MAJR DAO Report: BitClout
The Crypto Social Network
@xponentialdesign
The world is becoming digitized and decentralization is following close behind. It is happening to the financial system with Bitcoin. Social media is on deck.
We live in a society that is consumed by social media. Platforms like YouTube, Facebook, Twitter, Instagram, and Snapchat consume hours of the traditional user’s daily lives around the globe. In 2020, there was an estimated 3.6 billion people using social media and it’s expected to grow to 4.41 billion by 2025. More than half of the global population. Wild.
Eventually, everyone will have a cellphone and be on social media. It’s an easy way to stay connected, communicate, and leverage all the content available for entertainment or educational purposes. Both content creators and traditional users are what make social platforms go. Unfortunately, corporations, like Facebook and Google, act as the gatekeepers to these applications and make these huge networks centralized. They make the rules and take a significant portion of the profits. On some platforms, content creators are lucky to get a piece of the pie, but in general, creators and users see very little monetary value for their time and efforts. Times are changing.
A new project is gaining traction and attempting to elevate social media to new heights through decentralization. This is BitClout. “A platform for the people and owned by the people.”
What is BitClout?
BitClout is a first of its kind, crypto-based social network much like Twitter that allows users to speculate on and invest in people (mostly celebrities or particularly famous individuals) with real money. It is basically a stock market for social media allowing all users, not just content creators, to monetize an individual’s “clout” by investing in personalities and content.
The structure and key components of the network seem to be inspired by Bitcoin as they share core similarities. The BitClout protocol is completely decentralized and functions on its own blockchain. This means anyone could run a node for the network and store a copy of all its data. Stealing a page out of Satoshi’s playbook, the founder(s) of BitClout created the platform completely from the ground up and remain anonymous. Its native currency is engineered for scarcity. The one main difference between the two is that BitClout can support complex social media data at a higher throughput. Therefore, it has the capability to scale at a pretty rapid pace.
Like Bitcoin, BitClout is powered by two main elements: coin and code.
How it works
The network’s native currency is called BitClout ($CLOUT). Users buy BitClout with bitcoin through a decentralized exchange that is already built-in the application itself. To keep the token artificially scarce, the price of $CLOUT doubles for every million sold.
There are many ways to utilize the currency on the platform, but the primary purpose is to participate in the speculation of celebrities and their popularity by buying “creator coins”. Every profile that is listed on BitClout receives their own personal coin that can be bought and sold. These coins are referred to as “creator coins”.
By creating a profile, you can receive your own coin that others can buy. Purchasing creator coins is essentially investing in that person’s reputation or standing in society. The idea is as they get more popular and their “social clout” rises, their coin’s price will be positively correlated and also rise. Ultimately, the price increases or decreases depending on people buying or selling it just like any other security.
For example, if Elon Musk succeeds in landing the first person on Mars, his coin price should theoretically go up. And if, in contrast, he makes a racial slur during a press conference, his coin price should theoretically go down.
- BitClout Whitepaper
You can buy the coins of your favorite celebrities, influencers, or even yourself. The application automatically pre-loaded the top 15,000 influencers from Twitter, so you could purchase some of their creator coins even if they are not users. These famous profiles are “reserved”. This means these accounts will either have a clock icon next to their name if the given person or owner has not joined, or a check mark will be shown verifying they have joined the app providing valid identification. The platform has earned some interest bringing in well-known figures from both the celebrity and investing world including tech billionaire, Chamath Palihapitiya.
The method of these celebrities proving ownership of a reserved account is simply done through twitter. Here are the steps.
They navigate to their profile on BitClout
There is a button to hit that allows them to tweet their BitClout public key
After tweeting, they gain full access to the account and receive a percentage of the creator coins associated with their profile called “founder rewards”
This is a brilliant marketing strategy by BitClout. In order to have some of the biggest names around the world get access to their founder rewards on the app, the designated celebrity must tweet out they are joining the network. This serves as an easy way of promoting and advertising BitClout as these individuals have some of the biggest followings.
What are the incentives?
For the celebrities and influencers, BitClout offers multiple ways to further engagement with an audience, build their brand, and monetize themselves on a decentralized network. The list below is only a snapshot of some of the main benefits to incentivize creators.
Comment Participation - Creators can tailor and customize the logistics of their account so that only users with a certain amount of their coin can get access to commenting on posts and having a say or opinion on the content.
Message Prioritizing - Spam and random messages are unfortunately a part of everyone’s lives but especially for those that are famous. BitClout provides a way for influencers can prioritize their inbox in a few ways. They could make it so only people with a specific amount of the coin can contact them, prioritize their inbox with their largest coin holders, or have a small fee in the form of their coin to message them.
Sponsorships - Similar to the messaging inbox, creators can have a designated inbox where anyone can bid to have them repost particular content personal to them. If I wanted Michael Saylor to repost something of mine, I could send a bid consisting of creator coins to his inbox, and he keeps them if he fulfills the request.
Premium Content - BitClout can provide a paywall for a creator’s content that is only visible to coin holders of a designated size. This could also to the form of a subscription that users subscribe to in order to have access to the premium content.
Founder Rewards - This is probably the most important incentive of them all. Every profile on BitClout allows the creator or owner to be entitled to a custom percentage of their coins that are created as a “founder reward”. The founder rewards work like this. I create a profile and a coin. I set my founder reward percentage to 10%, which is considered the default. Then, someone buys 100 BitClout of my coin. Because my founder rewards percentage is 10%, 10 of the 100 BitClout would then be used to buy my coin, and those coins would go to my wallet rather than the purchaser’s. Depending on the value of a creator’s coin, these rewards can be substantial. Despite 10% being the default, BitClout actually recommends buying your coins upfront at the origination of the account and setting the percentage to 0% to maximize value.
For the users, BitClout is the ultimate platform to provide as inclusive and intimate of an experience with top celebrities that one could get.
Access - Social media is really the only way for the average person to get remotely close to or engage with prominent superstars and personalities. BitClout amps up this access even more allowing users to get in touch with big names and have the ability to participate in their content. There are limitations with the current platforms that exist, and part of the problem is that there is a lack of incentive. Why would a famous celebrity take the time to respond to me, show me exclusive content, or repost something of mine if they are not compensated for it? BitClout fixes this by giving users the opportunity of more access to these big creators by providing compensation for the celebrity in the form of the creator coins on the other end. Top personnel are right at your fingertips with this platform.
Investing - Before BitClout, there was never a way to truly financially speculate on people or bet on someone’s potential. Now, you can do this by buying anyone’s creator coin and succeed with them financially as they grow. Unreal.
Decentralization
Though incentives are important, perhaps the most intriguing innovation of BitClout is decentralizing social media. It has implemented and functions on its Proof of Work (PoW) blockchain, so anyone can run a node on the network. This enables anybody running a node to build apps on top of the BitClout protocol and integrate the native currency, $CLOUT, as well as the creator coins.
BitClout could be the starting point to a new world of social media that operates on the idea of “clout” data and speculation. As the platform continues to grow in popularity, it will be fascinating to see how this plays out.
Wrap Up
There have been grievances and praises about BitClout, but we’re excited to see where this project goes.
Though not a lot is known about the BitClout team, it has some strong backing. It has raised ~165 million from renowned VCs including Sequoia Capital and Andreessen Horowitz, Chamath Palihapitiya’s Social Capital, Pantera Capital, Coinbase Ventures, Winklevoss Capital and Reddit co-founder Alexis Ohanian. It is hard to overlook this and not assume BitClout has some sort of potential.
There is a plethora of benefits this technology brings to the table hence why the platform has grown quicker than anticipated. BitClout sets fire to creator’s potential, innovation, and the impact they can have on their audience. There are countless ways for creators to monetize their reputation and content. It gives power to the users and provides an opportunity for everyone to participate in the network’s growth. This is one of the first companies to use blockchain to create a new kind of social media platform, but probably not the last.
It presents an exciting new idea bringing the monetization, speculation, and social media together. BitClout solves existing problems and offers even the best incentives for being a user in a network. Crypto is revolutionizing various industries, and social media is next on the menu.
Brevin White
@brevinwhite
THIS IS NOT FINANCIAL ADVICE. IT’S IMPORTANT TO DO YOUR OWN RESEARCH. INVESTING IN CRYPTOCURRENCY OR ANYTHING FOR THAT MATTER COMES WITH RISK. THE INFORMATION PRESENTED IN THIS NEWSLETTER IS FOR INFORMATION AND ENTERTAINMENT PURPOSES ONLY.