Facebook Execs Reportedly Meet with Stellar While Pursuing Crypto Strategy
An unconfirmed report may shed new light on Facebook’s secretive crypto plans, with the social media firm reportedly meeting with representatives from cryptocurrency Stellar and looking for closer ties with American banks. Meanwhile, blockchain boss David Marcus has resigned from the board of Coinbase.
UPDATE: Facebook has denied this report and this article has been updated to reflect that.
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Stellar Gets Courted by Silicon Valley
Facebook’s crypto plans may slowly be coming into focus, and it appears the company could have the financial industry in their blue-tinted sights. Business Insider has published an unconfirmed report that David Marcus, head of Facebook’s blockchain team, met with startup Stellar, the crypto payment company that uses the lumens (XLM) digital currency.
The discussions reportedly centered around the creation of a new fork of Stellar – which is open source – that the social media company could engineer into an internal payment system. Such a move would save the Silicon Valley giant the effort of building a new blockchain protocol from scratch. Nothing has been confirmed, but XLM was up over six percent on the day accordingly when most coins were down at least two to three percent.
Facebook has denied the report, telling Cheddar that, ““We are not engaged in any discussions with Stellar, and we are not considering building on their technology.”
Key Exec Steps Down from Coinbase Board While Facebook Talks to Banks
In related news, CoinDesk reported that Marcus is stepping down from the board of directors of Coinbase, which he had joined in December 2017. He named his blockchain work at Facebook as the reason for his departure. It’s a move that could be seen as a further sign that Facebook may no longer view Coinbase as a partner, but rather as a competitor.
Another report from the Wall Street Journal earlier this week said that Facebook was in talks with American banks such as JPMorgan Chase, Citigroup, and Wells Fargo to allow users to link their financial accounts to Facebook. The WSJ said that Facebook had proposed to the banks that they share financial data, such as card transactions and checking-account balances.
Facebook reportedly wants to use the data for customer service purposes and not for advertising, however unlikely that might sound. The company was also interested in getting users to spend more time on its Messenger app, which it has already integrated payments into. Facebook may be considering giving its users the ability to contact their bank’s help desk (or help bot, as the case may be) directly through the popular chat app.
However, the talks have stalled on issues related to data privacy, as Facebook has repeatedly failed to protect its users’ data. One bank reportedly walked away from further negotiations. But getting direct access to Facebook’s huge user base of around 2.2 billion monthly active users may be too tempting for the banks to pass up. WhatsApp, which is also owned by Facebook and boasts at least 1.5 billion users, would also likely figure into the plans.
Looking East for Inspiration?
Taken together, the reports further fuel speculation that Facebook is looking to integrate payments more deeply into its social media and chat apps and move into turf currently controlled by financial firms. The company may be cribbing notes from China’s WeChat, which integrates messaging, social media, and payment services into a so-called “super app.” In 2016, Facebook hired Dan Grover, who had previously worked as a product manager at WeChat.
With over 1 billion monthly active users, WeChat allows users to connect their bank accounts and send and receive money with others on the network, as well as make payments to all kinds of businesses. It is owned by Shenzhen-based Tencent, a holding conglomerate that owns businesses in technology, social media, venture capital, and gaming.
Facebook enabled payments between friends on Messenger in the US in 2015, and added support for British pounds and euros last year. However, it lacks the ability to make payments to businesses, so users can’t hire an Uber from Messenger, like a WeChat user could with the equivalent Chinese app.
Yet it’s unclear if crypto and blockchain will actually fit into Facebook’s master plan. WeChat doesn’t make use of a blockchain system, instead relying on centralized servers. The success of any Facebook attempt at a similar system remains to be seen, as the company is coming under increased criticism as a result of its mismanagement and multiple data scandals. Public pressure is less of a problem for WeChat, as Chinese users are accustomed to having few privacy rights to begin with.
Have your say. Do you think the social media powerhouse’s look toward crypto is a good or bad thing? Let us know in the comments section below.
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