It has been a turbulent ride for Facebook’s shareholders in recent days. Measured in volatility, it’s almost like the price of Facebook’s shares behave like a cryptocurrency. And the times are changing. That Facebook, or any other giant company for that matter, actually would create its own cryptocurrency is no longer completely unthinkable.
But would it really be a cryptocurrency? Should there really be a blockchain? I would like to briefly go over why I’m quite sure that Facebook, how popular their “facecoin” might ever be, never could compete with real cryptocurrencies like bitcoin.
Facebook cannot use the blockchain
Firstly, I would like to say that Facebook, in order to create this facecoin, does not need the blockchain. It’s good enough with a regular database. I would even go so far as to say that they would not even get to use a blockchain.
Should Facebook use a blockchain for their facecoin, they would have to accept that the facecoin then is used by anyone to anything. Both legal and illegal. This is because the innovation with a blockchain is basically to create free and open value transfer without a key central player that can control it all. Such an innovation, if you want to use it, requires that you, like the bitcoin blockchain, also stand beyond the law, which Facebook definitely does not.
“That Facebook would create its own cryptocurrency is no longer completely unthinkable”
But why can’t Facebook just use a regular database? Sure, and if they are to launch their own currency, they should do that in my opinion. It can certainly be incredibly popular with millions and millions of users worldwide.
The innovation with cryptocurrencies, with bitcoin, with the blockchain, is not that you can create your own digital currency. We have been able to do that since we first invented the database. Who has not collected World of Warcraft gold or diamonds and rubies from the latest favorite mobile game? Digital money, albeit slightly more niche.
What distinguishes these currencies from blockchain based currencies is that they are 1) controlled by companies and 2) in the long run, therefore, are controlled by the state. They are not neutral networks for value transfer as bitcoin, but rather they are just databases with numbers that can be adjusted if there is just the slightest discontent from higher powers.
Bitcoin has no headquarters
In short, my argument here is that the only way for Facebook to compete with bitcoin is to launch facecoin on a blockchain. But should they do that, the police would come and knock on the door in moments.
Bitcoin does not have a headquarter, CEO or doors to knock on. Therefore, no centralized organizations, companies, banks or central banks, can ever compete with it.
Christoffer De Geer,
Vice president at the Swedish bitcoin exchange Btcx
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