Facebook’s Blockchain Move Could Checkmate the Internet
Op-ed
Facebook’s Blockchain Move Could Checkmate the Internet
03.06.2019

Here’s some old news for its billions of users worldwide—Facebook is polarizing.

But I don’t just mean the deep political divides and filter bubbles inherent to the social platform—I mean our emotional relationship with Facebook itself. It has managed to significantly scale social interaction and global communication, while simultaneously monetizing it to an obscene degree. Facebook has created engaging products and vibrant communities, but its unquenchable compulsion to collect personal data is matched only by its complete disregard for protecting it. On an individual level, I am grateful to Facebook for making many of my friendships and experiences possible, but I am terrified of its ever-expanding influence.

This love-hate relationship with Facebook seems to be matched by Facebook employees themselves, including the many former founders who have parted ways with Mark Zuckerberg in fear of how their own creations were used. It’s unclear how many checks and balances remain on Facebook’s insatiable growth mandate, once internally described as a “fucking land grab,” or its rapacious business model and tactics.

Tor Bair

But now, some new news: Facebook is seriously considering blockchain. David Marcus, a payments expert formerly of PayPal and Coinbase, leads its team exploring potential applications of the technology to Facebook’s own operations. Very recently at Harvard Law, Zuckerberg indicated his interest in using blockchain beyond cryptocurrency and payments, possibly for data sharing or identity.

These kinds of announcements tend to cause massive waves: when Facebook sneezes, the whole world can catch a cold. Acceptance of this nascent technology by one of the largest companies in the world can signal its impending global adoption. But our uneasy relationship with Facebook requires us to ask, yet again—would that be a good thing, or very, very bad?

To answer this, we need to first look at where blockchain could have short-term and long-term utility for Facebook. Then we can understand what the limitations of these implementations would be. And then finally we can see how these applications might impact users and how the cause of internet decentralization could be affected.

Without privacy protections, a Facebook cryptocurrency would compete more with Venmo than bitcoin.

As they are “decentralized” and “auditable,” blockchains are often hailed as a panacea for all the ills of our over-centralized world. This instinct is not wrongmany problems are indeed caused by the monopolist tendencies of big tech and a lack of accountability. The over-concentration of Facebook’s power and its lack of user data protections directly led to the Cambridge Analytica scandal.

However, blockchains have their own challenges. And unfortunately, one of the largest is privacy. Storing data on the blockchain is public by design, meaning that transaction histories are traceable, balances knowable, and user data exposed. As Ian Miers of Zcash once said, using blockchain for recording payments is “like Twitter for your bank account.” So without privacy protections, a Facebook cryptocurrency (I lean towards the term “Facebucks”) would compete more with Venmo than bitcoin—a potentially lucrative coup for Facebook’s payments business, but an extension of what is already a privacy nightmare for users.

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What about using blockchain for identity? It’s not surprising to see Facebook’s interest, since its goal has been to link your identity across as many platforms as possible so that you can be more effectively monetized. When an address is also connected to a social account or ID of any kind, you immediately create a connection between your real identity and your on-chain behavior. This on-chain data is a potential treasure trove of sensitive data for anyone who cares to look—and Facebook and its customers (third-party applications) certainly care.

Some sort of decentralized data-control application could be more in the interest of users. What Zuckerberg described at Harvard Law evokes 3Box’s existing “Spaces” project—app-specific private data storage. In this paradigm, users grant access to their off-chain data only to specific applications. So, instead of Uber storing all your data, you allow Uber to access it only when required. By placing more control in the hands of users, this solution is more democratic and decentralized—especially if users are paid for their data. Similarly, Facebook could build on top of a decentralized protocol like Enigma—a secure computation network that allows user data to be processed by independent nodes around the world while keeping the data itself encrypted (Enigma is my employer).

If Facebook cannot embrace the ethos of decentralization, we must continue to hope that decentralization can displace Facebook.

But why would Facebook actually embrace these user-friendly technologies? A realistic first assumption would be: If it disrupts Facebook’s business model (highly centralized around advertising revenue, especially on mobile), it won’t happen. We can imagine Facebook instead implementing a “decentralized” platform where individual users must provide consent for the use of their information by third party apps, but Facebook itself still collects all the money from these applications. And what will prevent third party applications from storing and redistributing that user data? Should users really be responsible for maintaining their own access-control settings? What would the default privacy settings be?

We must proceed with caution. Facebook’s future use of decentralized technologies may just be “security theater”—supposedly for the benefit of users, but instead further cementing Facebook’s centralized control. A native Facebook cryptocurrency puts the company on even footing with our largest governments. As builders in the decentralization space, we should stop short of celebrating Facebook’s interest in our nascent technologies. In fact, it could serve as a chilling reminder that the tools we build for liberation can easily become tools of oppression.

There are many ways that Facebook can use blockchain, but all that matters is this: Will they be good for users or society at large? Will Facebook actually decentralize elements of its platform and willingly cede any control? Or will blockchain become just another weapon with which Facebook achieves and maintains world domination?

Time—and Zuck—will tell. But if Facebook cannot embrace the ethos of decentralization, we must continue to hope that decentralization can displace Facebook.

Tor Bair is head of growth at Enigma, a decentralized protocol for secure data computation, and previously worked as a derivatives trader and data scientist. He writes and speaks frequently about decentralization and social networks.