Facecoin is coming according to recent reports of unidentified sources who were unauthorized to discuss unannounced plans.
“They are very serious about it,” one of them said, with Morgan Beller, a member of Facebook’s corporate development team, having spent the past year developing blockchain tech.
A new team then launched last week with some senior personnel, surprising commentators who suggested Facebook was planning something big. That something:
“Facebook is exploring the creation of its own cryptocurrency, a virtual token that would allow its billions of users around the world to make electronic payments, people familiar with Facebook’s plans told Cheddar.”
A token, for payments, on Facebook? What will they pay for? Is it an ethereum based token? How will it scale?
The answers are very few, to almost non-existent at this stage, but we are sure we will hear more as the battered Facebook couldn’t possibly have a better way to restore some of its reputation than by jumping on the crypto bandwagon.
Yet much of it right now seems more just drawing boards. The only thing for certain is that they won’t ICO, sparing themselves a headline we were so keen to write.
HypocriteBook to ICO after Banning ICO ads.
The Facecoin or Facetoken or whatever they’ll call it is apparently some years away. They’re also looking to acquire blockchain or crypto start-ups to gain expertise. Which might be fine as long as they keep their hands off Coinbase. That little star-boy should star IPO instead.
Finally, the only other information provided is that “blockchain technology could also be used to help Facebook verify the identity of accounts and encrypt data.”
We love information vacuums because it gives us room to speculate (that’s sarcasm). So, first some napkin maths with figures pretty much plucked from nothing.
Two billion users, 10% transacting at each point in time, 200 million daily transactions, 2,000 transactions per second, that being all of Visa, that currently being possible in no actual blockchain.
Those figures being unrealistic, two billion people probably don’t really use facebook, so lets be realistic but optimistic as in highest level of expected usage.
Two billion accounts, probably 10% that actually use Facebook, so 200 million, 10% of that transacting at any time, well 20 million is manageable.
By the time they launch this, ethereum will probably be able to handle that and have some spare room for 80 million more transactions. So the token will probably be eth based because that has most devs and thus most expertise.
Now token for identity means lost private key and if the token is just for Facebook identity, then that key will probably be lost as often as passwords are forgotten, which means all the time.
We’d therefore scratch that idea off the board, but if by identity they mean who are humans and which are bots, that could work, but then you’d have to monetize facebook as in require a pennytoken for each post or like or whatever.
No one is going to buy it, well, not for that purpose anyway, so you’ll want to airdrop and then keep airdropping. Expected results: some bot activity but noticeably lower.
Now how blockchain will encrypt data we don’t know. That could be an interesting space, but a bit of rocket science too.
At a conceptual level, the private key could be the decryption key. So no one can see your data unless you want others to see them because they want to pay you a tenner or whatever, so you authorize with your private key.
That’s if you still have the private key. You probably lost it a day after you used Facebook, unless you’re one of those rare species that lives on Facebook.
Arguably however, if we are going to do rocket science we can do it properly by linking that private key to the password, but then what if you lost your password.
Fine, let’s have ten private keys for each individual. What does that even mean? So, we’re probably talking nonsense but if you managed to link password to private key, then you can link identity to ten private keys, so if they lost password you send a new one and a new key is created.
So this is in a centralized way, right? Well of course. So then, the point? Well, the first point would be the rocket science, Facebook can afford it and should keep their employees happy, perhaps even privileged, to crack this data encryption on the blockchain thing in a Facebook setting.
The second point is that it would probably give users a bit more control over their data, but it’s unclear why Facebook would want that, hence they’re kind of not giving away control as they still have all the private keys, but at the same time they are kind of giving away a bit of control as in this scenario we’ve created out of nothing they would proclaim authorization for usage of data is now needed.
Now, if we are to be a bit fair to Facebook, and we haven’t really kept up with all that Analytica stuff, but you would think they did not intend friends to be able to share the data of friends of friends.
So, from Facebook’s perspective, not allowing friends to share their friend’s data might make sense as that’s Facebook’s job.
Yet, if we are to be a bit of a cynic, the fact they come out within days to say this will take years might suggest this is all just nice words to show they are doing something with that doing then perhaps kicked down the road like those cans until everyone forgets about it.
On the other hand, if we are to be a different kind of cynic, you might say Facebook feels a bit threatened by all these blockchenized social networks that have begun coming out.
They, of course, saw first hand just how quickly people went from MySpace to their social network, so they might have angst over whether a start-up might do the same to them.
If we were bettingnodes, we’d give an 80% chance to such scenario, even accounting for whatever Facebook might be doing.
That’s because although we do find this tokenized data idea very interesting at a conceptual level with implementation probably a different matter, we’d think Facebook is more trying to put plaster on things by adding some blockchain spice.
The social network is just too big, its movements probably far too slow, its design probably by committee or focus groups, and its implementation will have to sit on top of web2 infrastructure.
In short, we don’t think they can adapt even if they wanted to, unless they go all radical but corporatebook and radical don’t really fit well in the same sentence.
That all said, we’ll always be happy to be surprised, but when you look at what some web3 social networks are doing and when you look at what Facebook could realistically be doing, it’s a bit like bitcoin and eth, old and new, blockbuster and Netflix.