Apparently, Facebook, Telegram and Signal are all working on developing their own cryptocurrencies with the idea being to allow users on these platforms to make payments to each other using these new tokens/coins, with Facebook being the furthest along the development path.
According to five anonymous sources that talked to The New York Times, Facebook is “working on a coin that users of WhatsApp, which Facebook owns, could send to friends and family instantly.” Per this report, four people said that Facebook’s project is “far enough along that the social networking giant has held conversations with cryptocurrency exchanges about selling the Facebook coin to consumers.” Three people said that Facebook has more than 50 engineers working on this project.
This latest report about Facebook’s involvement with crypto mostly confirm earlier reports by Cheddar and Bloomberg in December 2018. According to Cheddar’s report (published on 13 December 2018):
“In recent months, the world’s largest social network has been quietly trying to recruit product managers, engineers, academics, and legal experts with experience in cryptocurrencies and payments, according to people familiar with the effort. Nearly 40 employees — including several former PayPal execs — work in Facebook’s ($FB) secretive blockchain group, and the company recently appointed a head of business development to oversee acquisitions and deals in the space. Since officially forming its blockchain group just eight months ago, Facebook has sent staffers to crypto conferences around the world to recruit researchers, cryptographers, and top academics in the field. At a private dinner Facebook hosted during a recent crypto conference, one attendee told Cheddar that Facebook employees pitched the idea of creating a decentralized digital currency for the social network’s 2 billion users.”
And according to the Bloomberg report (published on 21 December 2018):
“Facebook Inc. is working on making a cryptocurrency that will let users transfer money on its WhatsApp messaging app, focusing first on the remittances market in India, according to people familiar with the matter. The company is developing a stablecoin — a type of digital currency pegged to the U.S. dollar — to minimize volatility, said the people, who asked not to be identified discussing internal plans. Facebook is far from releasing the coin, because it’s still working on the strategy, including a plan for custody assets, or regular currencies that would be held to protect the value of the stablecoin…”
However, The New York Times article says that according to “three people briefed on the plans,” Facebook is “looking at pegging the value of its coin to a basket of different foreign currencies, rather than just the dollar,” and that Facebook “could guarantee the value of the coin by backing every coin with a set number of dollars, euros and other national currencies held in Facebook bank accounts.”
And since facebook is currently “overhauling its messaging infrastructure, which would connect” its three messaging apps, Messenger, WhatsApp, and Instagram, once this integration is done, it would allow Facebook’s new cryptocurrency to reach “across the 2.7 billion people who use one of the three apps each month.”
The New York Times article goes on to say that “Facebook employees have told the exchanges that they are hoping to get a product out in the first half of the year.”
Eric Meltzer, a co-founder crypto-focused venture capital firm Primitive Ventures, reportedly had this to say about the efforts by these three major messaging platforms to create their own cryptocurrencies:
“It’s pretty much the most fascinating thing happening in crypto right now. They each have their own advantage in this battle and it will be insane to watch it go down.”
On Wednesday (February 20th), Mark Zuckerberg, the Chairman and CEO of Facebook, released a video of a recent discussion he had with Harvard Law Professor Jonathan Zittrain, during which Zuckerberg said that he was considering the idea of making Facebook more decentralized by implementing some kind of blockchain-based user authentication system.
The issue of decentralization came up when Professor Zittrain asked Zuckerberg his thoughts on Solid, a new project led by Professor Tim Berners-Lee, the inventor of the World Wide Web, that is focused on the idea of “true data ownership.” Under this protocol, user data is decoupled from apps and held in some kind of “locker” that is under the user’s control, which means the user controls who can access this data and also the user is able to avoid the problem of vendor lock-in.
“So, I think it’s quite interesting. You know, certainly the level of computation that Facebook is doing and all the services we are building is really intense to do in a distributed way… I think the more interesting questions there are not feasibility in the near term, but are the philosophical questions of the goodness of a system like that.
So, one of the things that I’ve been thinking of a lot is a use of blockchain that I’m potentially interested in, although I haven’t figured out a way to make this work out, is around authentication and basically giving access to your information to different services, basically replacing the notion of what we have with Facebook Connect with something that is fully distributed…
Basically, you take your information, you store it on some decentralized system, and you have the choice of whether to log in to different places, and you are not going through an intermediary, which is kind of what you are suggesting here in a sense.
OK, now, there’s a lot of things that I think would be attractive about that… But let’s look at the flip side… Question is if you have a fully distributed system, it dramatically empowers individuals on the one hand, but it really raises the stakes, and it gets to your questions around what are the boundaries on consent and how people can really actually effectively know that they are giving consent to institutions. In some ways, it’s easier to regulate and hold accountable large companies like Facebook or Google because they’re more visible, they’re more transparent than the long tail of services that people would choose to interact with directly. So, I think this is a really interesting social question…
I think if you are doing fully decentralized Facebook, that would take massive computation, but I’m sure we can do fully decentralized [user] authentication if we wanted to. I think the real question is do you really want that? And I think you’d have more cases where… people would be able to not have an intermediary, but you’d also have more cases of abuse, and the recourse would be much harder.”
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