Rumors are flying surrounding the potential emergence of a Facebook cryptocurrency. Though the social media giant continues to dismiss claims that they’re working on a cryptocurrency exchange, evidence indicates otherwise. If the rumors about a Facebook crypto are in fact true, what could they be building behind closed doors? Facebook, infamous for storing your data, could seriously benefit from blockchain’s data storing capabilities. To understand why building a blockchain platform would benefit Facebook, we need to look at how Facebook makes money in the first place.
How Facebook Makes Money
According to Investopedia, the social media giant made $40 billion last year. The bulk of this—$39 billion to be exact—came from digital advertisements.
Part of the reason why Facebook makes so much money on advertisements is that they have an especially wide audience. They have an unparalleled ability to curate ads for individuals based off of data from their profiles.
Facebook knows everything from the basics—your gender, religion, sexual orientation and political views—to where you’ve logged in and which Facebook stickers you’ve sent. In essence, the majority of Facebook’s revenue comes from its ability to store and monetize data.
Using Blockchain for Data Storage
Blockchain is a decentralized and immutable ledger of transactions that you can access anywhere, any time. In different terms, it’s the best way to store data that you cannot delete, duplicate, or alter.
Not only is it a safer way to store data, but blockchain storage is cheaper. Because it’s decentralized, blockchain doesn’t store data in one place. From Facebook or any company’s perspective, utilization of blockchain storage means no expensive servers, maintenance fees, or off-site backups.
Today, an increasing amount of data is stored in the cloud. This means that you’re trusting a third party not to lose or misuse your data. You’re also agreeing to pay them a monthly fee, which adds up. Comparatively, Arweave, a blockchain-based data storage business, only charges once to store your data forever. Universally, blockchain data storage is safer and more affordable than cloud storage for both companies and individuals.
Facebook collects data on 2.2 billion active users (according to Statista), and this number keeps going up. It’s inconceivable that the social media colossus wouldn’t be looking into blockchain data storage.
Will Facebook Cryptocurrency Become a Reality?
Some speculate that Facebook cryptocurrency and blockchain could go way beyond data storage. In fact, Facebook has been trying to get into banking for years. In early August, the social media company announced that they are looking to partner with banks to gain access to users’ financial data.
A great way for Facebook to challenge Wall Street is by building a faster, safer, and more accessible way to move currency. This could come in the form of cryptocurrency exchange, which would allow Facebook to facilitate transactions outside of banks and record those transactions permanently. Though Facebook has refused to comment about whether they’re building a cryptocurrency exchange or wallet, their career page indicates otherwise: Facebook is currently looking to hire a blockchain engineer.
There has also been speculation that Facebook is trying to buy Coinbase, a leading cryptocurrency exchange. In theory, Coinbase could be seamlessly integrated into Facebook through design alone: both have a blue background and a similar, lower case font logo.
However, Facebook’s Vice President of Messaging Products, David Marcus, has recently left Coinbase’s board to work exclusively at Facebook. This could mean that Facebook is developing its own cryptocurrency exchange rather than integrating with Coinbase.
Additionally, Facebook has hired Shashwat Gupta. Gupta formerly worked for Expedia and Samsung Pay as part of their Product Strategy department. Gupta’s LinkedIn description specifies that he’s working in “Payments and Blockchain.”
Facebook Cryptocurrency: What Could They Be Building?
As we’ve seen with De Beers and Goldman Sachs, the advantages blockchain offers large corporations are staggering. Aside from the finance sector, nowhere is blockchain’s potential more overwhelming than in Silicon Valley. Even Apple’s own co-founder Steve Wozniak is entering blockchain.
But the thought of integrating banking, whether in USD or cryptocurrency, into an all-knowing social media platform can be concerning. If Facebook cryptocurrency becomes a reality, they’ll have a complete record for their users, from their likes to their purchases, that they can sell to advertisers at their discretion. Mark Zuckerberg’s sister Randi Zuckerberg just joined a leading cryptocurrency exchange’s advisory board. Might be time to hodl our crypto until Facebook’s announcement.