Expectations Low for Facebook’s Blockchain Initiative
Long-time fintech analysts have low expectations for Facebook’s newly unveiled blockchain initiative to be headed by PayPal‘s former president.
Further, analysts suspect the effort might not center on using blockchain to offer financial services on the Facebook platform.
“[I] can’t say I have any idea what the [Facebook] blockchain initiative will focus on,” Ron Shevlin wrote Bank Innovation. “But given its past history, it wouldn’t surprise me if FB says it will apply to 50 different things — even though in reality that will never happen.”
Facebook yesterday tapped David Marcus to run the initiative, which reportedly will initially staff fewer than 12. Marcus has run Facebook Messenger since 2014.
The key speculation is whether the blockchain unit will focus on financial services, or use blockchain for privacy and data storage efforts. This is important considering Facebook’s scope and its potential to disrupt traditional financial services or payments.
In a broad-ranging think piece published just after the New Year, Facebook’s founder, Mark Zuckerberg, referenced blockchain technology, saying that “[t]here are important counter-trends … — like encryption and cryptocurrency — that take power from centralized systems and put it back into people’s hands.” That reference acknowledges that the “currency” aspect of blockchain is at least on Facebook’s radar.
It has been widely noted that Marcus sits on Coinbase‘s board of directors. To some, that means Marcus will, in fact, pursue a financial services-centric blockchain agenda. But Marcus included little in the way of financial services in Messenger’s development roadmap. That despite rapid growth over the last couple of years in social media-connected payments (albeit in China) from the likes of Alipay and WeChat.
The better bet is that the blockchain unit will pursue data storage and encryption solutions, considering Facebook’s recent privacy dust ups. If that is the case, the fact that it is headed by a PayPal guy will amount to a circumstantial fact, and nothing more.
