Just How Serious Is Facebook About Blockchain Technology?

Siamak Masnavi

On Thursday (5 July 2018), we learnt via a Linkedin update that one of the world's top software engineers, Evan Cheng, who has been at Facebook since October 2015, has a new position at the company: Director of Engineering at the Blockchain group. According to Techcrunch, Cheng's new position has been confirmed by Facebook.

On his Linkedin profile, Cheng writes: "I was recognized by ACM for my non-zero contribution to the world of computer science." What he is talking about is the "Software System Award" he received from the Association for Computing Machinery (ACM) in 2012. This award is given out annually to an individual or group of people working on a software project that has had a lasting significant influence in the field of computer science. Cheng's award was for his work as a part of the LLVM project, which has played a huge part in the development of virtually all modern programming languages. And since he was hired by Facebook in October 2015, he has been exploring ways in which the company could improve its products by using the best ideas in the areas of programming languages and application development frameworks, both for the web and mobile.

Cheng's Twitter profile is also quite interesting. Here is he how describes himself:

"Director @Facebook, previously @Apple. World's friendliest curmudgeon. Day job - Programming languages, runtimes, compilers Night job - blockchain, crypto"

It certainly looks like this was written before June 2018, when Cheng got moved into the Blockchain group since his day job has now become "blockchain" also. So, if Cheng was not playing with crypto and blockchain at Facebook prior to June 2018, what was he doing in this space in his spare time? Google search results tell us that during the past couple of years, Cheng has been serving as a technical advisor for a number of prominent blockchain startups, including Chainlink, Quantstamp, and Zilliqa (since March 2018).

Although the news of one of Facebook's most senior engineers being moved to the Blockchain group is important on its own, the first indication of Facebook's interest in applications of blockchain technology (for use within its platform) came on 4 January 2018, when Facebook's founder and CEO, Mark Zuckerberg, wrote the following in a post that was meant to serve as his personal mission statement for 2018:

... one of the most interesting questions in technology right now is about centralization vs decentralization. A lot of us got into technology because we believe it can be a decentralizing force that puts more power in people's hands. (The first four words of Facebook's mission have always been "give people the power".) Back in the 1990s and 2000s, most people believed technology would be a decentralizing force. But today, many people have lost faith in that promise. With the rise of a small number of big tech companies — and governments using technology to watch their citizens — many people now believe technology only centralizes power rather than decentralizes it. There are important counter-trends to this --like encryption and cryptocurrency -- that take power from centralized systems and put it back into people's hands. But they come with the risk of being harder to control. I'm interested to go deeper and study the positive and negative aspects of these technologies, and how best to use them in our services."

However, it was not until 8 May 2018 (the day on which Facebook announced its biggest reorganization ever) when it became clear that blockchain was not just an area of personal interest for Zuckerberg, and that Facebook had become serious about blockchain technology, at least serious enough for one of their top executives, David Marcus, the Vice President of the Messaging Products ("Messenger") group, a former CEO of PayPal, and a member of Coinbase's board of directors since November 2017, to announce that he was setting up a small team to explore how to best leverage blockchain across Facebook, starting from scratch." Recode reported that, at launch, the team would be quite small (less than a dozen people), but it would include two top level executives from Instagram (who joined Facebook when it acquired Instagram in April 2012 for around $1 billion in cash and stock), Instagram’s VP of Engineering, James Everingham, and Instagram’s VP of Product, Kevin Weil. According to Weil's Linkedin profile, his position since June 2018 has been "VP of Product, Blockchain." 

When interviewed by CNBC on May 9th, Spencer Bogart, a partner at blockchain-focused venture capital firm Blockchain Capital, stated:

"I certainly don't think blockchain is an existential threat to Facebook today. Could it be? Yes, longer term. That's why they want to be smart and stay engaged... Apps like Robinhood are occupying a larger percentage of Facebook's most valuable demographic... Just that screen time — people spending time there instead of Facebook — is a threat to them."

One obvious application of blockchain technology at Facebook would be for implementing some kind of payment system for Facebook Messenger and/or Whatsapp, but Bogart warns: "The technology is still pretty nascent... There are scalability challenges." 

As Techcrunch noted May 8th, there are quite a few other areas in which blockchain technology could help Facebook:

  • "micropayments could open new ways to tip creators or compensate news outlets"
  • "cloud storage based on blockchains could help Facebook cut its massive server bills"
  • "the decentralized nature of the blockchain might unlock new paradigms for social networking with increased autonomy that might threaten Facebook if invented elsewhere"

One of these decentralized social networks that Facebook will need to keep an eye on is ONO, which runs as a DApp on the EOS platform. Founder and CEO Ke Xu said that although it would make sense in future for Facebook to pay "its influential creators with tokens" (as ONO does now), the much bigger challenge for Facebook would be how to compete with decentralized social networks, such as ONO, that allow users to "retain ownership over their own data" and give them full control over how their data gets used.

FInally, it is not difficult to think of even more applications for blockchain technology within Facebook's platform, for example it could use a blockchain-powered secure identity platform such as Civic for logins, or it could form a strategic partnership with Coinbase that would it to offer crypto trading within Facebook.

 

Featured Image Credit: Photo by "LoboStudioHamburg" via Pixabay; licensed "CC0"