Mark Zuckerberg
Facebook founder Mark Zuckerberg is searching for more balanced way to monetize your data REUTERS/Brian Snyder

The media is still discussing how Facebook's recent change to its news feed will affect the experience of its users and the companies whose businesses depend on the platform. According to Facebook executives, the changes are meant to address the mounting criticism the company has been picking up in the past year for not preventing ill uses of its platform.

Facebook's struggle to find the right balance between managing its multi-billion-dollar advertisement business and making its platform a safer and healthier space for its two billion users highlights a deeper problem riddling social media networks in general: As with most other online services, social media has become too centralized, concentrating too much power in the hands of too few.

Blockchain, the technology that brought us bitcoin and other cryptocurrencies, proposes a solution to the current broken state of social media, one that doesn't force users to place their trust, faith and sensitive data in the hands of centralized companies that have a track record of putting their own bottom line before anything else.

Here's how blockchain can make a difference.

How centralized social media networks function

Facebook collects huge amounts of information about users, which it stores on its own servers. It then mines this data to create digital profiles of every user and tweak the content of their news feed, make suggestions about people to friend, pages to like and more. It also shows users ads that are relevant to their preferences. This is the main source of its revenue.

The problem is, Facebook remains the exclusive owner of users' data and the revenue it generates from showing them ads. Users can't directly access their data. All they have access to is the limited set of profile settings that Facebook provides them with. If Facebook shuts down their account, they won't be able to retrieve their data. If it decides to make their data available to government agencies or sell it to other companies, they won't be able to do anything about it.

The more users interact with Facebook, the more Facebook gets to collect data and display ads. Meanwhile it becomes harder and harder for users to move on to another platform, because they won't be able to import all their Facebook data. The result of this lock-in is Facebook becoming richer and more powerful by the day and users losing more and more control over their digital lives.

As its user base continues to grow, Facebook's decisions become more and more impactful on people's lives. Today, we can only hope that Facebook doesn't turn evil and makes the right decisions about the content and data it handles. But the company was caught on several accounts trying to monetize its users' data in questionable ways, giving reason to doubt the nature of its intentions.

As Muneeb Ali, co-founder of decentralized application platform Blockstack says, "No company on the internet should have so much power that they get to debate if they should be evil today or not."

How blockchain solves the problem

Blockchain takes away the power from social media giants by giving the ownership of data back to users. Blockchain replaces centralized data servers with a distributed network of independent computers that store and maintain a common database. A considerable number of computers must verify and approve every new record before it is added to the ledger and replicated across the network. This model prevents any single party from manipulating the blockchain's data to its advantage.

"Instead of common social media platforms, where users get 'free' service at the cost of their data, blockchain platforms impose a cost on their usage," says Yonatan Ben Shimon, CEO of blockchain startup Matchpool. "But users get back the value of what they spend on the network through peer-to-peer payments."

Matchpool offers a decentralized matchmaking protocol that enables the creation of "pools" of users that share common interests and goals, analogous to Facebook groups. Matchpool enables pool creators to monetize their communities in various ways, including one-time subscriptions or per-content transaction fees. The platform uses its own cryptocurrency, the Guppy (GUP) token, which users earn and spend by interacting with the platform. Payments are made directly on the blockchain.

Blockchain applications encrypt users' data with their private keys and store them on decentralized networks to make that only the users themselves have access to it. This prevents unwanted parties from accessing or mining their data without their consent. "This data can't be monitor and analyzed by anyone," says Ben Shimon, which includes his own company.

Matchpool is among a handful of companies that have built decentralized social media platforms on top of the blockchain, including Social, an upcoming platform that mimics most of the functionality found on centralized networks, and Steemit, a Reddit-like decentralized social network that operates on the blockchain.

The advantages of decentralized social media to users are evident. But the companies that create them also benefit in ways that are not possible in centralized architectures. For one thing, companies running decentralized social media networks no longer need to worry about running afoul of the patchwork of laws that apply to maintaining and storing user data in different geographical regions. They can also save billions of dollars in cloud storage costs and circumvent blocks and censorship in countries that impose restrictions on the use of social media.

Will social media giants embrace blockchain?

Telegram recently announced the Telegram Open Network, its plan to port its platform to its own proprietary blockchain. Telegram doesn't rely on ads or monetizing user data to maintain its network, which make it better-positioned to make the transition to blockchain, though it's not clear why the company needs more than a billion dollars to develop it. Telegram already has more than 180 million users, which can make its token the most widely adopted cryptocurrency once it launches.

Oddly, of the data-hungry companies that run ad-based social media platforms, only Facebook has hinted at decentralization.

"With the rise of a small number of big tech companies—and governments using technology to watch their citizens—many people now believe technology only centralizes power rather than decentralizes it," Facebook CEO Mark Zuckerberg wrote in his New Year's Resolution post. "There are important counter-trends to this—like encryption and cryptocurrency—that take power from centralized systems and put it back into people's hands. But they come with the risk of being harder to control. I'm interested to go deeper and study the positive and negative aspects of these technologies, and how best to use them in our services."

However, this does not necessarily mean that Facebook will be exploring blockchain, as some have suggested. "Blockchain and cryptocurrencies are two separate things," says Ben Shimon. "Crypto currencies are assets while blockchain is the underlying technology."

Will Facebook make a radical change to strip itself of the enormous power it has accrued to be fairer to its users? "My guess is that Facebook will not use a decentralized database because analyzing data is their business," Ben Shimon says.