This is not a revelation (well, not for those who are reading this article), Facebook is about to conquer the blockchain and the crypto world, it is the least hidden secret of the Internet….
Check out this article if you just come back from a trek in the desert. Most of the media coverage of the event originated in this other paper from the very serious NY Times (it should be noticed, however, that it is not a thunderclap in a blue sky: the main part was already anticipated at the end of last year by Bloomberg).
However, let us recall the fundamentals:
- A little bit like all the major established players, Facebook, after having pinched its nose in front of the crypto-currency and the blockchain at the beginning of 2018 (ban on the promotion of ICOs, « warning » of its users…), would be preparing to launch its crypto-house by mid-2019 (let us keep the conditional tense out of courtesy, including for the cryptographic nature of the thing, even if nobody is fooled).
- It would be a StableCoin, a token of a non-speculative nature, backed by several fiat currencies (dollar, euro, yen, yuan… are necessarily mentioned with the most universalist vocation possible).
- 50 blockchain engineers are working on the subject, kept by confidentiality agreements and in secure premises apart away from other Californian HQ employees.
- LikeCoin (I like tthe name, if you have a better idea, the bets are open!) would be deployed for the benefit of WhatApp, Messenger and Instagram users, potentially reaching the American giant’s 2.3 billion consumers.
- According to a Barclay’s analyst, the implementation of this crypto would bring in up to 19 billion USD by 2021
- Negotiations are already underway with cryptographic exchanges (I let you imagine the length of confidentiality agreements…..)
- The ambition is simple: « to succeed where Bitcoin has failed » (breaking news: Bitcoin has failed!)
Facebook and money a missed appointment … until today?
To assume that Facebook is simply being opportunistic by trying to surf the blockchain and crypto trend would be a mistake.
Since its public launch in 2006, the social network has faced a major difficulty, which still remains its Nemesis today: how to monetize – and maintain the profitability – of services whose free access seems self-evident for everyone?
Since Facebook is unable to charge for its basic services, it will quickly explore other options, including the implementation of commercial transaction tools.
« facebook it’s free and always will be »* – Facebook Slogan
(*but please read the fine print)
Thus, in 2011, the social network will organize its first misconduct on the money market with Facebook Credit. We then speak of a « virtual money » that can be acquired with traditional currencies, allowing its users to acquire goodies on the site (games, image packs…).
A Facebook Credit was worth 10 cents. The users gave it a lukewarm/ tepid reception , many of them do not understand why all of a sudden we were trying to make them pay for something so obviously free by nature… the offer will be a little modified to end in 2012 with Facebook Gift, a concept inspired by gift cards, without much more success.
It will then be necessary to wait until 2015 to see a new attempt with Facebook Messenger Payment, a Paypal-Like, free of charge and adapted to the current trend of online piggy banks or micro-payments between friends to pay for a restaurant. Despite some rather unbearable limitations (no cross-border payments for example), we will remember that behind this application is David Marcus, former Paypal CEO, about whom we will talk in more detail a little further on! Despite good media coverage, Facebook Messenger Payme has still not been successful.
Becoming the major player in crypto, a sovereignty priority.
The concept may seem a little arrogant… damn it! sovereignty, refers to the notions of states, peoples, nations… here we are talking about lolcats and likes!
On the other hand, there is one simple observation to be fully aware of: some private companies in 2019 have in their hands more power than many States. Thus, if Facebook were a country, its 2018 GDP (55 billion USD) would put it at the same level as El Salvador and ahead of Senegal or Estonia…
Under these conditions, and considering that in modern capitalism the growth of companies is conceived unlimited, it is no wonder that the largest social network in the history of Humanity, starting from nothing barely 20 years ago, is caught up entertaining the dream of other ambitions?
After all, we are living in an era where a small online bookstore is planning after 15 years of growth – and in the most serious way – to conquer Mars (Amazon’s Mars project), where a « simple » search engine is immersing itself in transhumanism and trying to push human limits ever further (Google’s Calico), where a guy was taunted by a whole generation of NASA engineers when he explained aloud that recovering and reusing space shuttle launchers could be an interesting idea…before doing it himself (Elon Musk’s Space X…Ah, and just before that, he had disrupted 150 years of banking institutions with Paypal..,..a warm-up).
How can we blame this generation of pioneers, whose mantra has always been « think bigger », for planning the next step?
Facebook has long aspired to be a form of parallel public service. As an illustration, it should be recalled that what Zuckerberg considers as his baby is to the most remote corners of the world through its Free Basics program. So of course, according to Facebook, the « Internet » is not crowded with Wikipedia or Google but includes sites selected on criteria that we can easily imagine…..
Even if Facebook has never committed the political recklessness to display ambitions that could easily be described as libertarianist, we find here the ideological markers of a generation of genius entrepreneurs who would see themselves outdated and unsuited to the reality of the modern world…
There are even historical precedents that illustrate this trend: created in 1602, the Dutch East India Company will reach its peak with the equivalent of 7 trillion dollars, employing up to 100,000 people, dominating the world with its thousands of ships.
Do you know what Facebook would like to have in common with the Dutch India Company? Well, this private company had become so powerful….that it was creating its own currency!
But, do you know what other similarity there is between a 400-year-old company and Facebook’s business model? in both cases, its leaders were looking for resources to exploit. In the 17th century, it was the Indies that attracted the envy of Europeans (spices, textiles, precious metals…), in 2019, the new « digital gold » is… your datas.
And if in the near future, Facebook would buy your anonymity…with its own currency?
We could think of evolving in a classic episode of Black Miror….However, we live in a world where a large-scale rating network has just appeared in China, and part of the « social future » will inevitably pass through an increasingly important place taken by our digital avatar, its « value » increasing accordingly.
Your data are a source of wealth. That’s even the only real reason Facebook seems so free: in exchange for its flexibility of use, its ergonomics, the frightening and addictive dopamine shoot that browsing your news feed provides, the social giant pays itself by letting you tolerate its discreet but constant presence above your shoulder during an ever-increasing number of digital activities. This colossal war treasure is unparalleled in history.
Since the best lootings have an end, Facebook is now forced to face the facts: it is no longer possible to shamelessly pick from the data of its 2 billion users. Edward Snowden, the Cambridge Analytica scandal, the European RGPD have been through this. Generally speaking, web users are globally better and better informed about the implications of their datas, the times are changing. Worse still, the phenomenon is most noticeable among the most educated populations, with the highest purchasing power – also the most profitable for the company. Finally, it is devastating to hear former Facebook executives claim in a conference that they are forbidding their children to use the network!
So, in recent months, somewhere in a discreet alcove at the head office, these disadvantageous winds have obviously been mentioned. Teams were asked to study all possible options in order to solve a simple equation: how to continue to exploit without limits the data of users, more and more aware of their value?
Perhaps it was the boss himself, Mark Zuckerberg, who formulated the idea aloud?
– « we’re going to buy them from our users »…..
…causing silence in the room (the same idea from the trainee would probably have caused a mixture of contempt and hilarity, but the world is made that way…).
– « But it’s going to cost us a massive amount of money, boss!… »
-« No! Because we’re going to buy these datas with…….. our own currency, created by us, you’ve seen the hype around crypto! »
The plan is incredibly simple: An inscription? 10 LikeCoins, phone validated ? 50 LikeCoins, geolocation activation? 100…you consent to Facebook sharing a panel of information with third parties « to improve your experience »? Jackpot! 1000 LikeCoins!
The way Facebook will distribute its internal currency can respond to virtually unlimited (and scalable) business models. The prospects are unprecedented. Wasn’t last year’s job description for recruiting Blockchain and coder engineers « ready to take up an intellectual challenge on a subject likely to have a massive global impact »? »
Thus, at the time of writing, dozens of brilliant guys are struggling to multiply the number of cases of use, in accordance with a universal marketing principle: people ignore what they want, until they are forced to do so.
Given Facebook’s organic mechanics, it is likely that purely social functioning will become profitable: liking, commenting and sharing of course, but above producing quality content (= creating audience) and generating endless interaction, all of which are orchestrated by an algorithmic game that society has proven to have a solid mastery. These actions will increase the opportunities to generate profits, for users, but especially for the social network, which will thus be placed at the centre of the game.
Basically, the challenge for Facebok is the same as for many players in « virtual spaces »: to ensure that you remain as long as possible within the ecosystem and to do so, to make available everything that the average Internet user could dream of: entertainment, positive feedback, fast and innovative services… and if, in addition, these activities become profitable, the impact could indeed be global!
You liked social tracking? You will love your financial tracking!
An illustration, confusing in its simplicity:
Meet Bob.
Bob has been on Facebook for a few years. He has about a hundred « friends », whose publications he likes and occasionally shares. From time to time, he comments on a status or signs up for a game on the network. Bob’s use and behaviour is similar to that of 80% of network users: Bob is not an influencer who spends his life in front of his smartphone and multiplies ads, but not a day goes by without spending part of his time on a few social activities.
Although Bob does not have a fascinating social profile, he does leave multiple datas in his daily activities that Facebook is happy to accumulate discreetly but conscientiously. Facebook is thus able to offer Bob a news feed adapted to what he is supposed to like, but above all, it directs merchants and service providers to him, to whom the network guarantees, with quite formidable reliability, that they will offer something to Bob’s taste.
One day, bingo! Bob lets himself be seduced by the smooth curves of a magnificent Stratocaster electric guitar, he decides to buy it for the price of 1000 dollars and, to do so, goes to the merchant’s website….
…By leaving Facebook!
Let’s freeze and pause Bob: this moment is the quintessence of the strategic problem that haunts Facebook’s boards of directors: it’s unbearable to let Bob run away, at the exact moment when he finally becomes interesting!
Indeed, and even if Facebook is multiplying trackers and cookies more or less discreetly, the tracking still finds some limits, among which are those that affect the banking transactions secret. Whether it is the VISA system, Paypal, the Chinese of Alipay, all these organizations are bound by heavy obligations regarding the level of security and confidentiality of transactions. In short, even for Facebook, the door is closed… and armoured!
To summarize, Facebook has noticed Bob’s interest in rock’n roll (his news feed will be affected for a while!), it seems he bought a guitar, in any case, he seemed motivated (he clicked on the link in less than 3 seconds, which the network recorded well) but, beyond that, it’s hard to know more…. does he bought the model that was proposed on his news feed? didn’t he fall for a triangle? (Bob lives in the studio, Facebook is pretty sure)? Too many uncertainties remain, and it makes it more difficult for Facebook to refine its ability to please Bob!
Let’s meet again Bob in 1 year, in March 2020: Facebook implemented its internal crypto in September 2019, things are now working pretty well and using LikeCoin is gradually becoming natural for many network members.
Bob is tempted by a link offering him a very nice guitar display, he goes to the seller’s page and pays 100 dollars for the item…
But in fact, Bob pays with 1000 LikeCoin (whose price, stable, has been set at 10 cents of dollars). The transaction is immediately validated – thanks to the blockchain – and everyone is happy: Bob who will be delivered in the afternoon to his office, the seller who has no fear about the effectiveness of the payment… and Marc Zuckerberg who has finally reached an ambitious goal: to allow Facebook to facilitate, but above all to assist in the whole process!
to be continued…
