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Facebook Inc, (NASDAQ: FB) has recently been in the news for all the wrong reasons – no thanks to revelations about its unholy alliance with Cambridge Analytica. In the last couple of weeks, Facebook has been enmeshed in a scandal of epic proportions after news broke that Mark Zuckerberg’s company was complicit in the how Cambridge Analytical misused the personal data of as much as 50 million Facebook users.
The scandal sparked a global outrage with calls to #DeleteFacebook and many people taking proactive actions to secure their privacy on social networks. The share price of Facebook’s stock has declined more than 17% since the news broke as the firm continues to make damage-control moves. The firm as postponed the reveal of its potentially iconic Smart Speakers, Mark Zuckerberg will appear before Congress to address the scandal, and Playboy has moved to delete its Facebook accounts.
As Facebook continues to weather the storm of the Cambridge Analytical scandal, the worst is far from over because another seemingly innocuous threat is gaining momentum in the background.
Blockchain could be a game-changer for Facebook and other social networks
What is blockchain? This is probably the most recurrent question people ask in discussions about blockchain technology or cryptocurrency. It is somewhat hard to get a singular all-inclusive definition of what blockchain is. However, blockchain is simply a decentralized network of computers that can be used for recording transactions in a verifiable, tamper-proof, and secure way. Blockchain is fundamentally secure by design and immune to modification of recorded data because it is practically impossible to edit data on any block without notifying all the nodes and changing the data in the other blocks.
Blockchain technology has shown impressive potential to trigger a massive disruption and an unprecedented paradigm shift in the global economic landscape. Bitcoin, the first application of blockchain technology has shown the world the potentials of a value-driven economy immune from the fiscal policies of governments.
Ethereum is changing the enterprise landscape by giving businesses the tools they need to create smart (self-executing) contracts. Other blockchains such as Monero, Ripple, Litecoin, and Stellar are also trying to solve some of the worlds biggest problems with blockchain.
Here’s how blockchain can change the game for social media firms
Social media networks such as Facebook, Twitter, Snapchat, and Instagram among others are great tools for connecting with friends and family, but they are by no means perfect. One of the ways blockchain technology can disrupt the social network industry is to birth alternative blockchain-based social networks that place a premium on the security and privacy of user data.
Facebook and other social media firms such as YouTube and Instagram thrive on collecting user data, getting their attention, and selling them advertisement. The fact that Facebook makes most of its money on ads means that it sometimes seeks user engagement at the expense of user happiness just to make ad impressions.
On a blockchain-backed social network, users don’t have to worry about the net negative impact of social media usage on their happiness. The fact that the network won’t be ad-driven will protect them from being overwhelmed with lots of unnecessary content in their news feeds.
Secondly, Facebook makes billions of dollars as ad revenue – revenue that comes from leveraging user-generated content on its platform; yet, users don’t get a dime of that money. People are essentially sharing their lives on Facebook to make Zuckerberg and his fellow shareholders richer. In Q4 2017, the firm reported earnings of $2.21 per share on revenue of $12.97 billion.
With the token economy that blockchain promotes, users of a blockchain-based social network can expect to get a share of the revenue that their content generates. You’ll probably earn some tokens for your membership on the platform, users will earn more tokens when they create and share original content, and users get to earn additional tokens if their content goes viral.
The token economy of a blockchain social network could also hasten the rate of adoption. For instance, a referral model where people earn token by referring friends to open an account could increase the churn rate from traditional social media platforms to a blockchain-based social network.
Nonetheless, it is doubtful that a blockchain-based social network will succeed in pushing the likes of Facebook and Instagram out of the market overnight. The current social media landscape is stratified along the demographics of age. The GenZ seem to be more in tune with Snapchat and Instagram, while millennials seem to be more comfortable with Facebook and Twitter. Hence, it will take some time (probably years) for people to become comfortable enough to ditch Facebook for the idea of a blockchain-based social network.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.