It is becoming more and more evident that the social media paradigm is broken. Successive scandals continue to underscore that social media platforms place shareholder profits and the interests of advertisers above consumer protection and security. You do this in banks that threaten you with imprisonment, or at least a colossal fine and censure from the regulator.
Decentralized social media is in the spotlight, but what needs to happen in order for it to gain the necessary momentum to compete with the size and scope of the social giants?
In the shadow of DeFi’s meteoric rise, several stories crept in with the common thread of decentralized social media. On November 8, FTX CEO Sam Bankman-Fried addressed an audience at the Breakpoint event in Lisbon. He spoke of his belief that there is a huge unrealized potential in decentralized social media. He noted the ability to “supercharge” DeFi by combining a great product with a huge, well-established global user base.
A few days later, Alexis Ohanian, co-founder of Reddit and head of VC Fund Seven Seven Six, announced a partnership with the Solana Foundation. Jointly, the partnership will pledge $100 million to sponsor a decentralized social media project on the Solana platform.
Twitter’s decentralization goals
Around the same time, more seismic news emerged that Twitter is launching an in-house team dedicated to cryptocurrency as part of its quest to become a decentralized platform. Separately, Twitter provided funding for an independent initiative called Bluesky, dedicated to creating standards for decentralized social networks. Now, the new Twitter team will be working alongside the Bluesky team in a joint research effort.
Of course there’s Facebook, with its recent woes and the rebranding of the parent company to Meta. The company confirmed that the change reflects its focus on developing a digital metaverse. Based on previous Facebook news, one might assume that it will develop an economy based on the dime coin problem. The company also previously confirmed that it is looking into NFTs.
If we consider the metaverse as a natural evolution of our time spent online, it is inevitable that social media will play an active role in the infrastructure. The big question is will the winners be centralized or decentralized?
David vs. Goliath?
It’s clear that established social media companies have a Goliath-sized advantage over newcomers when it comes to user numbers. The same has been said of banking before the arrival of rival banks, Bitcoin and DeFi, where big fintech companies outpace banking, and the £2 trillion cryptocurrency market was created by people, without the traditional financial system and governments — All of them are in the last decade.
Facebook and Twitter have wide audiences and are ready to test out new features and integration, however, user sentiment isn’t necessarily on their side. It’s recently become clear that Facebook, in particular, is struggling to attract younger users.
Moreover, decentralized platforms have a potentially fatal advantage – financial incentives. Peer-to-peer Blockchain payments, along with DeFi and gamification, provide endless opportunities for users to generate income for their content while earning for other activities like watching ads. Could this be the incentive that pulls people away from traditional social media platforms?
I am a fan. Years ago, in the huge utility token controversy prior to Howie’s test, my version of the regulators explaining the tokens was a fictitious Facebook coin in which a consumer shares the network’s economic value with a “product” (in exchange for security) purchased instead of a token, using their personal data To earn network revenue (advertising) and create value.
In this illustrative example, several billion dollars of company valuation and profits will be distributed among billions of users and not just a few shareholders who may have unbalanced incentives or seek to exploit the data of billions of people, often with unintended negative consequences.
Social Media Times DeFi
It’s the early days of Web 3.0 but there are a few projects that innovate at the convergence of social media, decentralization, and digital assets.
Subsocial was built using the Substrate framework, which allows it to take advantage of the Polkadot and Kusama block ecosystem. It allows anyone to create their own social network without permission so that users can send and receive tips, recurring payments for content, rent or sell posts as an NFT, introduce the concept of monetizing memes, post social icons to communities, and much more. Compared to centralized platforms, they are quite resistant to censorship, so no one can block an account or sell personal data to others.
The interoperability of the Polkadot ecosystem is what makes Subsocial stand out as a blockchain social media platform, along with its customization capabilities. Once the platform is up and running, it will integrate with other applications running on the network, providing more monetization opportunities than competing platforms.
Alex Seaman, CEO of SubSocial, explains how he thinks this will launch new economic models based on social media, “We call it social finance – social networking combined with decentralized finance. The social networking platform on the blockchain is completely transparent, which means you can see Account balances for everyone you interact with.”
Seaman believes that people will not be put off by the idea that everyone can see their account balances, and find similarities with existing social platforms, “At first, people might object to the transparency feature, but think about when social networks were first launched, and they didn’t want People are posting pictures of their homes or children, which they do now regularly. I think once people experience the huge benefits of SoFi, such as the micro-economy, and the creators capturing the full value of their work, the sentiment will change.”
Since it is based on the blockchain, it is also possible to decouple the front end of their website from the underlying SubSocial infrastructure, giving developers more opportunities to customize their apps and websites while taking advantage of the platform’s engine.
Permanent Uncensored Content
Another notable project is Creaton, based on the Polygon platform. Creaton is a competitor to platforms like Patreon or OnlyFans, which allow creators to distribute paid content but both charge exorbitant fees and come under fire due to random account closures and opaque policies. By contrast, Creaton is a decentralized platform that allows creators to reach their audiences but at low fees and ensure resistance to censorship.
Creaton works by providing each creator with a non-fungible token contract (NFT) and printing all of its contents as NFTs. Since the NFT itself can’t necessarily hold all of the data in the content, which could be memory-heavy photos or even videos, Creaton works with Arweave, which provides a “permanent network” of uncensored, permanently available content.
Alexander Kloss, founder of Creaton, makes a compelling argument for censorship-resistant Web 3.0, “Online censorship by platforms like TikTok shows that judicial restrictions from a country can extend across the central Web 2.0. In an increasingly defining world, it only makes sense All creators own their entire content through NFT.”
Based on the Creaton model, the user is assured that their content is on the Internet forever, and thanks to smart contracts based on the blockchain, they will continue to get paid under the terms of its distribution. Klus believes this creates healthy competition between content platforms.
“Web3 will enable creators to go where they treat best, allowing them to switch between platforms with ease, thanks to the decentralized and interoperable nature of blockchain-based applications,” Klus adds.
At this point in the evolution of Web 2.0 and social media, it would be difficult to find many people who would argue that the current social media model is sustainable. The big question is whether the vast global user base of existing users can be persuaded away from their established accounts in favor of a different way of interacting online.
Financial incentives, ownership of your personal data, and control of your content in the Web 3.0 metaverse offer SoFi a compelling proposition and a good start. If it’s all free and a satisfying experience is easy to come by, it’s a killer app.