Like the Godfather, Facebook wants to make you an offer you can’t refuse.
Spend Facebook coins on its site, and you’ll earn rewards in the form of more Facebook coins.
Not good enough? Then how about this…
You’ll get more Facebook coins just by viewing ads or interacting with other content on its site.
Here’s the kicker…
You don’t even have to be on Facebook to earn its coins. When you visit your favorite online retailer and go to the checkout counter, you can opt to pay in Facebook coins and earn even more coins.
If you love Facebook… if you trust Facebook… if you don’t really mind the lack of privacy…
Then you’re probably going to love Facebook’s new cryptocurrency and all it has to offer.
But just know this: This is not a solution. It’s a bribe.
Facebook’s new coin will address none of its major flaws. It’s still in charge. It still collects a ton of data on you. It still bombards you with ads. And there’s nothing you can do about it.
And in return?
Facebook is offering you a tiny sliver of its action. Congrats.
I don’t know the exact size of this sliver. Facebook is keeping a lot of the details to itself. It will be in the form of a loyalty rewards system. But if it follows typical product loyalty systems, I guarantee it’ll be a fractional amount.
Facebook’s plans – which were shrouded in secrecy until a few days ago – have already been called “revolutionary” by CNN.
That’s hardly the case. The only threat Facebook’s coin poses is to other stablecoins and global credit card companies. It’s not a threat to decentralized cryptocurrencies.
Because of Facebook’s sheer size – 2 billion users and growing – practically anything it does is potentially needle-moving. But needle-moving and revolutionary are not the same thing.
Facebook Coin vs. Basic Attention Token
To show just how unremarkable Facebook’s coin will be, let’s compare it with a coin that’s already operating with an explicitly disruptive and revolutionary mission: Brave’s basic attention token (BAT).
The Brave team believes Facebook and other social media and search sites are part of an increasingly flawed and corrupt digital industry, where trackers are encouraged and a lack of privacy is tolerated.
So the Brave browser automatically blocks trackers and ads that learn about users without their knowledge. Brave monitors user activity (while maintaining their privacy) and rewards users with BATs. The browser has also been testing a limited ad option where users can earn BATs through viewing ads.
Here are some of the key differences between Facebook’s coin and Brave’s BAT…
Centralized vs. Decentralized. This is the biggest difference. Facebook will play just as large a role with its digital coin rewards system as it does with any of its other products. Its blockchain-based coin technology may be faster and more powerful than traditional payments, but it would still be centralized.
Brave’s BAT is a public, open-source token using the Ethereum blockchain. And it’s basically decentralized.
Privacy Optionality. Facebook’s new cryptocurrency makes payments faster and easier, but it doesn’t attack Facebook’s serious privacy problem. Facebook is considering using its coin to reward users who click on ads. That could lead to better ad targeting, but it doesn’t eliminate ads. Brave, on the other hand, gives users the choice of no ads or limited ads (coupled with generous rewards).
Distribution of Rewards. As I said, the Facebook coin rewards are likely a tiny fraction of Facebook’s ad revenue. But Brave users who opt to receive ads will get 70% of the revenue generated by the ads they see (in the form of BATs). Users, in turn, use their BATs to reward content creators. Brave plans to eventually let users exchange BATs for rewards like hotel rooms and restaurant vouchers.
Data Collection. If you don’t know this, you probably should. Facebook collects every message and file you’ve ever sent or received, and all the contacts in your phone. Earlier this year, The Wall Street Journal found that Facebook was collecting data from smartphone users’ other apps without their consent.
Brave monitors how users spend their time on its browser in a way that the users’ private data never leaves their devices, guaranteeing privacy.
At the end of the day, I can’t see anything revolutionary about Facebook’s centralized digital currency system. If successful, it would simply reinforce the status quo, namely Facebook’s dominant position in the social media space. It’s not a threat to either bitcoin or Brave’s BAT, which are true decentralized cryptocurrencies with clearly disruptive missions.
Invest early and well,
Co-Founder, Early Investing