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Facebook’s flirt with crypto and blockchain

What happened?

In August, David Marcus, lead in the blockchain developers team within Facebook, left the board of directors of Coinbase, the biggest US crypto exchange, to avoid the appearance of a conflict of interest. This is after Mark Zuckerberg’s new year’s resolution in which he shared his interest in the possibilities of encryption and cryptocurrencies. Furthermore, Facebook is extending its blockchain team with a blockchain public policy manager with experience in ‘blockchain, data protection, digital identity, cryptocurrency, and related policy issues’.

What does this mean?

The interest of Facebook in cryptocurrencies and blockchain technology could point towards a future in which Facebook (and potentially other big tech) will play a role in the crypto landscape. One explanation could be that decentralization will become an increasingly important theme for big tech against the background of incidents in which the integrity of centralized platforms have been compromised (e.g. Cambridge Analytica, the Yahoo/Twitter/Linkedin hacks, the Equifax breach, cloud black-outs, the Snowden case). However, at the same it is important to remember that the development of blockchain-driven applications is still in its infancy as it still faces considerable scaling and integration issues.

What’s next?

There are several ways in which Facebook can enter the crypto landscape. Interestingly, Techcrunch speculates about the potential applications Facebook is developing in the blockchain domain. One possibility is the introduction of a Facebook cryptocoin, which could incentivize and reward users (similar to the Steem platform) or could provide interesting privileges. A complementary option is that blockchain tech could enable the implementation of micropayments in its social platform. Another angle is that Facebook will introduce a crypto exchange, with some even speculating about an acquisition of Coinbase. Regardless, Facebook will face an interesting challenge in how it will apply decentralized tech within a business model that strongly relies on central control.