January 22, 20184min550

FACEBOOK is coming to cryptocurrency world

Mark Zuckerberg, worth $71 billion at just 33, has done rather well by Facebook’s centrally managed system.

Over the past decade and a half, the social media behemoth’s closed-source algorithm has quietly manipulated its millions of users’ news feeds to capture maximum ad dollars and steer them all to Zuck and his shareholders.

So, why’d Zuck do it?

The prevailing wisdom is he wants Washington off his back.

The Russian political investigation has shone a light on how Facebook uses its proprietary, closed-source algorithm, the core instrument of its centralized power, to deliberately package “like audiences” for advertisers.

More important than allegations that Russian operatives used Facebook to spread disinformation and influence U.S. elections is the fact that Facebook has become so powerful a force that this kind of meddling is possible.

What’s more, its algorithm effectively encourages it, if unwittingly. It naturally creates echo chambers of commonly minded people who will happily re-share and redistribute content they agree with. They will create a sticky audience to sell to advertisers.

The rise and fall of MySpace, the once ubiquitous platform that Facebook displaced, is a reminder that the latter’s dominance is not guaranteed.

Possible birth of FBCOIN

The resolution of this dilemma may lay with the very technology Zuckerberg has vowed to explore: a crypto-token, call it FBCoin.

To be clear, I have no inside knowledge on Facebook’s plans. This is pure speculation. But, given the company’s past forays, later abandoned, into digital money and payments, I think it’s worth speculating on, especially with the context the CEO has laid out.

It also offers a window into how the center of gravity might move from tokens produced by decentralized app producers to those of established enterprises – for better or worse.

Here’s an admittedly very rudimentary model. Facebook would pre-mine a large pool of tokens, distributing a significant number to shareholders and holding the rest in reserve to distribute to users based on some reliable metric of the traffic their original content generates. Facebook would then mandate that on-platform advertising must be paid for with those tokens. A market would then emerge, into which users could sell, giving them a way to monetize their content creation.

The value of the tokens would float against the dollar, based on demand and supply.

This, I believe, is how Facebook could best resolve its dilemma, giving both shareholders and users a valuable stake in the future growth of its platform under a more decentralized set of rules.

If Zuckerberg really wants to experiment with decentralized systems, a publicly issued crypto-token would be hell of a way to do it.

Join us Mark!

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