The First Decentralized Social Network
Prediction: In 24 months a billion users will adopt decentralized social networks
Yeehaw my friends,
The first web3 social network is about to take off. All the signs are pointing towards a massive shift that is about to flip the current social media framework on its head.
While it’s too early to tell exactly who the big winners will be, there are a lot of fundamental and executional strategies to keep an eye on. Today I want to highlight one project in particular.
Before we dive into this project, I want to acknowledge there is a lot of controversy around it. Whether or not it succeeds is not important—the important takeaway is that entrepreneurs are taking big shots at decentralizing social media, and as smart business people, we should analyze each attempt.
Last week, the BitClout team made ALL of their code public. If you aren’t familiar with BitClout, the best summary is that right now it looks and feels like web3’s version of Twitter.
Could you even imagine Twitter making all its code public? Or giving unlimited access to its API? The answer is no. This would never happen with Facebook, Twitter, Instagram, Snap, etc.
There’s a lot of controversy though around how BitClout decided to launch its decentralized network. Let’s review the primary concerns:
PRE-POPULATED USER PROFILES OF CELEBRITIES AND BRANDS
Every celebrity or high-profile brand from Elon Musk to the The Dallas Cowboys has had a profile created for them by the creators of the network.
Here’s a look at the unclaimed profile for the Dallas Cowboys.
While many people are upset about this approach, I actually think it’s a big positive. Here’s why—without pre-populated profiles based on Twitter accounts already in existence, any new social network is going to have squatters create accounts and hold people ransom.
Many people call this a bug in BitClout’s launch, but it may actually be a huge feature. How can a web3 social network ever be meaningful if a bunch of squatters claimed all the high profile usernames before the real owner could adopt the new network?
THE SECOND ISSUE IS THE MARKET CAP THAT IS ATTACHED TO EVERY PROFILE
It feels weird to have a market cap placed on you. Especially when it is placed front and center on your profile. I agree with this concern, while at the same time I can see a path forward that can overcome this design choice.
Let’s go back to the news about BitClout releasing all of their code. What are the implications of this?
BitClout stores all of its data on a public blockchain, which means that anyone in the world can run a "node" that exposes their own curated feed. Imagine if ESPN ran a node that curated a feed of the best sports content. Or if Politico ran a node that curated a feed of the best political content. Additionally, since BitClout is fully open-source, these players could even customize their UI and build custom algorithms to rank the influencers and posts in a way that serves their specific target customer. We think this will quickly move us from a world in which a handful of juggernauts control the dominant feeds to one in which consumers will have thousands of feeds to choose from, each with its own specific focus.
With this context, you can imagine a UI that doesn’t include price. A UI that just shows content posted by each user.
On top of that, storing all of the data on a public blockchain makes it so that, with one engineer, anyone can build a social media experience that's competitive with the existing incumbents. It cannot be overstated the extent to which this lowers the barrier to entry for creating new social media products. It becomes possible for existing publishers to trivially spin up social apps and experiences as direct adjacencies to their core business, and allows upstarts to innovate on a relatively even footing with megacorps for the first time. Compare this to today where building a competitive social app generally requires building a billion-user data moat first.
The only way to compete against a behemoth such as Facebook, is coordinated guerrilla warfare. A strategy that aligns tens of thousands of developers and businesses to independently pursue their own interest, while collectively competing against the juggernauts. This concept, if executed, is a 1,000x improvement over web2 social.
Access to content and reach are only one side of the equation though.
The other is monetization. Users of social networks have very limited ways to be compensated for their participation. Ad based models are required to keep web2 social networks alive and very little, if any, of that value is shared with the people and communities that make web2 social networks relevant.
Creator coins help move social networks away from ad based models.
Creator coins are already changing the game in terms of how creators monetize on the internet, but they're only the beginning. Because BitClout is money-native and open-source, anyone in the world can start to experiment with new ways for creators to monetize. For example, imagine a major creator wants to start offering premium content in exchange for a monthly subscription. All it takes is for one person on the internet to build this feature, and the entire BitClout user-base gets access to it instantly.
Does this mean advertising will go away? I doubt it … some people will still build ad models around their node of a decentralized social network, while others will pursue other business models, like commerce or subscriptions. The primary point here is that a decentralized social network can better diversify the business model that keeps it online.
Sure, Facebook and Instagram are pushing commerce solutions in order to diversify their revenue streams, but as I’ve said before, these platforms can offer social commerce, but they cannot be social AND commerce in the same UI. There are trade-offs to be made between a UI that is purely social vs. one the is purely commerce.
Contrast this to a decentralized social network and we get 1,000’s of developers who can create specialized UI experiences to achieve virtually any use case with the dataset provided by the network. This means one version of BitClout could operate as a subscription model, another centered around commerce, and a third driven by an ad model. None of these nodes would disrupt the user experience of the other, and therefore can be REALLY good at one use case and one business model.
SUMMARY
Whether BitClout is successful ultimately doesn’t matter. We also have to separate fundamental strategy from executional strategy. What do a I mean by this?
BitClout’s fundamental strategy is its decentralization.
The executional strategy are things like reserving profiles for celebrities and high profile brands.
Many projects will attempt to create a decentralized social network, and we need to pay close attention to the fundamental and executional strategies they pursue. How will other projects differ from BitClouts path? What aspects remain the same?
There are many other ways that I can see a decentralized social network come to life. The least obvious in the beginning will likely be the winner long-term.
In the coming weeks I’m going to publish observations on how other projects are choosing to build in this space, and the other ways that a decentralized social network could be born.
As I conduct this research, I’m going to form a list of “laws” or “properties” that a decentralized social network must have. This will help us identify who has the best chance at winning this market, and hopefully, allow for a lucrative investment opportunity for those that spot which project will win this race.
The next billion users in web3 will come via crypto social. I believe this will happen within 24 months :)
That’s all for today. Hope your week is off to a good start. I’ll talk to you again soon.
Jeff