Could Facebook Revive the Blockchain Industry?

blockchain industry

Is a blockchain industry revival about to happen? Facebook’s newest acquisition signals that 2019 might be the year to finally invest in blockchain.

Investor momentum behind blockchain technology may finally be building up with the latest acquisition from Facebook Inc. (NASDAQ:FB). Facebook’s recent acquisition of Chainspace is its very first blockchain startup, after signaling that it would be ramping up its blockchain acquisitions this May, having announced a new, dedicated blockchain unit (headed by David Marcus, former president of PayPal). Specifically, this acquisition is an “acqui-hire,” which means that Facebook bought the company for the skills and expertise of the staff, who will now be collaborating directly with Facebook’s new blockchain division. Four of the five researchers behind the London-based Chainspace, which describes itself as a shared and decentralized “smart contracts” platform.

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The Chainspace team had designed the system to facilitate payments as well as other services through blockchain technology, which may hint at what the social network plans to do. It’s likely that Facebook’s blockchain/ cryptocurrency ambitions have just begun. Speculation has been flying since Facebook CEO Mark Zuckerberg said in his 2018 mission statement that he is interested in blockchain technology because of how it “decentralizes power.” Blockchain is a distributed ledger that allows every stakeholder in the system to track any type of digital transaction, without the control of a single institution. Similarly, cryptocurrency is a digital currency based on blockchain that operates independently of a central bank or authority, and uses cryptography for security.

While we’re still not sure what exactly Facebook plans to do, the tech giant did announce last year that it was looking into creating its own cryptocurrency (which some have dubbed “Facecoin”) that could potentially let its users make electronic payments. Facebook’s other possible uses for blockchain could include identity technology, micropayments for services and content creators, and banking apps—that is, if Facebook has ambitions to also disrupt the financial services industry. Currently, 40 people work in Facebook’s new blockchain division, and the aggressive hiring spree has shown zero signs of abating.

Yet, other tech giants haven’t exactly been standing still. In May of 2018, Inc. (NASDAQ:AMZN)’s cloud computing unit AWS announced that it would be partnering with startup Kaleido to make it easier for customers to put their services on the blockchain. There have also been rumors of an Amazon-launched cryptocurrency, after the Seattle-based ecommerce and cloud services behemoth registered a slate of crypto-related domain names. Meanwhile, Alphabet Inc. (NASDAQ:GOOGL) subsidiary Google said in March that it was working on blockchain-related technology to support its cloud business. Google co-founder Sergey Brin had admitted last May that the search company “failed to be on the bleeding edge” of blockchain, but it’s looking like it’s tasked its research division Google X to make up for some lost time.

Finally, Microsoft revealed plans last year to collaborate with the Decentralized Identity Foundation to solve challenges related to our personal data and identities. But they are just a few of many brands looking to get in on the action. Other corporations that have their own blockchain initiatives include HSBC (NYSE:HSBC), IBM (NYSE:IBM), Accenture, Deloitte and JP Morgan Chase & Co. (NYSE:JPM).

Facebook’s newest move is the first startup acquisition by any of the large tech giants, however. And it likely won’t be the last. The social network had previously held talks, which ultimately fell through, with a blockchain-based payments platform Algorand. Now that Facebook has showed its hand, its competitors may very well follow suit. That could mean a new round of acquisitions in 2019 from competitors and venture capital investors in the blockchain industry and blockchain startups could be in the offing. So the upshot here is that this year could very well be a turning point year for the blockchain industry.

Featured Image: DepositPhotos/ everythingposs