Facebook acquired its first company in the blockchain space, smart contract protocol development and research firm Chainspace. The move was likely made to acquire the company’s team of experienced crypto developers.
Chainspace is an 11-person company that was started by five well-credentialed co-founders, including two Cambridge PhDs, several researchers from the University College of London, and part of the core group of people from Vega Protocol—a blockchain public network for trading financial product.
The acquisition by Facebook was likely a buyout for the company’s team, a strategy known as acqui-hiring. According to Cheddar’s sources, the move was done to augment Facebook’s growing blockchain division.
Facebook did not disclose the amount paid for the acquisition, although Cheddar reported that Chainspace was in the process of raising an initial funding round of less than $4 million.
The move is part of Facebook’s discrete plans to implement blockchain into its social media platform, including plans to launch a native cryptocurrency. Facebook veteran David Marcus, the former president of PayPal, was appointed last April to lead the initiative.
Background on Chainspace
Until it was acquired, Chainspace was building a sharded smart contract protocol that seems intent on addressing some of the scalability and privacy issues around Ethereum.
The company was building a proof of stake protocol leveraging sharding, zero-knowledge proofs, smart contracts programming “in any language,” and a few other cutting-edge features incorporated into its blockchain.
The implementation of these features is critical if a blockchain-based solution wishes to compete with technologies facilitated by high throughput solutions offered by centralized financial institutions like Visa and SWIFT.
Details on the Acqui-hire
So far, three of the five co-founders—Alberto Sonnino, Shehar Bano, and George Danezis—have updated their LinkedIn profiles to indicate that they are working at Facebook’s London office as “blockchain researchers.”
Another telling detail is the Chainspace website was recently updated with the following header:
People familiar with the startup told Cheddar that it will shut down now that Facebook has hired most of its employees.
Facebook has been secretive about the purchase and, when asked for comment, referred to an earlier statement about the company’s blockchain efforts:
“Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology. This new small team is exploring many different applications. We don’t have anything further to share.”
Facebook’s Move into Blockchain
Facebook has likely been exploring potential cryptocurrency and blockchain integrations for over a year, with Mark Zuckerberg first mentioning the technology in his annual personal challenge address.
That said, CryptoSlate’s sources at Facebook have mentioned that employees at the company have been pushing for potential crypto-integrations for several years, and only in 2018 did the initiative start gaining traction.
Within the last year, Facebook has been aggressively building its blockchain competencies, hiring software developers, engineers, and academics who are familiar with the technology. Currently, the company has over 10 job openings with the term ‘blockchain’ in the title. So far, based on estimates from self-reported LinkedIn titles, between 35-55 people work at Facebook’s blockchain division.
Considering Facebook’s enormous resources and access to software talent, smaller cryptocurrency projects should be wary of potential competition with the juggernaut. Going forward, it seems likely that the company will continue to aggressively acquire talent, companies, and proprietary technology to gain a foothold in the blockchain sector.Filed Under: U.K., Adoption, Partnerships, Technology
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