Are BitClout and Blockchain-Based Social Networks the Next Generation of Social Media?
August 31, 2021
What is BitClout and Blockchain-Based Social?
While cryptocurrencies like Bitcoin and Ethereum are dominating headlines, social platform BitClout is quietly making waves among the earliest adopters. BitClout is a decentralized social network, which is essentially Twitter meets Bitcoin. It allows users to post their social content on the blockchain and also speculate on creators by buying Creator Coins that represent them, which in turn allow creators to monetize their social media presence.
The platform has a feed similar to that of Twitter where you can follow and engage members of the global community. You can connect your BitClout account to your Twitter account or choose to remain anonymous.
How Does it Work?
Users can buy Creator Coins for their favorite creators and influencers, who can thank their patrons by sharing special content only to coin-holders. These coins function like stocks. In the same way you can bet on the future of a company by buying their stock, BitClout allows you to bet on the future perceived value of the creator you are investing in. And as more people invest in a creator, the price of the Creator Coin goes up.
Being the early days, buying Creator Coins is a tech-y process that involves buying Bitcoin elsewhere, transferring it into the platform, trading it for BitClout (the platform’s native cryptocurrency), and then trading that for the Creator Coin.
Why is it Controversial?
While there has been a lot of excitement around BitClout, it has also come with its own set of criticisms:
- BitClout creator, Nader Al-Naji, was the former founder of Basis, a stable cryptocurrency designed to replace central banks. This project failed, resulting in funds being returned to its investors, leading Al-Naji to go under a pseudonym @diamondhands on the BitClout platform to put distance and limit association between the two projects.
- Upon launch, BitClout decided to scrub Twitter for the top 15,000 accounts and created BitClout accounts and Creator Coins for them without their consent. To claim their accounts, they must tweet out their BitClout public key to verify, which is a growth hack for the platform, leveraging the user’s popularity to gain attention for BitClout on Twitter. People are spending their BitCoin to buy Creator Coins that are supposed to represent these influencers, resulting in BitClout making money off their reputation without their consent.
- The price of BitClout isn’t natural. It doubles every 1 million BitClout sold, which is a mechanism that was set arbitrarily by the founders.
- A major red flag at the moment is once you buy BitClout, there is currently not a way to trade it back to Bitcoin or withdraw it from the platform. There is no use for BitClout at this point beside speculation.
The investment approach of the network is changing the relationship between creator and audience that is not reliant on advertising. This may also lead to shift in mindset as a sense of accountability to coin holders could lead to more thoughtful content contributions.
Blockchain-based outlets are more of a challenge for brands to leverage due to their decentralized nature, so they may not be as welcome here as with other social platforms at this time. Without advertising available, brands would need to work with influencers directly or create content themselves.
Pharma brands currently leverage influencers to promote key messaging on social. HCPs are very active on Twitter for knowledge-sharing and are starting to build followings on more up-and-coming platforms like TikTok and Clubhouse. Could BitClout be a future destination for these influencers that brands could potentially tap into?
Time will tell whether BitClout will gain enough popularity to be the next big social network to emerge, but its existence is beginning to define social currency in a new way. There is no free-to-use path on the platform as Bitcoin is needed to fund your account, which could have an impact on overall adoption.
Given the attention around and growing adoption of BitClout, the possibility of blockchain-based social networks becoming major players in the next-generation of social is a strong one and something to keep on our radars as the landscape evolves.