The blockchain group is developing a stablecoin, a type of digital currency pegged to the US dollar or a basket of currencies, making it less prone to swings in price.
The inner workings of Facebook Inc.’s blockchain team are still shrouded in secrecy, but it’s staffing up, according to people familiar with the group. Those people said that its product, which Bloomberg earlier reported will be a type of cryptocurrency, could be announced as soon as next quarter.
Launched last May, Facebook’s blockchain unit now counts 50 employees. A significant number of those employees—about one in five—used to work at a single company: PayPal Holdings Inc. This quasi-reunion, driven by the group’s leader, former PayPal president David Marcus, is the latest signal of Facebook’s wider ambitions to integrate payments into its platform.
The people Bloomberg spoke to about the project asked not to be identified because information about the blockchain team is closely guarded at the social networking giant. Facebook declined to comment on the team organization or its plans.
According to Facebook insiders, the blockchain group is developing a stablecoin, a type of digital currency pegged to the US dollar or a basket of currencies, making it less prone to swings in price. The first country that will test the new currency is said to be India, a region that is particularly appealing for Facebook because it still has room to expand. The product could eventually allow users to transfer money for remittances via WhatsApp through stablecoin.
The company is already testing regular payments in the country through a product called WhatsApp Pay. At Facebook’s developer conference, Mark Zuckerberg said that the company would soon expand WhatsApp payments to other countries as well. Money transfers and private commerce, Zuckerberg said during his keynote, are “a part of the vision that I’m particularly excited about.”
Marcus left PayPal in 2014 to join Facebook as the head of its Messenger product. There, he spearheaded early monetization efforts at Messenger, helped shepherd the service as a separate app that now counts more than 1 billion users and launched an artificially intelligent assistant known as M (which was discontinued before a wide rollout). He left Messenger last May, and announced in a statement that he was “setting up a small group to explore how to best leverage blockchain across Facebook, starting from scratch.”
Marcus quickly brought some PayPal veterans with him to the new Facebook group. One of his first hires was marketing leader Christina Smedley, who will play a key role in packaging the eventual blockchain product, these people said. Smedley was hired by Marcus at PayPal as vice president of global brand and communications, and later joined him at Facebook Messenger. A communications veteran of both Amazon.com Inc. and public relations company Edelman, Smedley will likely be tasked with convincing users to trust the social network with their finances, despite its recent public relations and privacy issues and a broader skepticism over cryptocurrencies.
Other early hires on the blockchain team include Tomer Barel, who spent nearly a decade monitoring risk and fraud at PayPal making his way up to the executive ranks, and John Muller, who worked at PayPal and its former parent company EBay Inc. for almost 20 years. He will be the Facebook group’s general counsel, according to a person familiar with company. That may prove to be a particularly difficult job, as rules around the still-nascent cryptocurrency market continue to shift and evolve.
The term “PayPal Mafia” was coined in the mid-2000s to describe the later feats of PayPal’s early team, whose members include now-tech luminaries like Elon Musk, Reid Hoffman and Peter Thiel. Another, smaller PayPal mafia could be said to be forming in the Facebook blockchain group, which also includes Meron Colbeci, who worked with Marcus at PayPal in product management, as the group’s director of product, as well as Nate Gonzalez, who worked at PayPal on global peer-to-peer payments, and who Colbeci and Smedley helped recruit in October, one of the people said.
Despite its growing staff, though, the group is still in its early days. Moving beyond traditional payments to add blockchain-based stablecoin transfers would represent a huge shift for Facebook, with potential widespread implications for the worlds of finance and retail. A wider rollout of the cryptocurrency was described in a recent Wall Street Journal report about the project. However, Facebook insiders have cautioned that the company is likely still far from releasing this type of product.
“There is still a lack of clarity on what Facebook is going to do, but it looks like the long-term vision is creating a sort of marketplace model within Facebook,” said Harshita Rawat, a payments analyst at Sanford C. Bernstein & Co. International money transfers in particular are rife with inefficiencies, which Rawat said could make the area particularly well-suited for a cryptocurrency. Ultimately, she said, by “having people that have deep industry knowledge around payments,” the social network is keeping its options open for its money transfer ambitions.