would relieve Facebook of the pressure and responsibility of spreading erroneous data.
“The blockchain itself,” explains Vincent, “is inherently trustworthy and doesn’t need to know everything about you.” Meaning that users can pick and choose the information they wish to share with certain parties. And when you consider the number of apps that let you sign in with your Facebook account, what would be the ramifications of Facebook being hacked? Especially when it comes to our finances?
The one area of the Internet that will absolutely not, and should not, today take Facebook’s “word for it” are financially related sites – investments, banking, credit, business, etc. One Facebook hack or mistake and every site that “took Facebook’s word for it” makes identity theft and everything associated with that very real. A breach like that would make the Equifax breach look minor in comparison.
A blockchain could essentially allow Facebook to verify your identity, and other companies could accept this to be true. “Every other site that accepted the Facebook blockchain-based identity attestation would be able to transact safely with you via your Facebook identity,” Vincent confirms.
WINNING BACK USER TRUST
With all the recent press about data leaks and Cambridge Analytica, Facebook currently has a trust problem. Users don’t like finding out their data is being used without their knowledge. With a blockchain, users and businesses would no longer have to place their trust in Facebook.
“Blockchain basically says, ‘You don’t have to trust Facebook about this person’s identity. Trust the blockchain.’ Facebook just becomes an important part of establishing the start of your online identity,” Vincent points out.
Adil Wali, the co-founder of ModCloth (acquired by Wal-Mart in 2017) and the co-founder and CEO of Merit, agrees. “Facebook has a world-class engineering organization, and they are no strangers to building great software at scale,” he says. “And, of course, blockchain is a great potential foundation for solving some of the PR challenges they’ve faced with the recent Cambridge Analytica incident.”
With blockchain technology integrated with Facebook, users would have control over their data. “Facebook would not be in charge of your data or the data created by your actions, and an ‘academic’ level of access wouldn’t be possible without explicit notification and permission being given by you,” Vincent adds. “Additionally, that access would be revocable at any time, again, by you. You not only have an attested identity but full control of the data about you wherever you go.”
TOKENIZATION
Facebook has over 2 billion users worldwide. Despite its recent PR fiascos, the Facebook model actually works, so there seems little incentive to pivoting toward a tokenized ecosystem. That said, the possibility of tokenization remains. Consider incentivizing users to view content or data, or even encouraging engagement by rewarding others for creating content. But, then again, maybe not.
“The challenge for Facebook,” says Wali, “will be to consider the impact of these technologies on their core business and revenue model. Like all the major tech giants today, Facebook has a centralized service and revenue model. One of the primary innovations that blockchain brings is a sustainable revenue or business model associated with decentralized technology. Facebook’s core business, however, works. So they might not consider using the power of tokenization to allow users to partake in the growth of the business or a certain project or subsidiary.”
PREVENTING ADVERTISING FRAUD
Advertising fraud costs the industry a lot of money–some $19 billion in 2018, to be precise. Facebook could use blockchain technology to differentiate fake advertisements from real ones, and identify traffic generated by bots.
“Blockchain quite simply does an identity attestation, so it can help the ad industry verify the difference between a real advertiser and a fake advertiser – bots or advertisers passing [off] fake information as true – by using crowdsourcing, for instance.”
THE TAKEAWAY
It may be some time before we find out what Facebook will be doing with blockchain tech, but there are certainly a lot of possibilities. However, it’s more likely to be used as a complement to its business model, rather than a replacement to the existing model. Facebook may even serve to resolve one of blockchain’s biggest challenges – increasing the number of day-to-day users.
“The blockchain ecosystem needs to collectively cross the chasm from being cool to being a thing we can use every day. I could see Facebook really helping with that,” says Wali. The massification of blockchain tech? We’ll have to wait and see.
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