Facebook and Instagram parent Meta Platforms, Inc. (FB) is considering introducing digital tokens and lending services to its apps, with the aim of boosting alternative sources of revenue, according to a Financial Times report.
- Meta is reportedly considering introducing digital tokens and lending services to boost alternative its revenue sources.
- People familiar with the initiative said that the tokens would most likely be centrally controlled by Meta rather than tied to a blockchain.
- The possible introduction of digital currencies across Meta’s apps may align with the company’s foray into NFTs.
- Meta is also exploring traditional financial services, such as offering small business loans.
- Global metaverse revenue growth could help offset a decline in Meta’s social media users.
The social media giant is exploring its own virtual “social” and “reputation” tokens—referred to internally as “Zuck Bucks”—for contribution rewards and “creator coins” for Instagram influencers, people familiar with the initiative said. The sources noted the tokens would most likely be centrally controlled by Meta rather than tied to a blockchain to avoid regulatory hurdles. In January, the company abandoned its three-year-old blockchain-based stablecoin payment system known as Diem after it ran into opposition from policymakers.
The company also has traditional financial services in focus, such as offering small business loans. Although there are no immediate plans to launch such offerings, Meta has held preliminary discussions with potential lending partners, according to the Financial Times report.
A blockchain is a distributed database that is shared among the nodes of a computer network. As a database, a blockchain stores information electronically in digital format. Blockchains are best known for their crucial role in cryptocurrency systems, such as Bitcoin, for maintaining a secure and decentralized record of transactions.
Possible Alignment with NFT Launch
A possible introduction of digital currencies across Meta’s apps may align with the company’s foray into non-fungible token (NFTs), which are reportedly slated for a mid-May pilot launch, by a testing phase of features that would allow users to own and mint them. Other internal documents sighted by the Financial Times revealed that Meta is considering monetizing NFTs via fees and/or ads.
In January, rival social media company Twitter, Inc. (TWTR) introduced NFTs to its platform. Although the microblogging site doesn’t monetize NFTs directly, it currently only allows its $2.99-per-month Twitter Blue users to display NFTs as profile pictures.
Initiative Fits Meta’s Expansion Into the Metaverse
Meta remained tight-lipped Wednesday when asked about the report. “We have no updates to share today,” a company spokesperson told Reuters. However, in January, Meta’s finance division head Stephane Kasriel wrote in a company memo: “We’re making changes to our product strategy and roadmap so we can prioritize on building for the metaverse and on what payments and financial services will look like in this digital world.”
The metaverse is a digital reality that combines aspects of social media, online gaming, augmented reality (AR), virtual reality (VR), and cryptocurrencies to allow users to virtually interact.
Facebook rebranded to Meta in October 2021, positioning itself beyond social media into a virtual technology company. Earlier this year, the tech giant became a member of the Crypto Open Patent Alliance (COPA), a consortium of tech and crypto companies led by Jack Dorsey’s payments company Block, Inc. (SQ) that pledges to share crypto-related technologies.
In recent quarters, Meta has seen a decline in users, threatening its advertising revenue, which generates around $120 billion per year. Research firm Insider Intelligence forecasts that Meta’s photo-sharing app Instagram could see its monthly user growth fall to 3.5% by 2025, down from 16.5% in 2021. However, revenue growth from providing virtual goods and services should be more than offset a slowdown in Meta’s social media business, given that data points to worldwide metaverse revenue, reaching $680 billion by 2030.