Facebook may soon begin exploring uses for cryptocurrency technology.
The company’s founder and CEO Mark Zuckerberg posted his annual personal memo on Thursday — mostly about being a better CEO — but one throwaway reference to cryptocurrency technology captured much of the media’s attention.
Writing about how the last year saw many people lose trust in social media and tech companies, Zuckerberg noted the growing importance of de-centralizing forces, like the rise of cryptocurrency.
“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.”
Some people who read the memo were quick to jump to the conclusion that Zuckerberg was referring to Bitcoin. That inspired breathless headlines (many of which have since been changed) speculating about Zuckerberg’s desire to integrate Bitcoin into Facebook.
As The Next Web pointed out, it’s misleading to use Bitcoin as a shorthand for cryptocurrency. There are many types of cryptocurrency technology, and Bitcoin is just one of them.
That said, it’s telling that Zuckerberg specifically called out cryptocurrency in his annual new year’s resolution post. When you look at the broader landscape of social media companies and messaging platforms, it makes perfect sense that Facebook would be paying very close attention to such technology.
First, consider that nearly 100 percent of Facebook’s revenue comes from online advertising, while other sources, like mobile gaming, have fallen in recent years. (And newer sources, like its virtual reality division Oculus, make up a tiny fraction of the company’s total revenue.)
These figures shouldn’t be all that surprising — the social network has long been one of the single most dominant players in digital advertising. Still, the company would be foolish not to pursue other meaningful revenue sources longterm.
Adopting some kind of cryptocurrency could be one way to do that. But rather than buying into one that’s already established, like Bitcoin, what might be more likely is Facebook creating its own coin.
There’s already precedence for such a move. Messaging app Kik, popular among teens, had its own initial coin offering (ICO) last year, raising nearly $100 million for Kin, its ethereum-based coin. Chinese social networks have also experimented with their own cryptocurrencies, despite the country’s efforts to crack down on the practice. As CNBC points out, having its own coin could help Facebook eventually catch up to Asian competitors like WeChat.
And while it’s far too soon to say how a Facebook token would work within the bigger social network, Messenger certainly seems like the first logical step. Using service like WeChat and Kik as blueprint, it’s not difficult to imagine how Facebook could choose to offer its own in-app currency to users.
Coincidentally, Facebook Messenger chief David Marcus recently joined the board of digital currency exchange Coinbase.
Either way, with Zuckerberg promising to “study” the issue with the same intensity he’s given his previous yearly challenges, it’s more likely than not we’ll hear from the CEO on cryptocurrencies again before the year is over.