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Why Big Tech Hasn't Joined The Crypto-Revolution

Internet giants have now started flirting with decentralization, to try and replace the so-far failed hopes of Bitcoin and blockchain technology.

Time to let go, man
Time to let go, man
Lionel Laurent

LONDON — Pop quiz: Which of Alphabet Inc., Apple Inc., Amazon.com Inc., Facebook Inc. and Netflix Inc. has shouted most to investors about Bitcoin or blockchain?

The answer is ... none of the above. Bloomberg's database of regulatory filings shows no mention of either blockchain or Bitcoin in these companies' disclosures since 2008. The closest was Netflix CFO David Wells, who said on an earnings call last year that a "borderless currency" within the next decade might be nice.

This apparent silence — and bear in mind regulatory filings don't cover social media or interviews — is telling. This is a successful billionaire class which embodies mottos like "move fast and break things' or "step by step, ferociously."

Facebook isn't going to torpedo its business model for the fun of it.

The Winklevoss twins championed Bitcoin, but Mark Zuckerberg never did. Bill Gates has been as dismissive about Bitcoin as Warren Buffett. You still can't do your shopping on Amazon using digital currencies. Given the volatility of cryptocurrencies, the regulatory risks involved, and deflating demand, it's little surprise that the biggest steps taken by the tech giants have been banning ads for Bitcoin clones.

But why has there not been more excitement about speculation-free, company-friendly blockchains, which tout distributed ledgers as efficient and secure?

Big banks like HSBC Holdings Plc have been eager to promote it as a more efficient way to move secure data around without hurting its underlying business. Yet almost a decade after Bitcoin's creation, Zuckerberg only recently pledged to study encryption and virtual currencies; he has now reportedly put a dozen people on the case.

The dinosaurs on Wall Street have been more aggressive. Financial firms have the biggest share of blockchain patents, according to law firm EnvisionIP, more than tech firms. Even then, the latter group is dominated by old-school brands like IBM.

Are tech firms simply reluctant to embrace blockchain because they see it as an existential threat? True believers argue that the technology is anathema to the powerful Silicon Valley elite, who through sheer size and market share have become incumbents themselves — like banks.

Physical representation of the Bitcoin cryptocurrency — Photo: Marco Verch

Take Facebook: It's a centralized, entrenched middle-man that sells $40 billion of ads annually thanks to user data surrendered for free. Is it any wonder that Zuckerberg might drag his feet in tinkering with this?

Blockchain startups are already being pitched that target the economics of his business: French think tank Generation Libre is proposing to help people control, authenticate and sell their data to platforms for a transparent price via a blockchain. If that took off, one could (just) imagine Facebook losing users and being forced to reinvent itself.

But maybe the tech elite knows something we don't. If big banks have survived the past decade of fintech and crypto-disruption, and dabbled with blockchain experiments to reap the benefit of a buzzword, then maybe the wealthy and entrenched forces of Silicon Valley can do likewise without needing to panic.

The promised crypto-revolution hasn't materialized.

The recent proliferation of Initial Coin Offerings was supposed to disrupt the venture capital funding model, but it seems to have been co-opted: Witness WhatsApp rival Telegram ditching its public ICO plan after raising $1.7 billion privately.

Facebook isn't going to torpedo its business model for the fun of it, and it's unlikely to view rival start-ups as a threat until users sign off en masse and seize control of their data — which hasn't happened.

Sure, big tech companies and big banks probably suffer from the innovator's dilemma, and lean towards conservatism. But the promised crypto-revolution hasn't materialized either.

Zuckerberg's dalliance with decentralization doesn't have to bring a zeitgeist with it. It could just mean that blockchain isn't as cool as it thinks it is.

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Geopolitics

New Probe Finds Pro-Bolsonaro Fake News Dominated Social Media Through Campaign

Ahead of Brazil's national elections Sunday, the most interacted-with posts on Facebook, Twitter, YouTube, Telegram and WhatsApp contradict trustworthy information about the public’s voting intentions.

Jair Bolsonaro bogus claims perform well online

Cris Faga/ZUMA
Laura Scofield and Matheus Santino

SÂO PAULO — If you only got your news from social media, you might be mistaken for thinking that Jair Bolsonaro is leading the polls for Brazil’s upcoming presidential elections, which will take place this Sunday. Such a view flies in the face of what most of the polling institutes registered with the Superior Electoral Court indicate.

An exclusive investigation by the Brazilian investigative journalism agency Agência Pública has revealed how the most interacted-with and shared posts in Brazil on social media platforms such as Facebook, Twitter, Telegram and WhatsApp share data and polls that suggest victory is certain for the incumbent Bolsonaro, as well as propagating conspiracy theories based on false allegations that research institutes carrying out polling have been bribed by Bolsonaro’s main rival, former president Luís Inácio Lula da Silva, or by his party, the Workers’ Party.

Agência Pública’s reporters analyzed the most-shared posts containing the phrase “pesquisa eleitoral” [electoral polls] in the period between the official start of the campaigning period, on August 16, to September 6. The analysis revealed that the most interacted-with and shared posts on social media spread false information or predicted victory for Jair Bolsonaro.

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