Meta is working on the construction of the metaverse, this parallel universe of virtual worlds accessible in augmented and virtual reality, which requires a whole infrastructure, including currencies. According to the FT, these tokens were nicknamed “Zuck Bucks” (“Zuck’s dollars”, short for Mark Zuckerberg) by employees. These are digital tokens and not a cryptocurrency registered on a blockchain. Other NFTs and “social tokens” projects are also underway. The founder of Twitter seems delighted to see Meta embark on the adventure.
In June 2019, Facebook officially launched Libra, a cryptocurrency that is supposed to make buying goods or sending money as easy as an instant message. By attacking the field of cryptocurrencies, Facebook has set itself a major challenge, as it itself is the subject of a serious crisis of confidence after a series of scandals around its management of personal data.
Libra was presented as a cryptocurrency freed from states, central banks and the traditional financial system. A universal and decentralized currency, supported by the largest social network in the world, supported by major payment players (PayPal, Visa, MasterCard, etc.), accessible — also — to those who do not have access to banks.
However, the obstacles got higher and higher; in the wake of scandals splattering Facebook, fears of regulators who demanded guarantees on the source of funds, financial stability or the protection of personal data, some members have left the ship. Seven of the most important members of the Libra project, including PayPal, Stripe, Visa, eBay and Mastercard, have withdrawn from the project amid statements from financial regulators in many countries.
The end of the tunnel seemed further and further away for Facebook; the launch date was moving further and further away from the initial forecasts. Also, to breathe new life into itself, Libra has tried to prove to the public that the association would like to distance itself as much as possible from the suspicious look given to Facebook as to its entry into this industry. Libra therefore decided in November 2020 to change its baptismal name.
In a blog post, she argued:
“The Libra Association announces the adoption of a new name and the recruitment of key executives, reinforcing its organizational independence. Now transitioning to the name “Diem”, which marks a new day for the project, Association Diem will continue to pursue a mission of building a safe, secure and compliant payment system that empowers people and businesses around the world. The Association has worked to ensure that the project is designed to meet regulatory expectations, in line with the Association’s guiding principles of innovation, inclusion and integrity”.
“The Diem Project will provide a simple platform for fintech innovation to thrive and enable consumers and businesses to conduct instant, low-cost, and highly secure transactions,” said Stuart Levey, CEO of Diem Association. “We are committed to doing so in a way that promotes financial inclusion – expanding access to those who need it most and simultaneously protecting the integrity of the financial system by deterring and detecting illicit behavior. We are delighted to introduce Diem – a new name that marks the growing maturity and independence of the project”.
Despite his best efforts and strategies, Diem was unsuccessful and was forced to sell his assets to Silvergate.
Here are the words of Stuart Levey:
“From the outset, Project Diem focused on harnessing the benefits of blockchain technology to design a better and more inclusive payment system. The members of Association Diem and our exceptional team have pursued this vision with determination and perseverance, driven by the desire to provide substantial benefits to consumers and businesses, as well as a payment solution for those who are currently underserved. or totally excluded from the traditional financial system.
“We are proud of the work accomplished by the Association, our partners and our team. This has included building and testing a blockchain-based payment system with state-of-the-art controls to protect consumers and fight financial crime, which is supposed to be safe for people making ordinary everyday payments.
“One of our top priorities when designing the Diem payment network was to put in place controls to protect it from abuse by illicit actors. We have responded to this concern in a way that has never been seen before in the industry, by implementing numerous controls recognized as innovative by regulators. Among those controls was a ban on anonymous transactions, which pose both sanctions-busting and money-laundering risks.
“As we undertook this effort, we actively sought feedback from governments and regulators around the world, and the project has evolved and improved significantly as a result. In the United States, a high-level regulator informed us that Diem was the best-designed stablecoin project the US government had seen.
“We are pleased that the subsequent Stablecoin report released by the President’s Financial Markets Task Force has validated many of Diem’s core design features. These features not only address the risks of issuing a stablecoin, but also the risks associated with transferring stablecoins between parties.
“While we gave positive feedback on the network design, it was nonetheless clear from our dialogue with federal regulators that the project could not proceed. Accordingly, the best course of action was to sell the Diem Group assets, as we did today at Silvergate.”
Rebelote for Facebook in this area?
Meta may have ditched its Diem cryptocurrency, but the company is still exploring financial products, according to a new report from the Financial Times. Facebook and Instagram’s parent company is said to have a few products in the works, including virtual currency that company employees have apparently taken to calling “Zuck Bucks.”
Zuck Bucks, which refers to the name of Meta founder, chairman and CEO Mark Zuckerberg, is “unlikely” to be a cryptocurrency. “Instead, Meta is looking at introducing in-app tokens that would be centrally controlled by the company, similar to those used in gaming apps such as the Robux currency in the popular children’s game. Roblox,” according to the Financial Times. Roblox has built a huge business selling Robux, and Meta might try to emulate some of that success on its own platforms. As another illustration we can also cite the Fortnite V-Bucks.
Meta hasn’t fully distanced itself from blockchain products, as the company also plans to post and share NFTs on Facebook. The FT says the company plans to launch a pilot project to do just that in mid-May, according to a memo, and soon after Meta will test allowing “membership in Facebook groups based on property of NFT and another to mint (create)” of NFT. The FT previously reported on some of Meta’s NFT plans for Facebook and Instagram in January, and Zuckerberg announced in March that NFTs would be coming to Instagram.
There were rumors that this was happening. Last year, Instagram manager Adam Mosseri said the team was “actively exploring NFTs” but had made no real announcements. In January, a report circulated that Facebook and Instagram teams were working on NFT integrations. The report mentions that there has been progress on features allowing you to use an NFT as a profile and create NFTs on the platform and discussions on creating a marketplace.
But it’s still unclear exactly what it would mean to mint an NFT on Instagram. Could you sell a popular message as an NFT, for example? Or create NFTs that act as passes for people to see specific stories*? Meta hasn’t said anything about that yet, though it looks like minting abilities won’t come until later. The idea of a market seems to be even more remote, given that in the interview with South By Soutwest, Mark Zuckerberg did not allude to it directly, although the massive valuation of sites like OpenSea probably makes one tempting business venture.
Additionally, Meta is exploring “social tokens” or “reputation tokens,” which “could be issued as rewards for meaningful contributions in Facebook groups, for example,” the FT reports. The company is also apparently looking into traditional financial services such as small business loans.
“We have no updates to share today,” Meta spokeswoman Lauren Dickson said in a statement. “We are constantly considering new product innovations for individuals, businesses and creators. As a company, we are focused on building for the metaverse and that includes what payments and financial services could look like.”
While waiting to see how (and especially if) these plans come to fruition, one public figure seems to be a big fan of Facebook’s plans: former Twitter CEO Jack Dorsey.
Diversify sources of revenue
Meta seeks to diversify its sources of revenue beyond personalized and targeted advertising, because this economic model is called into question, in particular by regulators concerned with better respecting users’ personal data. In early February, Facebook told shareholders it expected a $10 billion revenue shortfall because of privacy features on iOS.
On a call with investors to comment on the company’s quarterly results and discuss projections, Sheryl Sandberg, the company’s chief operating officer, said:
“First, the advertisements. Like others in our industry, we have faced headwinds following Apple’s iOS changes. As we described last quarter, Apple created two challenges for advertisers. The first is that our ad targeting accuracy has decreased, which has increased the cost of results. The other is that measuring those outcomes has become more difficult.”
Facebook CFO David Wehner clarified that the $10 billion in revenue impact this year was only an estimate: “We’re just estimating what we think is the overall impact of the cumulative iOS changes on 2022 revenue forecast,” Wehner said. “If you aggregate the changes we’re seeing on iOS, that’s the order of magnitude. We cannot be specific about this. It is an estimate”.
Rachel Maga is a technology journalist currently working at Globe Live Media agency. She has been in the Technology Journalism field for over 5 years now. Her life’s biggest milestone is the inside tour of Tesla Industries, which was gifted to her by the legend Elon Musk himself.