Mr. Joel’s main conjecture is — what if Facebook harnessed the pure digital currency Bitcoin to “facilitate exchange”? Yes, the whole content world is trying to figure out right now what exactly a post-advertising revenue model looks like. Does Facebook figure that out and become a commerce play? Does commerce sit easily in what they’ve already built?
While I’m inclined to believe there’s some long term truth to crazy people like Jeff Jarvis who argue that magazines will become stores someday — that interrupt advertising will become native advertising will become direct marketing will become direct commerce — I think there’s a lotta years on that transformation. And it will be accomplished finally with little fanfare by companies not even in play, IMVHO.
But even more fundamentally, here’s why I don’t think Facebook and Bitcoin won’t even make out, much less get married —
The Bitcoin Problem: Bitcoin is a great store of value and a largely friction-less medium of exchange online. But only online. Getting “real” currencies in and out of BTC will become increasing difficult as it gains popularity and the border of the real and virtual is where banks and governments will be camped out. You want to exchange your 10 BTC for 1000 USD? Soon that will be a regulated (taxable? illegal? definitely trackable!) event. The current best practice of using BTC as a laundry machine to buy drugs and guns with USD will be, if its not already, a diminishing use of BTC. The border will be patrolled.
But! Wherever value can be both offered online and consumed online, where that border never comes into play, that’s where BTC rules. If you created and uploaded music in digital form, sold it to someone who then listened to from the cloud — BTC can facilitate that transfer of value without any help (read: knowledge or oversight) from a bank or government. Same goes for books, movies, artwork, games, things in games, really anything that could be created purely for online consumption.
Does that sound like the future of Facebook?
Facebook Currency — Facebook facilitates social connecting, it’s a social exchange. That’s is core value proposition and I think the pivot to a commercial exchange is a such a violation of that core value that it wouldn’t survive any sudden transformation in that direction. Not a perfect analogy but think: Napster going commercial. Poof.
Don’t forget that Facebook already has at least three very popular and entrenched currencies — likes, comments and friends. Not only are these value markers exchanged and consumed by your friends, but that sly algorithm Edgerank is pruning your feed based on your social “spending patterns”.
How would a commercial currency sit beside these social currencies? Well, how would feel if your Grandma wanted you to pay — even a tiny amount — for pictures from her last birthday party? Or how would feel if you found out that a friend was paying for “likes” (I think this is already happening..). Or if you found out your friend had paid someone cool to comment on their lame status?
I think Facebook is already in a very fragile position and to the company’s credit I think they’re improving their core value — relevant social connections. But still the site is like some crass bar where people with a certain kind of social facility come off as cool and happening, but then there’s the 80% of us who are kind of doofuses who get just enough value from glimmers of furtive social connection that we stay and try. Or go and come back again. But definitely do our fair share of lurking. So what’s that about adding a commercial element? Now you have a crass bar with hookers.
So no, I don’t think Facebook and Bitcoin make a very good match at all — Facebook would have to change too much. And this is ignoring the coming regulation of Bitcoin that is likely going to keep Amazon and Ebay and the real commerce plays — even fully digital online consumption sales — on the sidelines. But if Facebook won’t work and if Mr. Joel is still looking for an object-focused weakly-social play that’s on the prowl for a business model and could use some Bitcoin lovin’, why not Pinterest?