The next generation of social network
Market trend is difficult to predict, but if done correctly, it will give crypto investors a huge amount of money. For example, in 2020, the boom in Yield Farming brought the investors in DeFi and Yield Farming projects a huge profit. In 2021, NFTs grow exponentially, making people think that NFTs are bubbles. It’s still not clear though, but one clear thing is that NFT projects in 2021 have grown at an unprecedented rate. And this is no coincidence since technology evolved in momentum and one innovation will lead to another. With the development of NFTs and DeFi, the next trend is likely to be Social Tokens as well as Web 3 Social Networks.
In today’s article, we will talk about Social Tokens, and Bitclout, which is an interesting project about Social Tokens.
What is Social Token?
Because the social token is in its infancy, its language and definitions are not entirely agreed upon. While the categorization of social tokens will change over time, this report outlines a foundation for how to classify social tokens as an asset class and explain their value proposition. Generally speaking, social tokens can be divided into a few categories:
1. Personal Tokens — issued and controlled by a primary individual
2. Community Tokens — issued and controlled by a group, often managed by a decentralized autonomous organization (DAO)
3. Social Platform Tokens — tokens that represent control over a platform that facilitates social token issuance and exchange
What is BitClout?
BitClout is a brand-new crypto project aiming to build a social network where all users can participate and invest in cryptocurrencies. BitClout provides the features of a social network platform, including post & images sharing, followers, timeframes and comments.
Basically, BitClout is seen as the Twitter of the crypto community. In addition to its unique features, the decentralized project also allows users to participate in the trading of tokens, the main difference is that each token represents an influential figure, such as Elon Musk, Justin Bieberm, Jake Paul and many other famous names, both inside and outside the crypto community.
BitClout was born with the goal of creating a resonance of speculation and legal values, thereby creating a more diversified, convenient product and allowing users to speculate on celebrities to increase their contribution to the community.
From users’ perspective, BitClout limits the spread of ads which negatively affect user experience and the ability to absorb online information. For speculated celebrities, the platform offloads the reliance on advertising and provides incentives to develop new potentials.
Many investment funds have decided to pour capital into BitClout, notably the following names: Coinbase Ventures, Huobi, Sequoia Capital, Polychain, Andreessen Horowitz, Social Capital, Winklevoss Capital, and Digital Currency Group.
How does BitClout work?
All transactions on BitClout are conducted using a platform-issued cryptocurrency, called BitClout (BTCLT).
The way BitClout works has many similarities with Bitcoin, in other words, users can directly pay for BTCLT with Bitcoin. According to Diamondheads, the founder of BitClout, after every 1 million BTCLT sold, the price of BTCLT will double, and this creates the rarity of BitClout and the opportunity to increase the accumulated value for early adopters.
Apart from buying directly, the method of mining BTCLT to receive coins is also completely feasible for participants, but it should be noted that the maximum number of BTCLT allocated for this method will be limited to 500.000 BTCLT in the coming years.
What is Creator Coin?
With BTCLT, BitClout users can purchase and sell tokens representing celebrities and influencers. Each profile on BitClout will represent a celebrity’s Twitter account and correspond to the profile’s token, called the Creator Coin. Creator Coin can be bought and sold by anyone.
For example, Twitter of the founder and CEO of Binance CZ is @cz_binance, the corresponding token will be “cz_binance”. Similarly, Elon Musk’s coin is “elonmusk”, and that of Ariana Grande is “arianagrande”.
Speculating on celebrities is interesting, but on the other hand, it is also a shortcoming of BitClout, especially when recent lawsuits have raised mixed opinions about copyright infringement since the platform uses the image of public figures but does not have the approval from them.
Notably, the tokens on the list of “Top Weekly Creators” (Top founders, listed weekly) witnessed a sky-high price. As of 9am on April 19, 2021 (GMT +7), the elonmusk coin was worth approximately $63.316.
Creator Coin, in addition to speculation, is also a measure of the effectiveness of the contribution of famous people to the community, in other words, the investment in people and the value that people create.
If a celebrity achieves a new accomplishment, such as Justin Bieber’s new album standing at the top of the Billboard chart for weeks, his Creator Coin’s price could soar. On the contrary, if there are scandals, Justin’s coin price may drop.
BitClout currently has more than 15.000 Creaton Coins, representing 15.000 most famous people on Twitter and corresponding to more than 15.000 wallet addresses on BitClout’s blockchain.
However, not all 15.000 profiles have recorded the celebrity’s confirmation, the unconfirmed profiles are still in “reserved” state.
Investors can directly buy Creator Coin by sending BTCLT to the corresponding address. BitClout will mine new coins for each purchase of Creator Coin.
Creator Coin’s pricing formula (USD):
Creator Coin Price = 0.003 * Number of Creator Coin Circulating² * BTCLT Price (USD)
Another cool thing about BitClout is that users can also create their own Creator Coin or create for an individual rated as influential and potential.
How to buy Creator Coin?
You first need to memorize the Seed Phase including 12 random words, which is used to log into your account. You can also regenerate another Seed Phase that is not the same as the available one.
After completing the first step, the system will step up to the verification step.
You need to re-enter the Seed Phase in step one.
After successfully verifying the Seed Phase, you need to verify your phone number. Enter your phone number and the system will send 6 numbers to your phone to complete this step. You can skip this step if there are identity concerns. The same goes for the email verification step.
Once account creation is complete, users can surf and view BitClout updates like a regular social network, such as comment or react. To purchase Creator Coin, investors can buy BitClout directly with Bitcoin and use BitClout to buy or sell Creator Coin.
BitClout — The Pros and Cons
BitClout interface reminds us of Twitter, with an intuitive and user-friendly interface, focusing on basic features of an early social network such as posting, sending messages and updating BitClout profiles. Besides the social network, the trading platform, Top Weekly Creators updates, and the user’s wallet are also easy to access.
BitClout is initially shaped as a speculative tool. For the long-term plan, the platform also aims to expand perks for speculators as well as increase the benefits for celebrities.
First, BitClout’s most obvious drawback is its reliance on celebrity reputation. Imagine one day that the celebrity you invested in on BitClout was smeared, then it would cost the people who invested in that celebrity a lot, or help those who carry out the attack for a profit. Next, BitClout is said to intentionally inflate the Creator Coin’s price to create “hype” and attract new investors with the aim of making a profit. Indeed, according to the Creator Coin pricing formula, the Creator Coin’s price will increase with the number of Creator Coins issued, leading to an increase in capitalization. However, BitClout is currently calculating capitalization by multiplying the latest selling price with the total amount of supply available on the market, instead of adding up the coin’s value together in each time of issuing.
So, should we invest in BitClout?
In fact, from my point of view, BitClout is nothing like Ethereum or BNB or any other projects. BitClout gives me the feeling of Bitcoin in its early days of 2015–2016. It has a lot of potential with huge backers. However, the operating model with Creator Coins is quite similar to Ponzi. BitClout will either become a new phenomenon with strong growth, or simply, it would be a zero return project.
- BitClout is currently in the portfolio of Kingsman Ventures