Facebook has talked to crypto project Stellar about its blockchain efforts - and it could show how the social media giant is pushing into finance
- Facebook is speaking with a number of crypto projects as it explores ways in which it can use blockchain technology.
- In recent months, Facebook's blockchain team has met with open source payment technology company Stellar about some of these opportunities, people told Business Insider.
- Facebook could use blockchain technology to rival big banks' payments network.
- The tech firm has big ambitions for its blockchain group, with a recent job ad saying the group "is a startup within Facebook, with a vision to make blockchain technology work at Facebook scale and improve the lives of billions of people around the world."
Facebook is speaking with a number of crypto projects as it explores ways in which it can use blockchain technology.
In recent months, Facebook's blockchain team, led by former PayPal executive David Marcus, has met with open source payments technology company Stellar about some of those opportunities, people familiar with the talks told Business Insider. While the talks were early stage, they could shed light onto Facebook's ambitions to push into finance.
For example, if Facebook wanted to rival the big banks' payments networks, it could leverage blockchain technology to do so, a person familiar with the firm's talks with Stellar said. The speed of certain blockchains over traditional financial pipes-and-plumbing is one of the most cited benefits of the red-hot technology. A JPMorgan research note said that the speed of a transaction on Ripple's network took four seconds versus the three to five days it takes for traditional banking systems to process a transaction.
Facebook is already taking other steps to break into banking. The company is reportedly considering showing users their bank balance or potential fraud alerts.
A Stellar insider told Business Insider it would make sense for Facebook to record payments transactions onto a distributed ledger like Stellar. Other merchants could then connect to a Stellar-based ledger. This platform could rival the SWIFT Payments network that now connects banks together and allows for money transfers.
"They'd be taking the rug out from under the banks," the person said. "They can add a bank more quickly than a bank could build a social network."
Sources say Facebook and Stellar have spoken about the firm potentially forking the main Stellar network as part of its blockchain efforts. A crypto fork is when a blockchain splits into two - both have the same underpinnings but can be managed differently moving forward.
Facebook is known for working with other open-source technologies, being one of the largest maintainers of React, an open-source technology language. It could in theory fork an existing blockchain as opposed to building its own.
A spokesperson for Facebook disputed that the company would build on Stellar's technology.
A spokeswoman for Stellar declined to comment.
'Improve the lives of billions of people around the world'
A source close to Facebook's blockchain business said the company is making a long-term bet on blockchain that will likely resemble its investments in artificial intelligence. Rather than targeting a specific vertical, such as payments, Facebook's blockchain group would provide a foundation from which the firm will be able to target an array of possible opportunities.
A recent Facebook job ad reflect this notion, saying the blockchain group "is a startup within Facebook, with a vision to make blockchain technology work at Facebook scale and improve the lives of billions of people around the world."
The firm is also looking to expand its crypto group, according to job ads. One position the firm is looking to fill is manager position for a newly created software engineer team within the blockchain group.
Facebook is also hiring a blockchain public policy manager to analyze policy issues relating to blockchain and advise product and business teams on those developments.
Already, Shashwat Gupta, a former product manager for Samsung Pay, joined as a product strategist for blockchain in May. Blockchain was removed from his LinkedIn profile after Business Insider talked to a Facebook spokesman.
And Evan Cheng recently was promoted to head of engineering for blockchain in June.
The duo joined existing Facebook employees including Kevin Weil, a VP of product, and James Everingham, head of engineering, blockchain.