On December 20, Bloomberg reported that Facebook is creating a stablecoin for WhatsApp users. Reportedly, the cryptocurrency will be used for money transfers made within the messaging app and will focus on the Indian market.
The move provides a curious juxtaposition for the social media giant, which banned cryptocurrency advertising through its network in January and then partially reversed in June.
Here's how the Facebook relationship developed with cryptocurrencies and blockchains in 2018 – overall, it was a fragmented road.
January: Zuckerberg is confident about cryptography; Facebook prohibits crypto advertising
On January 4, Mark Zuckerberg presented his personal challenge for 2018: to adjust Facebook. While this year brought even more problems for the social media giant – Zuckerberg's data privacy statement before the US Congress is a prime example – the Facebook CEO seemed optimistic about the company's future. # 39; early 2018. Interestingly, he cited cryptography and cryptocurrencies as potential ways to empower users in his Facebook post:
"There are important counter-trends to this – like cryptography and cryptocurrency – that take power from centralized systems and put it in people's hands. […] I'm interested in studying and analyzing the positive and negative aspects of these technologies and the best way to use them in our services ".
Despite Zuckerberg's bullish statement on January 30, Facebook announced it will ban advertising that uses "misleading or deceptive promotional practices", specifically referring to initial coin offerings (ICOs) and cryptocurrencies. Rob Leathern, director of product management at Facebook, explained the company's decision in a blog post:
"We want people to continue to discover and learn about new products and services through Facebook ads without fear of scams or deception.That said, there are many companies that advertise binary options, Ico and cryptocurrencies that currently do not operate in good faith."
The ban was "intentionally broad", which means that the social media company has decided to ban all cryptocurrency ads on its platforms (notably Facebook, Instagram and public networks) and then find out how to identify those that are actually " misleading. " However, Leathern also stated that the company intends to "revisit this policy and how [they] enforce it as [their] the signals improve. "
Facebook's move seemed to coincide with the public announcement of the US Securities and Exchange Commission (SEC) related to investment and ICA related to cryptography, which was published at the beginning of December 2017. In that statement, the SEC president Jay Clayton has suggested that there is a growing trend for "fraud and manipulation" in the cryptocurrency and ICO markets due to their increasing popularity.
It is important to underline that, by extending its encrypted advertising ban, Facebook set a precedent for other high-tech companies, such as Google and Twitter, in the end they followed the example. There was also a short-term effect: the general ban on Facebook was followed by a sharp drop in Bitcoin (BTC) prices, from $ 11,200 to $ 8,800 in the few days following the announcement of the decision.
February: Facebook has no intention to encrypt, says its Messaging manager
On February 2, CNBC published an interview with David Marcus, Messenger's head of Facebook and a member of the board of Coinbase, who also admitted having a "long time" interest in cryptocurrencies.
Marcus told the news that Crypto will not appear on its platform soon, citing cost and scalability problems:
"Payments with Crypto are now only very expensive, super slow, so the various communities that manage the different blockchains and the different resources have to solve all the problems, and then when we get there one day, maybe we'll do something"
During the interview, Marcus also defended Facebook's decision to ban all crypto-related ads:
"We want to protect the community.This is the number one job.All legitimate people in the encrypted world with whom I spoke have thanked me at least for what we have just done with that move. […] The reality is that the vast majority of these ads were a scam and we can not allow fraud to exist on our platform. "
However, he noted that the policy could be revised "once the industry will self-regulate much better and you will have better legit products that want to be advertised on the platform".
May: Facebook forms its Blockchain team; voices on the encryption of social media emerge
On May 8, Facebook unveiled its blockchain plans, as David Marcus announced that he will direct the group focused on technology assembled within the social networking service company.
"I'm creating a small group to explore how to make the most of blockchain on Facebook, starting from scratch," Marcus said on his personal page.
A few days later, on May 11, the journalist Cheddar reported that the release on social media is "very serious" on the launch of his own cryptocurrency. The anonymous sources of Cheddar "familiar with Facebook's plans" have reported that Facebook is "specifically interested in creating its own digital token" for its 2 billion users.
The company did not respond to the cryptocurrency entries, limiting their statement to a brief comment on the newly formed blockchain team:
"Like many other companies, Facebook is exploring ways to harness the power of blockchain technology. This new small team is exploring many different applications. We have nothing else to share."
June: Facebook backpop on the announcement of cryptographic announcements
On June 26, Facebook made a little of a turnaround compared to its views on the crypto. The social media giant has updated its policies to once again allow cryptocurrency advertising on the platform, but has maintained the ban on ICOs.
In the accompanying announcement, Facebook claimed to have examined the best way to "refine" its general prohibition of cryptographic announcements "in recent months" in order to "allow certain ads to be published while working to ensure that they "sure. "
The "Policy on products and services banned" Facebook magazine stated:
"Starting from June 26th, we will do it […] allow advertisements that promote cryptocurrency and related content from pre-approved advertisers. But we will continue to ban ads promoting binary options and initial coin offerings. "
However, the updated policy required advertisers to submit an application so that Facebook could evaluate their qualification to serve encrypted ads. In particular, applicants were invited to include "any licenses they have obtained, whether they are traded on a public stock exchange, and other relevant public backgrounds on their business." Ultimately, Facebook said that "not everyone who wants to advertise will be able to do so."
July: the director of engineering of Facebook moves to the blockchain team
On July 6, Evan Cheng, technical director of Facebook for three years, moved to the same position in the company's blockchain group, led by David Marcus.
The software engineer updated his LinkedIn profile to reflect the newly acquired position, and the change was also confirmed by Facebook.
Prior to this, Cheng was in charge of programming languages and the runtimes division on Facebook for about three years. Prior to joining the social media company, Cheng worked for back-end engineering for the Apple technology giant for nearly 10 years.
August: Marcus leaves Coinbase to avoid conflicts of interest; Facebook denies having worked with Stellar
On 10 August, Marcus announced that he would leave his position on the board of Coinbase, obtained in December 2017:
"Thanks to the new group I'm installing on Facebook near Blockchain, I decided it was appropriate for me to resign from the Coinbase committee. […] I was deeply impressed by the talent and execution that the team has shown during my tenure, and I wish the team all the success it deserves to go on ".
According to a Facebook spokesperson cited by CNBC, the move was "to avoid the appearance of conflict, rather than because of a real conflict".
Also on August 10, Business Insider reported that Facebook and Stellar, a decentralized protocol for cross-border digital currency for legal currency transfers, had considered a potential partnership to build a Facebook variant of the stellar blockchain. The move "could shed light on Facebook's ambitions to push towards finance and hire big banks," the report suggests.
However, Facebook has promptly refused to enter into talks with the cryptocurrency firm Stellar. The spokesman for the social media giant reported to Cheddar that Facebook "was not involved in discussions with Stellar, e [was] not considering building on their technology "the same day.
December: Facebook's blockchain arm is on a recruitment spree; voices on a surface of stablecoin of WhatsApp
In December, Cointelegraph noted the assumption folly of Facebook's blockchain arm, as the social media company listed at least five new blockchain-related positions on its career page in three weeks, most of which were closed at the time of the press.
The only remaining position that mentions the blockchain is for a business development lead, for which potential applicants must have a "deep understanding of the product and blockchain technology" in order to "inform and influence [Facebook’s] product roadmap and support and execution on product plans. "
As for Cheddar, by December 13, Facebook's blockchain department, once ranked by its chief David Marcus as "small", had nearly 40 employees. The Facebook job announcements say that the "ultimate goal of the blockchain group is to help billions of people with access to things they do not have now", which "could be things like fair financial services, new ways to save or new ways of share information ".
Furthermore, in December, the rumors about Facebook's cryptocurrency reignited once again. First, Cheddar cited a source who said that "Facebook employees have launched the idea of creating a decentralized digital currency" during a private dinner that the company hosted during an unencrypted cryptographic conference.
Furthermore, on 21 December, Bloomberg followed a more detailed report, stating that the social media company is creating a cryptocurrency for users of the messaging service WhatsApp, which Facebook obtained for $ 19 billion in 2014.
The token will allow users to make money transfers within the messaging app and will focus on the remittance market in India, where WhatsApp has more than 200 million users. According to World Bank data, in 2017 the country received about $ 69 billion of foreign remittances, equal to 2.8% of Indian GDP.
More specifically, Bloomberg sources said that Facebook is developing a stablecoin. However, it is not likely to be released soon, as reportedly, the social media company is still calculating what its stablecoin will be.
Regarding public comments, Facebook has forwarded the same statement since May, when the first rumors about their cryptography emerged. It reads: "Like many other companies, Facebook is exploring ways to harness the power of blockchain technology. This new small team is exploring many different applications. We have nothing else to share."