A new platform promises to turn social value into financial value but skeptics are already raising concerns
Unlike a platform like YouTube that allows users to monetise their content through video ads, if you run a popular Twitter account or one of your tweets goes viral the only way to capitalise directly from the success is by subsequently promoting galaxy projectors and purple vibrators in your replies. But now a new social network has launched that promises to allow influencers and users to monetise and profit from their popularity.
BitClout is a decentralised block-chain based platform that tokenises Twitter personalities and enables users to buy and trade coins representing these personalities. Think of it as a stock market for people and their reputations. It works like this. Every profile on the platform is given its own “creator coin” which can be bought and sold by anybody using the network’s native cryptocurrency, also called BitClout. The value of someone’s creator coin is designed to rise and fall depending on the “social clout” of the person in question. So, for example, if Kanye West came out with another popular Yeezy sneaker that everyone loved, his social stock, and therefore (theoretically) his creator coin, would increase. If he then went on another rant about slavery being a choice, his popularity would decrease along with the value of his creator coin. The idea is that you as a trader can make money by speculating on a person’s future popularity and social ranking.
BitClout is, in theory, a way of turning social value into financial value. As the argument goes, why should the social networks – Facebook, Instagram, Twitter etc. – be making all the money, when it’s the users who are creating and viewing the content. “What you get to do is monetize yourself,” the anonymous founder Diamondhands (Reddit slang for someone who holds onto a strong financial position) told Decrypt. “All the positive things you put out in the world will cause people to like you and buy your coin. You can monetize pent up enthusiasm for you, and let fans ride the rocket ship with you.”
When it launched earlier this month, BitClout had already pre-downloaded 15,000 of the most popular Twitter profiles – think Justin Bieber, Barack Obama, and Elon Musk – onto its platform, mostly without the knowledge or permission of the people attached to the profile – a move which has already caused backlash. It then assigned thousands of cryptocurrency tokens to each of them. Each person is entitled to a portion of the token associated with their identity. For example, Musk is entitled to claim some of the $12.7 million that his Elon Musk token is currently worth. However, in order to do so you are required to first tweet about the site (conveniently free marketing for the platform). A few celebrities have already sent out their tweets including Pamela Anderson and Bhad Bhabie.
This, however, leads us to one of the major issues of BitClout: while you have to transfer money – real money – into the site in order to buy the BitClout cryptocurrency, as of now you cannot withdraw any money out. A user can send these tokens to other users or use them to buy creator coins but there is no way to redeem them for cash or Bitcoin. When you try, the following message is displayed: “BitClout is under brief maintenance. All funds are safe. Thank you for your support. We’ll be back shortly.” Understandably this message has not assuaged concerns and firms that specialise in cryptocurrencies have already likened BitClout to ‘Bitconnect’, a notorious 2017 Ponzi scheme and crypto scam.
Skeptics of the platform have also raised other concerns. Crypto entrepreneur and co-founder of Tezos Kathleen Breitman told Coindesk that BitClout’s attempt to commodify individuals creates an “ick factor” that is especially off-putting to women, while blockchain researcher Lumi argued a marketplace that trades on the reputation of real people creates an incentive to “cancel” them. “All you have to do is open a short position and then try to mangle someone’s reputation,” they said. Criticism has also been directed at the platform for its decision to upload the profiles of 15,000 people without their consent. Brandon Curtis, the chief research officer for decentralised token exchange Radar Relay, has already issued a cease and desist order over its use of his name, photograph and likeness.
Despite these issues, many high-profile investors including Reddit co-founder Alexis Ohanian and the Winklevoss twins (known for suing Facebook founder Mark Zuckerberg) have bought into the idea and BitClout now holds nearly $170 million worth of Bitcoin in a wallet over which it has total control.
One pro – or con depending on how libertarian your politics are – of the platform is that it offers a censorship-resistant, decentralised alternative to the traditional social network model. Unlike platforms like Facebook and Twitter, BitClout will not be regulated by centralised moderation policies which means it wouldn’t be able to implement bans such as the one Donald Trump was given by Twitter. Another difference is that, unlike the architecture of the traditional platforms which rely on centralised servers to keep their networks running, BitClout uses dozens of autonomous blockchain-based nodes scattered around the world. According to Diamondhands, the code for BitClout’s blockchain is open source and will be published by the team soon. This spirit of decentralisation is a factor which has also contributed to the insistence of Diamondhands to stay anonymous, despite many people widely identifying the founder as former Google engineer Nader Al-Naji. “If something is to be decentralized, it needs to be run by a community not a dictator,” they told Decrypt.
Despite all the concerns that have cropped up in the mere weeks since launch, Diamondhands remains confident of the success of their platform. “To me, it’s just a matter of time before everybody sees where the right side of history is,” they said. Will these words prove true or will they end up ringing as hollow as Elizabeth Holmes’s similarly grandiose statement, “This is what happens when you work to change things. First they think you’re crazy, then they fight you, then you change the world“? Stay tuned.