What a Facebook Blockchain Token Might Look Like

Mark Zuckerberg, worth $71 billion at just 33,
has done rather well by Facebook's centrally
managed system.
Over the past decade and a half, the social
media behemoth's closed-source algorithm
has quietly manipulated its millions of users'
news feeds to capture maximum ad dollars
and steer them all to Zuck and his
shareholders.
So, why is he exploring a more decentralized
model? And what role might crypto
technology play in that?
In a New Year's post to the platform, the
Facebook CEO noted (with zero irony, it
seems) that
"With the rise of a small number of big
tech companies … many people now
believe technology only centralizes
power rather than decentralizes it."
And he vowed, on that basis, "to go deeper
and study the positive and negative aspects"
of decentralizing, people-empowering
technologies such as cryptocurrencies and
encryption.
It was followed by another post telling users
that upcoming changes to their news feeds
meant they "can expect to see more from
your friends, family and groups" and "less
public content like posts from businesses,
brands, and media."
It remains to be seen whether this bet in favor
of "meaningful social interactions" over higher
traffic content is, as Zuckerberg said, "good
for our community and our business over the
long term." The immediate reaction on Wall
Street was harsh: Facebook’s shares fell 4.5
percent last Friday following the second post.
It was a predictable response: if Facebook will
no longer curate new feeds to emphasize
strong, ad-attracting content, then revenues,
and returns to shareholders, will decline.
Threats to Facebook
So, why'd Zuck do it?
The prevailing wisdom is he wants Washington
off his back.
The Russian political investigation has shone a
light on how Facebook uses its proprietary,
closed-source algorithm, the core instrument
of its centralized power, to deliberately
package "like audiences" for advertisers.
More important than allegations that Russian
operatives used Facebook to spread
disinformation and influence U.S. elections is
the fact that Facebook has become so
powerful a force that this kind of meddling is
possible.
What's more, its algorithm effectively
encourages it, if unwittingly: it naturally
creates echo chambers of commonly minded
people who will happily re-share and
redistribute content they agree with, creating
a sticky audience to sell to advertisers.
This happens even, or perhaps especially, when
the stories they are sharing are demonstrably
fake .
But Zuckerberg is clearly also bothered by
rising disaffection among his users, a group
to whom cyber security guru Bruce Schneier
once offered this warning: "Don't make the
mistake of thinking you're Facebook's
customer, you're not – you're the product."
It took a while, but many now understand the
bum deal they’re getting: they produce and
distribute the content that drives traffic on
the site, as well as delivering attention to
advertisers, but aren't compensated one penny
for it.
To make matters worse, they're forced to look
at content they don’t want to see. (Who else
is in the crypto community is sick of James
Altucher's "eccentric bitcoin expert" ads in
their Facebook feed?)
The problem is that under the current
business model, the more Facebook
decentralizes – either by being less
interventionist in news feed curation or by
following YouTube's lead and sharing ad
revenue with traffic-driving users –
shareholders will either get a smaller pie or a
smaller piece of it, or both.
On the other hand, if user discontent leads to
attrition or even an all-out exodus, it matters
not that shareholders are protecting their
margins – advertisers will leave, revenues will
slide and, eventually, the platform could die.
The rise and fall of MySpace, the once
ubiquitous platform that Facebook displaced,
is a reminder that the latter's dominance is
not guaranteed.
A token solution?
The resolution of this dilemma may lay with
the very technology Zuckerberg has vowed to
explore: a crypto-token, call it FBCoin.
To be clear, I have no inside knowledge on
Facebook's plans. This is pure speculation.
But, given the company's past forays, later
abandoned, into digital money and payments ,
I think it's worth speculating on, especially
with the context the CEO has laid out.
It also offers a window into how the center of
gravity might move from tokens produced by
decentralized app producers to those of
established enterprises – for better or worse.
Here's an admittedly very rudimentary model:
Facebook would pre-mine a large pool of
tokens, distributing a significant number to
shareholders and holding the rest in reserve to
distribute to users based on some reliable
metric of the traffic their original content
generates. Facebook would then mandate that
on-platform advertising must be paid for with
those tokens. A market would then emerge,
into which users could sell, giving them a way
to monetize their content creation.
The value of the tokens would float against
the dollar, based on demand and supply.
This, I believe, is how Facebook could best
resolve its dilemma, giving both shareholders
and users a valuable stake in the future
growth of its platform under a more
decentralized set of rules.
Of course, crypto folks accustomed to
thinking of attack models will immediately see
dangers here.
There are ways to game traffic data –
something that Brave is trying solve with its
browser and BAT token – and how does the
algorithm know whether something is
"original" and not just copied and pasted from
someone else?
Ideas for reputation tokens , proof-of-work
models to disincentivize the creation of
traffic-generating bot armies, and other skin-
in-the game solutions will be needed to
encourage honesty.
And who would run this? It's hard to imagine
Facebook choosing not to control the market
for its own tokens or to centrally run the
ledger.
Yet if it wanted to truly unpack the expansive
power of network effects, opening up the
tokens to a true, decentralized blockchain
system and, eventually, a decentralized market
could result in far more explosive growth –
and, by extension, token-based returns for
Facebook’s shareholders.
If Zuckerberg really wants to experiment with
decentralized systems, a publicly issued
crypto-token would be hell of a way to do it.
Personally, I would much prefer someone else
creates a scalable decentralized social media
solution to replace Facebook’s insidious
centralized algorithm – to do to it what
Facebook did to Myspace. Social media badly
needs a model that puts control back in the
hands of people.
But who knows? Maybe Mark Zuckerberg, who
has vowed to give virtually all his wealth away
to charity, will recognize that perhaps the
most powerful gift he can make to the world
is a platform for creativity that empowers
people by fairly rewarding their ideas and self
expression.