Meta has drawn up plans to introduce virtual coins, tokens and lending services into its apps as Facebook’s parent company pursues its financial ambitions despite the collapse of a cryptocurrency launch project.
The company, led by Chief Executive Mark Zuckerberg, is looking for alternative revenue streams and new features that can attract and retain users as the popularity of its major social networking products, such as Facebook and Instagram, dips – a trend that has impacted its $118 billion per year year threatened. year advertising-based business model.
Facebook’s financial arm, Meta Financial Technologies, has been exploring the creation of a virtual currency for the metaverse, which employees have internally dubbed “Zuck Bucks,” according to several people familiar with the effort.
It’s unlikely to be a blockchain-based cryptocurrency, some of the people said. Instead, Meta is leaning towards introducing in-app tokens that are centrally controlled by the company, similar to those used in gaming apps like the Robux currency in the popular children’s game Roblox.
According to company announcements and people close to the plans, Meta is also considering the creation of so-called “social tokens” or “reputation tokens”, which could be issued as rewards for meaningful posts in Facebook groups, for example. Another attempt is to create “creator coins” that could be associated with specific influencers on its photo-sharing app Instagram.
According to several people familiar with the initiative, Meta has also been exploring more traditional financial services, with a focus on providing small business loans at attractive interest rates. While nothing is currently planned, the company has previously held discussions with potential lending partners, one of the people said.
Most efforts are in the early stages of discussion and could change or be dropped, although plans to integrate non-fungible tokens or NFTs into its apps are more developed. Zuckerberg confirmed an earlier Financial Times report that Instagram will soon start supporting NFTs.
According to a memo shared internally last week, Meta plans to pilot a posting and sharing of NFTs on Facebook in mid-May. This will be “briefly” followed by testing a feature that allows membership in Facebook groups based on NFT ownership, and another for minting – a term for creating NFTs.
According to another internal document, NFTs may be monetized via “fees and/or ads” in the future. Facebook declined to comment.
Meta lost more than $220 billion from its market valuation in February on the day it was revealed that users were increasingly spending time with newer competitors like short-form video app TikTok.
The company has recently tried to find other revenue streams and support e-commerce on the platform by delving into cryptocurrencies and blockchain technology. Its big tech rivals like Google and Apple have been more cautious about diving into the emerging space.
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But the push has been plagued by setbacks and regulatory scrutiny. Earlier this year, global cryptocurrency project Diem, which it spearheaded, was wound up and its assets sold to a California bank Silvergate after US regulators refused to give the pilot the green light over currency stability and competition concerns.
Amid internal frustrations, Meta’s finance department has suffered what one former employee described as a “mass exodus” of employees over the past six months. Head David Marcus left the company late last year along with key engineers, compliance staff and almost the entire legal team.
Those that remain are investigating how to create or support digital currencies in their metaverse — an avatar-filled virtual world that Zuckerberg hopes will eventually generate billions of dollars in commerce in digital goods and services.
Employees are now trying to find the least regulated way to offer a digital currency, two people said, with a non-blockchain-based digital token proving to be the most attractive option.
It wouldn’t be the first time Facebook has introduced such a currency into its ecosystem. It introduced Facebook Credits in 2009, a virtual currency that allowed users to make in-app purchases, typically in games like FarmVille. According to Barclays, this represented 16 percent of revenue at the time of the IPO in 2012, but was closed in 2013 because it was too costly to maintain.
In a memo from late January, Meta’s new chief financial officer, Stephane Kasriel, wrote: “We are making changes to our product strategy and roadmap. . . This allows us to focus on building for the Metaverse and what payments and financial services will look like in this digital world.”
Kasriel, who replaced Marcus when he left the company in late 2021, said the company will “accelerate” investments to facilitate payments within WhatsApp and Messenger and “help creators monetize their activities,” such as through NFTs.
He also announced plans to merge his Facebook Pay wallet — his existing peer-to-peer payment system that doesn’t use blockchain technology — with Novi, the digital currency wallet originally slated to hold the Diem coin.
“The wallet will offer payments, identity and digital asset management within the [family of apps and Reality Labs, its virtual and augmented reality arm,] and to other apps/websites over time,” he said.
While some of Meta’s efforts are focused on digital payments, other efforts are part of broader plans to use blockchain technology to introduce more “decentralization” to its platforms amid a growing buzz in Silicon Valley around the so-called Web3 movement.
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Web3 proponents typically seek to use distributed ledger technology to give users more control and ownership over their data, and to disintermediate big tech groups who typically monetize that data as part of their ad-based business models.
But Meta seems to be embracing some Web3 ideals. According to a planning document, it is evaluating whether to store data on a blockchain, how to give users more control over their digital identity, and whether their identity or accounts can be ported or used on platforms other than Meta’s apps.
Meanwhile, its plans to reward users for credible content with “social tokens” could allow Meta to remove itself as the central moderator of content and give Facebook communities more power in self-moderation, according to the document.
Additional reporting from Cristina Criddle in London