Even though cryptocurrencies and decentralised financial systems have been in the making for over three decades, they rose to prominence in the aftermath of the 2008 financial crisis. The trust in traditional banking services hit rock bottom and people needed a robust system which was trustworthy, and free of middlemen.
This is where Facebook decided to go forward with Blockchain, an incorruptible digital ledger of economic transactions which can be programmed to record not just financial transactions but virtually everything of value.
How Facebook Plans To Reinvent Itself
Facebook is among the growing list of tech giants like Amazon and Microsoft, who are looking at Blockchain technology for more transparent and secure data systems.
Acquihiring: These enterprises are employing ‘acquihiring’ as a strategy to step up the game for staying relevant in the near future. As a part of this strategy, companies are acquiring new talents and promising startups who are using blockchain technology. This way, they don’t have to reinvent the wheel, but just need to provide a larger platform for these startups to use their expertise on a larger scale.
Facebook, began making moves towards cryptocurrencies in early 2018. Even though the social media giant was buried under a pile of controversies, it somehow managed to stay afloat on the innovation side.
Cryptocurrency: Last year Facebook quietly launched an in-house startup, one focused on blockchain technology and cryptocurrency. Facebook also announced that they would be launching their first crypto product — a digital stable coin for remittance payments in India.
This was a smart move considering the fact that India represents over 10% of the $613 billion global remittances market and lowering transaction costs and frictions while adding currently unbanked users and this could be a winning real-world use case.
Management: Facebook’s small team of blockchain experts is led by David Marcus who was the vice president of Messenger earlier as well as the former president of PayPal. Facebook has now hired the team behind Chainspace. The acquisition of the Chainspace team is the clearest sign yet of the network’s ambition to be a big player in the nascent blockchain industry.
Scalability: Facebook is also looking for scalability. In fact, they only showed interest in blockchain companies that could accommodate their large number of users.
A Transparent And Secure Future
This wouldn’t be the first time Facebook would attempt to disrupt the payments market with a virtual currency. Facebook earlier had ‘credits’ as a digital currency on its platform. A native payments solution, backed by blockchain, could revolutionise payments on Facebook and some of its most popular products. However, cryptocurrencies are still in a grey area with some countries like India, labelling them illegal for monetary transactions, while others being fairly open to the idea.
Diving Into Digital Wallets: Blockchain can make transactions free or very cheap and Facebook plans to build a cryptocurrency wallet with its own token that people could use to pay for things with partnered businesses or that they discover through Facebook ads.
Using Cryptocurrency For Ads: This development will also help Facebook monetise its cryptocurrency at a faster rate. With more than six million advertisers and 65 million businesses that have Facebook pages, passing the transaction fee savings on to the users, while touting partnerships with Facebook Crypto can boost sales for businesses. That could, in turn, get clients to spend more money on Facebook ads, as the discounts would enhance conversion rates and drive sales.
Outlook
Will Facebook acquire more startups? If yes, then what will it do with their assistance? The answers to these questions are still to be known. Going by the growing talent pool around blockchain technology within Facebook, it is quite obvious that this social media giant is doubling down on building a Blockchain unit within the company.
