Yesterday, it was reported that Facebook's CEO was exploring how the social media site could integrate the blockchain into its login and data sharing systems.
Today, industry experts weigh in on the likelihood of those claims, the potential challenges and the wider industry impact.
Back in 2018, Mark Zuckerberg is thought to have started on this journey when he wrote a post on Facebook discussing encryption and cryptocurrency, taking "power from centralized systems and [putting] it back into people's hands." Keen to delve further into this, he noted that he was going to study the negative and positive aspects of these technologies "and how best to use them in our services."
The notice came at a time when the social media site was being hit with fake news, its data scandal through Cambridge Analytica, alleged Russian interference in the US election and crypto scam ads despite a policy overhaul.
Now, it seems that Zuckerberg has taken his research a step further. In a recent interview, he indicated that he's "potentially interested" in putting the Facebook login on the blockchain and introducing a blockchain system "that's fully distributed." This, in turn, would permit users to pick and choose the apps they want to follow as well as restrict the amount of data shared.
Speaking about Zuckerberg's plans, Ryan Fang, co-founder and COO of Ankr, a distributed cloud computing network that harnesses idle computational power to make data sharing more efficient and cost-effective, said that Zuckerberg's interest in the potentialities of blockchain "should come as no surprise."
With Facebook's recent acquisition of four members of Chainspace's founding team and rumors of a stablecoin in development, it's clear that a considerable investment in effort and resources have been made in exploring blockchain's utility for the social media giant, Fang added.
In February, it was reported that Facebook had hired researchers from the University College London behind blockchain startup Chainspace.
"Given its history of data privacy scandals, Facebook would benefit from a system truly devoid of intermediaries and if done well, coupled with its other intended forays in implementing blockchain-based solutions, it would potentially boost both its enterprise and social media market share," Fang noted.
He went on to add, though, that the sheer size and volume of Facebook's network will be a true test for the scaling capabilities of today's blockchain projects.
For Benjamin Scherrey, CTO of HotNow, a gamified online-to-offline economy for users to derive real-world value from a virtual world, if Zuckerberg is afraid that he may share a fate similar to MySpace due to a loss of a fickle user base, then he needs to find a way of making a Facebook account bring real value to the account holder.
A great way to do that is to become a reliable crypto wallet that satisfies the KYC [know-your-customer] requirements necessary to satisfy governments, he added. Given how much information Facebook already has on its users, the incremental cost to Facebook is relatively small.
Scherrey added that if the company has a wallet that's up-to-date with its KYC requirements, the next logical step would be for Facebook to have its own cryptocurrency. This was something Cheddar initially reported on last May.
"This is a fairly straightforward value proposition for Facebook that really has no downside while shores up the value that users might place on their Facebook accounts," he said.
Of course, while Zuckerberg appears keen to put data protection high on its agenda, which he thinks the blockchain can aid, could it also produce a different effect. After all, the whole point of decentralized ledgers is to remove control from centralized companies such as Facebook, who, according to Scherrey, are producing a "shared economy."
For him, a truly decentralized system will ultimately replace the business model for centralized companies who will have their multi-billion dollar valuations wiped away as "cryptoledgers undercut the rent economy and put power back into the hands of the creators."
The only question is whether or not Zuckerberg can foresee and catch this wave that is most certainly coming or, instead, try to stand against it and get wiped out like Kodak did with digital photography, Scherrey concluded.
