It is pretty clear that existing social media platforms suck. So, we need something which is controlled by the community, something which is aligned with the needs of users. If you are not convinced, below is a brief rundown of problems with current social media platforms.
For over a decade, centralized social media have reined control over our digital lifestyles; Twitter can ban whichever account it pleases, Facebook can sell our data to anyone it wishes, and YouTube can bend the rules of monetization whenever it sees fit.
From privacy to the economic aspects of our digital life, social media platforms can make/bend the rules
Existing social media platforms’ incentives are in stark contrast with those of the users.
Social Media platforms rely heavily on advertisements for their revenue (users hate ads)
To attract advertisers, social media platforms create a digital copy of each individual to predict their needs for more ad clicks. (users want privacy)
You might ask, Why not just leave the platform and move to another one?
Networking Effects — if you move to another platform, you need to start from zero; You need to gather your followers, likes, and reputation on a completely new platform with fewer users. No one wants to be in a complete ghost town with no friends.
Barrier to Entry — the barrier to entry is immense. Any new idea is quickly copied or acquired by the giants. You probably know that Facebook acquired Instagram, but no one remembers that Snapchat introduced the concept of stories which was quickly copied by Instagram and then almost all social media platforms.
Therefore, just a handful of social media platforms exist and a few control the market. Let’s see if decentralized social media is any better.
BitClout: Decentralized Twitter
BitClout is the first popular decentralized social media with the same look and feel as Twitter. It aims to give as much power to the community as possible and a handful of individuals, or even the creator himself, can not solely influence the platform.
Before we start with the crypto, let me tell you I am no financial advisor and the contents of this post should not be considered as financial advice, they are merely my opinions. Please make any investments at your own risk.
BitClout has its own native cryptocurrency called $BitClout which is used to purchase secondary currency on the platform called Creator Coins. There also exists a diamond button to easily pay creators if you more than just ‘liked’ their content.
What are Creator Coins
Every account on the platform has its own currency called creator coins represented by the name of the creator. The value of this currency is determined by an exponential function. We will discuss this later. First, let's address the obvious question — ‘Why would I buy any creator coins or Why would anyone buy my coin?’
In theory, creator coins are intended to represent the trustworthiness or the reputation of an individual. This means that if a creator, VC, entrepreneur, or any user is creating value for its followers, the value of their currency should go high as more people would be willing to bet on them. You can even purchase your own currency to show that you are on the platform for the long term and would provide value to the token holders.
Again, above is the intended purpose of the creator coins. The platform is very new, so no one knows how people would find ways to plummet or skyrocket the value of any token.
Existing uses of creator coins:
People are building software products that require users to hold certain creator coins to use the service
Creator coins works as a marketing strategy to gain followers in return for diamonds
Speculate on a creator’s success
Giveaway of an NFT or anything to the latest/most/longest token holder
Potential use cases
Creators can unclutter their inbox by only allowing messages from individuals with the most tokens
Creators can hold an AMA session for the largest token holders
Tokens can be used as a sponsorship payment for retweets, posts, etc
Creator coins can function as funding for new projects
The Risk You Take
Before you pour every dollar into the platform, here are a few things you need to consider-
The founders of BitClout are anonymous.
You cannot cash out BitClout to BitCoin and out of the platform, so it is a closed-loop.
There are legal concerns surrounding BitClout and how it functions.
With that said, I personally have a BitClout account, and I have bought some creator coins. This is because there are people like Balaji S (former CTO Coinbase), Fred Wilson (VC) Chamath P (CEO Social Capital) who have invested in the platform and are using it. Please do your own research before making any decisions.
Value of Creator Coins
The value of creator coins is determined by the formula —
*price*_*in*_*bitclout*=.003×*creator*_*coins*_*in*_*circulation2 <- (that 2 is squared)*
As you can see from the graph and the formula, the value of creator coins grows exponentially as more coins are held in the wallet. Initially, all accounts have zero coins and more are minted as users or the creator buys them. The value of the coin is determined by the quantity as per the graph above.
When a user buys creator coins, the value is locked into that profile and a sell action takes this value out of the profile. All of this happens in accordance with the curve, thus the value of coin goes up or down.
Creator coins create a positive sum game which benefits both the creator and their follower who supported and believed in their work
Founder rewards are associated with the account of the creator coin. When any user buys the creator coins, a certain percentage of the coin goes to the creator. This is called founder rewards. You can set founder rewards to 100% if you are charging for a service so that the total purchase amount goes to you, or you can set it to around 8% to encourage people to buy your coin.
This is just the tip of the iceberg. BitClout is decentralized and its code is publically available. All the data in BitClout can be accessed by anyone to create more products, features, or data analysis. In legacy social media platforms, the central authority solely controls all of this information and can misuse it for their personal benefit.
There are more possibilities than we can discuss here. This is literally a digital currency tied to an individual. They can decide how it operates and how users use it.