Facebook Steals Another Crypto Idea for Its Nonsensical Rebrand

Mark Zuckerberg’s vision for the metaverse has little to do with the open, interoperable vision first articulated by the blockchain industry.

AccessTimeIconOct 29, 2021 at 7:20 p.m. UTC
Updated May 11, 2023 at 6:21 p.m. UTC
AccessTimeIconOct 29, 2021 at 7:20 p.m. UTCUpdated May 11, 2023 at 6:21 p.m. UTC
AccessTimeIconOct 29, 2021 at 7:20 p.m. UTCUpdated May 11, 2023 at 6:21 p.m. UTC

There is so much, too much, to be said about Facebook’s announcement yesterday that it is changing its corporate name to “Meta” as part of a refocus on what is, essentially, online virtual reality. Most of what is to be said is really not good for Facebook. This is a desperation move made in the face of a PR nightmare that has a slim chance of panning out as a market proposition, and basically zero chance of reversing the company’s declining political and market fortunes in the U.S. and Europe.

So, given the target-rich environment, let’s start close to home: “Metaverse” is the second buzzy concept that Facebook has misappropriated from the blockchain industry. It is likely to be just as poorly executed as Zuck’s first craven magpie act, the would-be stablecoin Libra, now known as Diem (Facebook screwed up that launch so badly it had to rename the product: Sensing a theme?). Libra or Diem or Novi or Calibra or whatever was an attempt to steal some vague crypto halo while actually creating a powerful stream of new data for Facebook, in direct contravention of the principles behind the entire model being appropriated.

Similarly, the true “metaverse” is a blockchain concept, but you can already tell Facebook’s metaverse will be as big a perversion of it as Libra was of Bitcoin. The core idea of the blockchain metaverse is wide interoperability of virtual assets stored on a neutral and verifiable ledger. The same blockchain tech that makes non-fungible tokens (NFTs) usable across, say, virtual galleries and (soon) Twitter would be used to create tokens that represent virtual reality assets usable across a variety of immersive experiences, from Decentraland to (let’s say, in theory) Second Life to Minecraft.

Though Facebook’s online VR will have some form of NFT integration, the broader vision is not what Zuck is rolling out. Much of yesterday’s announcement presentation was focused on his frustration with Apple’s App Store and Facebook’s plan to build a competitive, parallel walled garden focused on online VR experiences (I’m not going to call it “the metaverse,” because see above). They’ll be collecting fees on creators who, say, design a virtual sweater. Zuck yesterday even warned that fees on the platform would be high for a while (which, come on Facebook comms team, we know you’re sleepwalking through a state of moral paralysis, but at least pretend a little harder).

Zuck justified those high fees by explaining that Facebook (no, I’m not going to call it “Meta” either, because see above) will be building up its online VR business at a loss for a while, including by subsidizing devices. This speaks to one of the other huge warning signs for Facebook’s pivot. It’s already pretty clear very few people actually want to use VR, especially in the kind of persistent way that would make it a good walled-garden content store business. The Oculus VR devices at the center of Facebook’s plans have been pretty good technology for at least three or four years now, but sales have been unimpressive. Other VR and AR companies, such as the infamous Magic Leap, have burned money without finding product-market fit. Spending boatloads of cash to drive adoption is the only hope Facebook seems to have of making mass-market VR work.

That spending, too, shows just what a desperate move this is. It’s not that this wasn’t clearly a long-term plan – it may even have been in the cards with the purchase of Oculus way back in 2014. That absolutely did not pan out on its own terms, as Zuck is admitting when he says “we expect to invest many billions of dollars for years to come before the metaverse reaches scale.” Compare that timeline to the much faster payoff for Instagram after Facebook bought it in 2012.

(We may also see yet again how little Facebook means anything it says about user privacy. Oculus was developed and founded by Palmer Luckey, an ideological authoritarian who went on to found a military contractor, Anduril, that sells spy hardware like camera drones and recon towers, no doubt influenced by his engineering work on Oculus. Make of this what you will.)

A normal company, one not facing withering scrutiny for its abuse of its own users and the law, would probably not rename itself after a business that had already failed. And spending money to acquire customers is the behavior of a risk-taking startup using private VC money to increase its chance of capturing a novel business opportunity, like Uber using subsidies to win rideshare. It’s not obvious that the tactic makes any sense at all for a big public company trying to give life to a business that seems to have little traction of its own.

It also doesn’t make sense because the price of hardware like a VR headset isn’t actually the limiting factor in adoption Zuck would like you to think it is. In technology, there’s this thing called an “adoption curve” where early tech enthusiasts spend a lot of money on weird things, then more people buy them as they get cheaper. The first part of that adoption curve still hasn’t really happened for VR, even during a pandemic when everyone was trapped at home. Making the headsets cheaper can’t solve for this clear lack of interest among the very hyper-engaged audience that’s not supposed to care about price.

But the monopolistic outspend-the-competition approach comes from the playbook of another one of Zuck’s favorite people, the neoreactionary authoritarian Peter Thiel (sensing a theme here?). It probably gives Zuck some comfort to go back to a familiar playbook. And there are probably still enough credulous, bootlicking Web 2.0 investors out there that Zuck will be able to stave off total collapse just by saying something a la “you gotta spend money to make money, fam” on investor calls for the next 10 years as Facebook’s new VR unit, and then the entire company’s balance sheet, bleeds to death.

Because that’s the even bigger picture here. Leaving aside regulatory and legal concerns, Facebook as a company has probably already seen its best days. User numbers in the United States are declininghttps://www.yahoo.com/news/facebook-weaker-knew-123509841.html, particularly for young people, across both Facebook itself and, crucially, Instagram, which had extended the company’s relevance a few extra years. Facebook’s future, unfortunately, probably lies in second- and third-tier economies with even weaker governments and poorer citizens.

That will leave Facebook freer to follow its worst impulses. On the metaverse front, ironically, it may mean it winds up with something closer to the deepest origins of the term in Neal Stephenson’s “Snow Crash,” a masterwork of dystopian cyberpunk science fiction from the 1980s. Stephenson’s metaverse is a corporatized ghetto where the global poor play out a digital semblance of lives they can’t afford, while back in reality their emaciated bodies wither in cramped apartments.

The metaverse Facebook is building, in short, is a digital version of hell. Hard to think of a more appropriate Charon to take us there than Mark Zuckerberg, who has already unleashed so many demons on the waking world.

Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

David Z. Morris

David Z. Morris was CoinDesk's Chief Insights Columnist. He holds Bitcoin, Ethereum, and small amounts of other crypto assets.