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Facebook’s blockchain play to foster mainstream adoption?

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  • Appointed former PayPal president David Marcus to lead blockchain initiatives
  • Blockchain has many uses for identity protection and monetization
  • Telegram, Wechat acting fast on blockchain

Facebook’s blockchain play could foster mainstream adoption, analyst Rohinee Sharma suggests.

In a report published on Smartkarma, Ms. Sharma looked at Facebook’s recent troubles vis-a-vis Cambridge Analytica and compared Facebook to a country that should be held accountable for keeping its “citizens”, the 2.2 billion monthly active users, safe or be held responsible for failing to do so.

Facebook is taking steps, Ms. Sharma said. Former PayPal Holdings (PYPL US) president David Marcus, until recently Facebook’s vice president of messaging products, said May 8 he will lead a new initiative to explore the possibilities for using blockchain technology at the social media giant.

“In his new role, he will head the company’s blockchain initiative – comprising of under a dozen employees (engineers and product staff) which until recently had only one – Morgan Beller – from corporate development,” Ms. Sharma said. “Oh, and by the way, (Mr. Marcus) is also on the board of Coinbase – a digital cryptocurrency exchange.”

A single entity with the regular attention of 30 per cent of the world’s population may be just the ticket blockchain and cryptocurrencies need to make the mainstream leap, Ms. Sharma argues as she plots several avenues Facebook could take.

David Marcus

“The company could use the blockchain as a tool to tackle fake news for instance; something like a Steemit or even Reddit, where news is ranked or voted. Or it could use it to verify identities(tackle fake accounts), offer a better level of data protection and storage,  give greater ad transparency and hopefully do the most radical thing (that Facebook can ever do)-move from a centralization to decentralization leading to ownership, control and monetization of the user’s data in the user’s hands.”

Mr. Marcus might also look to companies like DigitalBits, who are tokenizing rewards points to improve their liquidity by allowing users to trade points, or ones such as Biotron who employ smart contracts to allow users to monetize their personal data.

Recent activity at Telegram may have “encouraged” Facebook to look more closely at blockchain, Ms. Sharma suggested. The messaging app is very popular with the crypto community and recent raised $1.7 billion through an ICO

“This raise has given Telegram enough money to fund its own supposedly superior third generation blockchain driven enterprise (solving issues of speed, scalability, and energy efficiency),” Ms. Sharma said. “The Telegram Open Network (TON) … would extend the messaging app into an application that would support many other services including file storage, payments etc. These, would, in turn, be paid for by the “Gram” – Telegram’s cryptocurrency.”

Telegram is also developing Telegram Passport, a service which will store and verify user identities and prevent the anonymity associated with cryptocurrency transactions, a trait which troubles regulators.

“Here, the user would have complete control over his information and which when used would be done so with the user’s consent,” Ms. Sharma said, while adding China’s Wechat is also reportedly working  on an identity verification platform.

With Facebook clearly being an integral part of hundreds of millions of people’s social lives, it offers the perfect environment that can expose people to cryptocurrencies without fear of abandonment.

“There are important counter-trends to this — encryption and cryptocurrency — that take power from centralized systems and put it back into people’s hands,” Ms. Sharma quotes Facebook founder Mark Zuckerberg as saying. “But they come with the risk of being harder to control. I’m interested to go deeper and study the positive and negative aspects of these technologies, and how best to use them in our services.”

“Maybe this offers a clue to the possibility that days of centralized data could be numbered,” Ms. Sharma concluded. “That itself, hopefully is a good thing.”

Tony Zerucha is an alternative finance journalist with more than seven years experience in the space. The author of more than 1,000 articles, Tony was named LendIt's 2018 Journalist of the Year.

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