The need for SocialFi
In October last year, Facebook and its subsidiaries went down for just six hours, triggering a reaction that required not only an apology from the founder, but also a subsequent blog post to insatiate demands for answers. For six hours, people were unable to view messages from loved one, log into reliant services like Tinder and, God Forbid, scroll through the newsfeed to prevent a second of boredom. Social Media platforms may be digital, but their physical impacts are inescapable. It’s from these likes, shares, comments, and messages that spawn real-world civic action, drama, relationships, and violence.
These omnipresent platforms are now one of the latest frontiers being challenged by proponents of Blockchain Technology, a distributed database system that was first established to host Bitcoin. SocialFi, as the disruptions are called, literally represents the integration of crypto-financial services with online social interaction (Social+Finance). This has the potential to maximize the real-world earnings that influencers and followers can make from their participation. The crypto revolution has also presented exciting solutions to two of the most common complaints about social media incumbents; unilateral censorship of free speech and unconsensual use of user data.
INTEGRATION OF CRYPTO FINANCE
Ignoring SocialFi, the crypto-sphere is already generating huge earnings for a range of participants. This includes
- Miners earning cryptocurrencies in exchange for verifying transactions for a blockchain
- Artists selling their art as Non-Fungible Tokens or NFTs (virtual assets whose ID and ownership status is stored on a blockchain) which automatically pay them royalty whenever it’s sold on the secondary market
- Gamers making significant income by earning and trading in game rewards and tokens
- Citizens suffering from inflationary currencies being able to safeguard their wealth in StableCoins who’s values are pegged to assets like the USD
- Traders that speculate and arbitrage with all these different assets and more
One emerging SocialFi application is enabling seamless access to these services from platforms such as Facebook. A notable example of this is the SocialDeFi Alliance. This would drastically reduce the friction of getting involved, ensuring more people can safely access the finances available in crypto.
Additionally, natively crypto platforms such as Monaco Planet have sought to ensure safe access by requiring logins through wallets like Metamask, among other mechanisms.
The advent of NFTs has also provided a lucrative avenue for influencers to directly profit off their reputation. The term often used for this is ‘Social Tokens’, and rudimentary examples have already arrived. For example, Youtube has experimented with issuing personalized NFTs to content creators which they can then hold and sell. Thus, giving them an asset, whose value can appreciate with their status. Twitter has also enabled blue accounts to use their NFTs for their profile pictures to raise the price that they may get in the event of a sale.
NFTs are also able to enrich the fans of influencers. For example, the project Rally enables influencers to issue tokens to loyal fans that entitle them to perks such as exclusive content. These tokens are an improvement on existing giveaways as fans can sell the NFTs among themselves, creating an economy around the artist.
Another possible use of NFTs on Social Media platforms is to bestow governance rights. In other words, the more active you are on a platform like Monaco, the more tokens and thus ‘votes’ you get on proposals for the platform. Such a structure can be useful to ensure decisions such as who to censor are made democratically, rather than unilaterally by the employees of a site.
OWNERSHIP OF DATA
A variety of projects are also moving to give users agency over the data that social platforms collect. These include projects like RSS3 which enable users to clearly see how their data is being collected and veto this if they choose.
Moreover, projects like CIRUS and FRAGMA seek to enable users to automatically generate or ‘mine’ tokens for interacting on their platforms. Thus, sharing the profits of user activity with the users.
The omnipresence of social media in our lives will likely never subside. As a result, the reforms towards decentralisation and ownership emanating from SocialFi aren’t just exciting; they’re critical.
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Author’s Personal LinkedIn: https://www.linkedin.com/in/danigan-keecha-milsom-210a62189/