BitClout: Decentralized blockchain-based solution to take social media out of the dilemma
Did you enjoy the Netflix documentary series “The Social Dilemma”? Well, I did. For sure everyone is familiar with this series topic, how many times Google or Facebook Ads magically came out with what you are precisely looking for at that moment?
The real social dilemma can be summarized in the following statement:
“If You Are Not Paying for the Product, You Are the Product!”
Nowadays, we are surrounded by social media platforms (e.g. Facebook, Instagram, YouTube, etc..) where we engage other people. Communicating, exchanging valuable and personal info on social media platforms is today a common standard in our public life.
There are three common aspects in the majority of social networks that we can identify and with whom we have to deal with:
- Centralization (Unique point of failure)
- Business (revenue) model
- Information disclosure (Privacy Issue)
Each social platform is a central authority per se, every transaction we make within our community on Facebook is allowed because a third party is lending us a place to do that. For instance, our Facebook, Instagram or Google account is not ours, we could be shut down at any moment.
Let’s make an example taking into consideration recent events: The world is fighting Covid19 and our success mostly depends on the vaccination campaign. Probably, you are already familiar with the cultural issue of NO-VAX (people believing that somehow vaccines kill people). The main goal of this group is spread out (mostly through channels such as social media) fake news about vaccine’s side effects to make people scared of it. As a consequence, some of the biggest social media platforms such as Twitter and Facebook are tracking down and blocking content, groups or pages spreading NO-VAX’s fake news. Of course, from the majority of people this news is perceived as something positive because Facebook is working to restrict a cultural issue that could jeopardize all the effort we are making across the world.
Nevertheless, let’s think if this kind of power Facebook got over our activities on the platform were used to pursue the interest of a restricted group of people or financial institution. You probably heard about the case of Hedge Funds vs Reddit, where through a coordinated action a bunch of Reddit’s users (in the first place) caused heavy losses of the Melvin HF which aimed to short sell GameStop’s stocks betting on the company’s failure to make huge profits. In this case Facebook to stop the gathering of small retail investors that were buying GameStop’s stocks blocked temporarily several trading groups with fake reasons such as sexual content violation.
Regarding the second common aspect, business (revenue) model, most platforms follow the same scheme: free accessibility and shareability of content and revenue stream based on targeted Ads.
The business model topic is strictly correlated with the information disclosure one. The product Facebook is selling is “us”. In order to access all Facebook features we have to disclose freely our personal data. Once disclosed, our data are sold to companies which can perform targeted ads. In this scheme our data can be sold to the so-called highest bidder and be used to shape our behaviors and choices.
Is there an alternative to this common social network paradigm?
Blockchain technology is promising to change this paradigm.
First of all, the blockchain is a decentralized network where a copy of the entire ledger is kept in every node running in the network. It avoids the unique point of failure issues, indeed, if a centralized authority such as Google or Facebook is hacked millions of users are gonna lose their personal data. In a Blockchain network we can engage P2P relationships where transactions occur without interferences of third parties and/or central authority, moreover, the hacking attempts are mitigated by the cryptographic and consensus mechanism underlying blockchain’s transactions.
In the past years we have seen several blockchain applications in different fields: supply chain, educational path certification, financial inclusion, healthcare and so on. Nevertheless, given the social network dilemma discussed before, how blockchain technology could be applied to counteract the current social media platform’s business model?
Here BitClout comes…
BitCout is a blockchain network designed for running social media.
There’s no company (thus no central authority) behind the BitClout project. It was developed by a group of anonymous developers. As any other social network it is based on the engagement capability of people within a certain community, nevertheless, the economic incentives scheme used by BitClout do not count on targeted Ads and upselling of our personal data.
Inside BitClout network users can speculate on people’s success by betting on their personal token generated every time that a new user creates its own profile. But let’s take this step by step.
How it works?
BitClout blockchain has its own cryptocurrency (called BitClout). The whole network is running on Bitcoin public blockchain and users can buy BitClout using their own Bitcoin.
People can send or receive BitClout Coins (BC) by other users across the network and even “invest” in a new type of crypto asset called Creator Coin (CC).
Token’s supply within the BitClout network is taken under control by automated market makers. Price variation is governed by the bonding curve mechanism that explicitly raises up the value as more tokens get minted (It makes BitClout naturally scarce, resulting in 10 to 19 million BitClout minted in the long run).
Creator Coin: Every time a new user signs in its own CC is created. Everyone can buy it using its own BC. Basically, that’s an incentive to bet on a people’s success: the more a given CC is purchased the higher its value becomes (Bonding Curve scheme). It means that early adopters can buy a given CC at its minimum price and gain positive returns if the person linked to that CC increases its reputation.
This mechanism is rewarding for all people involved in the network and since users’ actions are reputation oriented, it ensures the quality of content shared on BitClout.
In a nutshell, you can bet on people’s success and earlier you bet greater will be the net return. Moreover, BitClout is planning to implement other functionalities tied to the Creator Coins to allow engaging better with their community, you can find it explained in BitClout’s White Paper in “What Are Creator Coins Useful For?” paragraph.
BitClout is just born and it got more than 100k signed in yet (Included me). If you want to join and connect here it is my profile.
More and more people (not only developers, entrepreneurs and enthusiasts) are getting closer to decentralized blockchain-based solutions and recent trends such as NFT (Non — Fungible Tokens):
Founders Reward: everyone on BitClout is allowed to keep a predefined percentage of coins that are created (Founder Reward). To make an example, If Bob sets its Founder Reward to 10% and then Alice buys 100 of Bob’s Creator Coins, 10 coins of the amount bought will end up in Bob’s wallet rather than Alice’s.
The 10% is a good default value to keep a stake over own Creator Coins, when their price is relatively low at the beginning, so as it increases and more people purchase it would be better decrease the percentage till 0.
BitCloud and, generally, decentralized social network paradigm are certainly in their early days. Personally, I can’t wait to see where it is going. Nevertheless, we can already see a new way to think about social network interaction.
As a decentralized blockchain-based social network, BitClout is more secure with respect to current centralized social media due to the lack of a unique point of failure (a full copy of all transactions and data is stored in every node running the network). Moreover, blockchain architecture allows users to make P2P transactions and thus, monetize their reputation on the network. This new economic incentive system based on blockchain solution has created a new kind of social network business model not relying on targeted Ads and personal data upselling, furthermore, as provided by a public blockchain architecture all transactions within the network are perfectly traceable and transparent (Welcome to the BitClout Block Explorer).