You need to read between the lines in recent articles that cover Facebooks founder and CEO Mark Zuckerberg comments about cryptocurrency. Zuckerberg and Facebook VP for Messaging Products, David Marcus also backs this claim, but he was recently added to the board of Coinbase a leading global cryptocurrency exchange.
Zuckerberg and Marcus claim that the future of global democratization and regulation of fake news will be in the use of blockchain technologies. Zuckerberg has been studying cryptocurrencies and hopes it can be used to help fix content management issues that Facebook must deal with on a daily basis.
Zuckerberg stated that “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. I’m interested in going deeper and studying the positive and negative aspects of these technologies, and how best to use them in our services.”
Personal Take: Zuckerberg found out that there is easy money to be made from the blockchain process. A blockchain is a software platform that sits on every peer’s PC, linking their CPU’s into one large processing machine. Every transaction is linked to many peers and will only be closed once a designated peer, a miner, has hashed (calculated) the transaction and authorized it. This allows multiple users to be a part of the transaction process, in Facebook’s case, the process of editing and authorizing information. The by-product of the blockchain is the “coin” or “payment” that a miner gets, in the form of an increment of cryptocurrency. Basically, a “long string of alphanumeric data” that make up a complex code that represents a part of a coin.
What Zuckerberg is telling us is that he intends to transfer Facebook onto a blockchain platform and then generate “Facebook-coin”, which is a grand way of saying, I am going to print myself some more money, because anyone that has my coin will trade it on an exchange for real money, giving me more value.
The only “democratization” that Facebook will give us when going to blockchain is by making themselves richer, but will also make a few more investors and miners richer on the way, sort of spreading the wealth through blockchain technology “coinage.”
Personal Take: I expect to hear Uber, Didi, Apple, Amazon, Microsoft, and Google coming out with similar statements soon. After all, if you have a billion customers in your database, wouldn’t you want to increase your wealth with a personal currency? As the saying goes, “money attracts money”, and in the case of cryptocurrencies, big money attracts even bigger money.
Truth be told, the cryptocurrency baby will grow, bubble values will burst, national banks will create legal tender based crypto-coins for transactions. The CCEX (Cryptocurrency Exchanges) will grow, and while these coins will never become real currencies, they will gain a regulated asset status, and their exchange rate volatility will slowly evolve to SEC style trading.