Yesterday, I was reading news about good old Facebook developing a cryptocurrency for use via WhatsApp. To begin with, it looks like they are planning to use it for remittances in India.
I had known about their plans to hire blockchain developers and that led to the obvious conclusion that something was afoot. At first, I thought that they were planning to launch something on their main social media platform that would resemble Steem. But I guess you don't screw around with your crown jewels... Especially when it is bringing in decent revenue via advertising!
Anyway, it is too easy for those of us that are interested in Crypto to dismiss central authority and the current internet and government status quo. However, such reflexive dismissal is dangerous and ill-informed in any sphere, and this is no different.
My two cents
Well, there is no denying that Facebook has an incredibly huge user base that crypto can currently only dream about! Adoption of any crypto at this scale would cement crypto as a viable financial solution (aside from its other potential solutions) worldwide. Active user adoption is currently the holy grail of the crypto world.... when you look at the abysmal usage of Dapps on any site that aggregates the information, it is pretty depressing....
So, Facebook could launch with a captive audience of over a billion users. If they could even get a tiny proportion of those users to start using their crypt, they would launch with a huge head start in adoption over every existing crypto-currency out there... perhaps even over the entire existing ecosystem!
So, with this huge advantage why am I a little dubious about the Facebook project? Well, it boils down to the fact that Facebook is a centralised company, and I don't mean this in a derogatory "decentralise everything" zealot's denouncement. It boils down to the fact that goverments prefer to be in control (well, at least the printing part of it, the rest is out of their hands!) of their currencies. I suspect that the idea that other entities could offer their own currencies is quite abhorrent to governments in general. With Bitcoin and other currently existing crypto, there is no single "target" company or individual to bring down, and so in many ways, this protects the existing crypto from acts of wanton jealousy! Other crypto like XRP (Ripple) don't try to act like currency, but act more like an enabling bridge, and so they aren't functioning as "currencies" as such...
However, for a company (especially such a large and powerful company such as Facebook) to offer their own currency over which they would have full control over would be a big red flag to the existing monetary system and to the authority of governments. If a company can issue a currency, where else could they start infringing on the powers that are normally reserved for governments?
So, for me, I would think that this will be a doomed project for Facebook. However, that said, I am still willing to hedge my bets and take some Facebook Dollars into my portfolio if and when the time comes. To bet against Facebook is a dangerous thing, and I'm not idealistic enough to do that. After all, I bought into Ripple when people were screaming that it wasn't a true crypto... as I did think that it presented a possible melding of the centralised status quo and the newer technology. I'm still not convinced that in the short to medium term that there will be a whole-scale revolution of the existing financial system. I'm more of the idea that there will be a melding of the two... at some point and in some fashion... that specifics of which still remain a mystery to me!
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Nicely laid out. Very clear and concise, I agree with you.
There is a little spider in my head (one of many) that says Zuck (or any other big company for that matter) won't be able to concede randomness into their business and therefor will never, ever be able to start a real crypto. In the law of unintended consequences, they might just expose a whole bunch of the world to actual crypto. That would be an incredible service to humanity!
Thanks for a terrific article!
In the end I'm not sure that a real fully decentralised crypto is what the greater population wants or desires. There is just too much safety in being able to appeal to a central authority. Well, at least in the short to medium term, perhaps things are different in the far future!
Probably a meld of systems is what will be optimal for most people. But yes, it would be interesting if Facebook proves to be the gateway drug that gets people familiar with the wider ecosystem!
@bengy,
Good article.
I would proffer this however: It may not be either/or ... it may be a hybrid. There are a number of up-and-coming STEEM/Steemit competitors (Mind.com, Narrative, etc.) that are combining centralized and decentralized systems.
As we've discovered on STEEM/Steemit, an alternative term for 'decentralization' is "utter chaos" ... fitting, as the underlying ideology of cryptocurrencies is 'anarchism.'
No Rulers, No Rules has lead to systemic vote-buying/selling, no focus or concentration of force ... and no generally accepted plan (or even a common vision of the goals of the blockchain).
In all honesty, 98% of Steemians couldn't give a shit about centralization/decentralization beyond what is technically required to prevent security breaches. They just want a social media platform where they get paid to create and curate.
'Overthrowing governmental control' is the ideological claptrap of zealots and has precisely zero chance of working ... which may explain why anarchism has never been implemented anywhere, in any time frame, in all of history.
I pray for institutional investors to get in here and take over (completely sidelining the 20- and 30-something Whales, Witnesses and Dev's that think they understand how life works because they can write Python).
These guys have no sense of priorities ... STEEM is under $0.30 and barely in the Top 60 cryptocurrencies ... perchance it's time to re-evaluate assumptions.
No ... ideologues are NEVER capable of re-evaluation. Their Utopian Dream has become a religion and talk of compromise ... a blasphemy.
Quill
Despite the unpopularity of this idea with the zealots, I do agree with you. We are going to see some sort of melding, too much of one of another thing is always terrible. There has been too much of a swing to decentralisation as an ideal, perhaps the coming year will see a bit of a correction!
One of the positives I can see is it might make crypto more acceptable in a general way. On the other hand if facebook screw it up then it could poison people further against it. Time will tell...
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To be honest, if Facebook did it, they will likely do it right and people won't know they are dealing with crypto, it will have a user facing UI that will likely mask all the current awkwardness and clunkyness!
Hmmm.... Interesting thoughts. Glad I read this. I haven't looked into it much, but very curious to see what happens. ;)
It is hard to tell where things will land with crypto and decentralisation in general. It will be something of a meld, but a giant like Facebook is hard to ignore... Whatever your feelings about the company!
See, I have a big problem with this and this is how untrustworthy facebook is. I don't think it's possible to trust anything they have to say, so anything they promise in terms of privacy and security, something that is a pretty big part of crypto, becomes inherantly untrustworthy.
I worry more that if Facebook, with it's big market share, becomes a face for crypto, it's more likely people won't trust it.
It's kind of like with a gaming company such as EA. The premise of DLC isn't a bad idea, but it's gotten such a bad reputation because of EA shenanigans, it's in part poisoned the well for a lot of people. I worry a facebook Crypto would have a similar effect.
Well, it is impossible to ignore what Facebook will do with crypto if they decide to pursue it. The truth is that many people are happy enough with Facebook that they do not leave the ecosystem and do not seek alternatives even after all the information that has come to light.... Hopefully, it will not come to pass that Facebook is the dominant force in Crypto, but you can't ignore the fact that if they entered the space it would be a huge thing for better or worse... Regardless of what you think of the company! In many ways the lack of trust is not really an issue, it just becomes a tool that people use out of convenience... Hopefully one that leads them down the rabbit hole to other alternatives!
People hate EA, but they are still profitable and they still have a lot of 'gamers' returning to them!
EA's profits have been in rapid decline due to how high gaming budgets are in the AAA industry. Pair that with the decline of game sales over the years, EA's success hinders on all of their games being massive hits, something they are struggling with more and more as days go by (Especially with the Steam Refund Policy)
Similar with Facebook, facebook activity get slower by the day, Messanger being the only heavily used aspect of the site these days. It's still active, but there's no way to say they aren't in decline these days.
I do think it will be a big thing if they do regardless, they are still huge, but I don't see it being a good thing for anyone if it catches on with the people on Facebook. The best thing that could happen is it flairs out instantly, and enough people learn about Crypto and become interested in it, and realize how terrible facebook's attempt was. If it doesn't flair out immediately I can only imagine bad things to come of it.
Sounds like they're grasping at straws to me, trying to stay ahead of the game. It would bring more widespread attention to cryptos though, which could be good.
Quite possibly, but it is a space where they can afford to invest in regardless of whether they think it is a good fit or not. However, remittances in developing countries is a good beginning (especially for dodging regulations...).
I agree with your final conclusion. Ultimately, for crypto to succeed, it will have to get some government backing. I think that, eventually, governments will issue their own digital currencies, then companies like Facebook will adopt those currencies. It's likely that Facebook is piloting a crypto in India with plans to expand in Asian countries like Singapore and China. If it catches on, they may eventually introduce something in the U.S., but Americans are still largely suspicious of crypto.
I think they started in developing countries to partly dodge regulation! But also, I think people in developing countries are more likely to use it rather than hold long term as an investment... Which is defeating the point of the exercise!
I agree on both counts.
hmmmm
I have heard of this just vaguely
It was an interesting read and your thoughts on it
Thank you for sharing :)
No problem! Nothing better than the internet for some pontificating!
I can only agree. It would be indeed a big step towards mass adoption, but there's no way there will be any decentralization. FB wants to own and control everything, so chances are it will be a no-go.
Yes, for this sort of use case, centralisation does mean submitting to much more regulation. Something that is both a good and bad thing...
Howdy sir bengy! yes sir, I heard about this the other day so I appreciate your thoughts on it.
Yes, it is interesting that an internet giant is trying out something. Hard to say if that is a good or bad thing!
Howdy today sir bengy! well if it succeeds it will be good for the entire crypto market right?
Are you guys going to celebrate New Years and if so, what does that entail, some kind of wild drinking parties? lol.
I'd probably buy some too, just to have them sitting there, in case their price increases exponentially. You never know...
Exactly, I'm not that idealistic!
Great discussion points and seeing what others are saying too, the adoption of crypto with Facebook appears to be a double edged sword. On one hand, it will be a very powerful way to get people in to crypto and mass adoption is right there.
On the other hand, no government will be happy with allowing a currency to be created by a company. Computer games as well have a "virtual currency" that can be used for in-game purchases but you can't trade those back in to fiat if you don't use them. That's kind of the vision I have with big companies like Facebook proposing "crypto", when really, it's just a token to incentivise purchasing of products exclusive to the website or game.
Will true crypto die-hards want to be a part of Facebook? Probably not but it will be interesting - thanks for sharing your thoughts and everyone in the comments section.
Yes, but I think Facebook is developing their own for remittances, which is only a small step away from being fiat money, especially if it takes off and gets some snowballing user base going! Plus, Facebook tends to have more ambition than your regular gaming company!
Cryto die hards won't like it and might not use it... But let's be honest, they are severely outnumbered!
True, Facebook obviously want the world and they pretty much have it. You can't argue with the numbers and people are too lazy to move away from it I think. We will see!
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