Facebook is inching closer to threatening traditional processors and financial institutions with its own digital currency by adding staff with expertise in the underlying technology.
Facebook has hired staff from Chainspace, a blockchain startup staffed by researchers at University College in London. The Chainspace deal, an acqui-hire, was first reported by Cheddar. Chainspace's site said it has "moved on" to something new.
The move is sure to spark speculation that Facebook will issue its own cryptocurrency, particularly since it comes just a couple of months after Facebook reportedly started a cryptocurrency-linked remittance project in India and began development on a stablecoin, which often supports cryptocurrency payments by shielding merchants and buyers from shifts in the market value of cryptocurrencies.
People are seen as silhouettes as they check mobile devices whilst standing against an illuminated wall bearing Facebook Inc.s logo in this arranged photograph in London, U.K., on Wednesday, Dec. 23, 2015. Facebook Inc.s WhatsApp messaging service, with more than 100 million local users, is the most-used app in Brazil, according to an Ibope poll published on Dec. 15. Photographer: Chris Ratcliffe/Bloomberg
Chris Ratcliffe/Bloomberg
In a statement, Facebook said: “Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology. This new small team is exploring many different applications. We don’t have anything further to share.”
Chainspace was building a system to decentralize smart contracts, or an automatic trigger for payments when certain conditions are met. Smart contracts, which are technically not legal contracts, are often part of the code that underlies cryptocurrency transactions. Cheddar also reports Chainspace is developing nonpayment use cases for its blockchain.
Facebook in 2018 moved David Marcus from his post leading Messenger to another job heading Facebook's blockchain strategy. Marcus joined Facebook in 2014 after serving as president of PayPal, and came to Facebook as it was developing its "buy button" and other merchant-friendly features that can be accessed from within the social network.
Marcus' move within Facebook has been viewed as a prelude to Facebook building its own cryptocurrency, though retail and payment industry analysts say Facebook faces an uphill climb in building the merchant network needed to provide necessary scale.
Also, Facebook's own history with virtual currency is mixed. Its first digital currency, Facebook Credits, failed six years ago, and Facebook temporarily banned cryptocurrency advertising in 2018.
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