We all know that Facebook is working on their own cryptocurrency. Many are speculating how this will affect the cryptcurrency out there and what it will do to the industry. After all, with somewhere between 1B-2B users (depending upon who you believe), the social media giant has the ability to become the default currency.
They could put cryptocurrency in the hands of more than 1B people. This is something that everyone should take notice.
So how will this affect the rest of the cryptosphere.
My guess is it ends up delaying things. While Facebook will introduce people to it, they will also turn them away from it.
How will that happen?
Simply because a hack is almost guaranteed.
There is no possible way that Facebook is able to secure the tokens. The company is not looking to decentralize anything. It wants the control and will not give that up. Thus we are dealing with a centralized system that is vulnerable under the best of circumstances.
Facebook is far from the best of circumstances. In fact, when it comes to the securing of data, they are truly awful.
As if the Cambridge Analytica was not bad enough, the company is repeatedly getting itself in hot water with more data breaches. We now find out that the company has information for millions of users open to prying eyes.
The database, hosted by Amazon Web Services, was left exposed and without a password allowing anyone to look inside. At the time of writing, the database had over 49 million records — but was growing by the hour.
From a brief review of the data, each record contained public data scraped from influencer Instagram accounts, including their bio, profile picture, the number of followers they have, if they’re verified and their location by city and country, but also contained their private contact information, such as the Instagram account owner’s email address and phone number.
https://techcrunch.com/2019/05/20/instagram-influencer-celebrity-accounts-scraped/
This is starting to make people wonder if the company even cares about data security. Either this is the case or they are totally inept at it. Whatever the reason, this does not bode well for the future of Facebook's cryptocurrency.
Private information is interesting to hackers. In many cases, there is a monetary value to it. This requires the selling of the data or using it illegally. Both approaches require more effort to monetize the data.
With cryptocurrency things are different. The data stolen, the token, has the value. Over the years, we saw "honeypots" tapped into on exchanges and millions of dollars cleaned out.
With Facebook's record in data security and being hacked, the likelihood of it happening is great. My guess is the number of people who will be trying to hack the honeypot increase significantly over what is taking place now. Enter the nest and, presto, instant money.
Of course, being a controlled blockchain, Facebook could simply fork it to revert everything back. The problem with this is the confidence will be shaken. There is also the problem that it could happen more than once.
The lack of confidence will cause problems for adoption of cryptocurrency, at least in the west. Few will take the time to understand the difference between something that is centralized and apt to be hacked versus a decentralized blockchain that removes much of this risk.
Just consider how many people think Bitcoin got hacked when it was centralized exchanges.
All of this will not destroy cryptocurrency yet it will turn a lot of people off. This will delay things for a couple years. That does not mean the industry will not keep moving forward and grow, it will. What it does mean is that the education process will become that much more critical.
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