Social Media Giants and Blockchain
Why Social Media Companies Should Embrace Blockchain
This might be great for users, but companies could benefit even more.
Blockchain makes it possible to securely store and transfer digital information without the need for centralized servers. Blockchain isn’t limited to monetary transactions, and many companies are employing it to create all kinds of decentralized applications in various domains.
To understand how blockchain can transform social media, consider how a centralized service like Facebook works. Under its current architecture, Facebook is the sole proprietor of all its users’ data, including profile data, connections, posts, interactions, preferences, chat logs, device information, and geolocations.
The sheer amount of information Facebook has about its users enables it to run a very profitable ad service—its main source of income. Facebook is also in exclusive control of the software that runs on its platform.
Facebook users, on the other hand, have practically no ownership of their data or control over the content they consume. They get none of the money that’s made from their data.
Facebook CEO Mark Zuckerberg mentioned “cryptocurrency” and “decentralization” in his New Year’s Resolution post, but without giving away details.
Instead of centralized servers, blockchain-based social media networks store users’ data on decentralized storage networks and encrypt it so that only users can access it.
In this model, advertisers pay users (and not the company that owns the platform) in cryptocurrency to gain access to their data and display relevant ads to them. Users’ ownership of data would also let them port their information and digital profiles to other applications and networks, without seeking permission from anyone.
Despite the clear benefits of decentralizing social media networks, I don’t think Facebook would be willing to give up the immensely profitable empire it has built on user data to give power back to users. But just the idea of endorsing cryptocurrencies and blockchain might make Facebook even richer than it already is. Large brands and established companies have reaped huge benefits simply by using blockchain terminology.
In examining the landscape, when a startup professes to decentralize some aspect of the internet with blockchain and cryptocurrencies, I take it with a grain of salt. When an established company makes the same claim, I take it with a whole bucket.