Is Blockchain the Key to User-Controlled Social Media?
Blockchain industry startups are attempting to capitalize on a growing disillusionment with traditional social media platforms.
New social media platforms are starting to emerge that utilize blockchain and distributed ledger technology in an effort to build platforms where users are in control of their data and more expressive choices are available.
The development in the industry's startup ecosystem coincides with a growing disillusionment with the traditional social media platforms. But will security, control and less exploitive content be enough to compel people to start over?
Dor Konforty, CEO of Synereo, one of the next-generation social platforms, thinks so. But, he believes this transition will happen in stages, starting with open-source communities and decentralized technology.
Synereo is actively targeting cryptocurrency enthusiasts, recently presenting its distributed tech stack, programmatic content delivery network and smart contract system at the COALA blockchain workshop in New York City.
Konforty and his team are building the platform as more of a public utility rather than a profit-making machine. And that's when things get interesting, because now users aren't made to follow a specific path and flow determined by centralized platform providers.
For instance, because the platform is peer-to-peer, users can create multiple identities for different groups. During the COALA event, Konforty illustrated this feature saying it would be fine for his friends to see pictures of last night’s party, but that he might decide to shield those pictures from co-workers.
Another next-gen social platform that’s targeting the cryptocurrency community is being developed by Steemit.
The goal for Steemit is to create a Reddit-like platform that "rewards positivity and accuracy over garbage content like some of the things you see on Facebook," said Ned Scott, CEO and founder of Steemit. "On the other hand, we want to create the lowest barrier means to getting cryptocurrency."
This direction is a sound one.
"The more people get disillusioned with how Facebook and Twitter manage their data and do not protect them and use their streams to advertise and tinker with...the more they’re going to want a platform not controlled by a single entity but instead distributed," said Gil Luria, head of technology research at Wedbush Securities.
And while replacing the incumbents will be difficult, Luria said that bitcoin users might be a market where such an idea can be incubated.
In practice, most industry startups are using forms of community currency to facilitate this goal.
On Steemit, there will be three different types of currency: steem, the proprietary cryptocurrency; steem power, the digital currency users get when they post successful content that then can be used to vote on other content; and steem dollars, which is cryptocurrency pegged to the dollar.
According to Scott, one of the problems with the cryptocurrency movement is the difficulty in acquiring the tokens; with Steemit, it’s as simple as liking or creating a post.
The company’s interest in getting more people into cryptocurrency is just as simple: "It’s a very liberating tool," Scott said.
Synereo also has it’s own proprietary cryptocurrency, amp.
Amp allows users to benefit from their participation and will also help make sure good, accurate content reaches the most people. Each user will have a reputation on the network determined by their location on the network and the history of how their content has been appreciated.
A better reputation allows a user's post to reach farther into the network. If a user invests amps into a particular post, that post can then permeate past the user’s organic reach and into greater spheres of the network.
The people who see that content then get amps just for their attention; the number of amps received for views depends on the reputation of the user viewing the content with those users that have better reputations getting more amps. For instance, a well-known political commentor that has a large following would be compensated more for their attention to a political column than a user that posts in networks that discuss sports.
Synereo is currently giving amp bounties to anyone that contributes to the project, either developing on the open-source code, creating new content or spreading the message.
And this is where distributed ledger technology plays a role, in the transferring of tokens across the network.
Although Konforty said a blockchain isn’t the correct tool for most of Synereo’s features. The technology doesn’t make sense for transferring information to be replicated, such as picture of your cat or your breakfast, but instead is only advantageous when working with immutable data like valuable units.
Both Synereo and Steemit aren’t putting all its chips in one basket though, seeing the social networking applications as one iteration of a bigger decentralized platform play.
Steemit has been building its platform after raising money from several investors, although the terms were not disclosed.
Synereo has funded its work through crowdsales of amps. Another campaign will take place soon so Synereo can finish developing the voting system – sending tokens towards posts to create a hierarchy of relevant and useful content.
Reluctance from Average Joes
But, proprietary tokens are also how many new blockchain-based companies make initial money to fund projects. It’s a type of crowdfunding that also resembles multi-level marketing schemes that have scammed users out of money in the past because tokens increase in value as more users join the network.
Should the developing company have a large stake in that token, it could decide to cash out when the price rises, making substantial amounts of money while destroying the value of everyday user’s tokens.
There’s also the risk of pump and dumps, since the cryptocurrency community is made up of a significant amount of speculators.
In the community these platforms fare going after "there’s a high level of awareness to not being taken advantage of by having a cryptocurrency that’s goal is to enrich the founders," said Luria, adding:
But this skepticism can be counteracted by a good amount of transparency. The founders of these companies need to be clear with users about how much stake they have is the cryptocurrency and what they’ll use the gains for, Luria said. Ethereum, he added, is a prime example of how projects can "communicate a value-add so people will participate in the crowdfunding sense, instead of pyramid scheme sense".
Steemit also tries to offset some of this uncertainty by encouraging everyday users that see benefit in a decentralized platform to use the steem power and steem dollars, instead of regular steem which even today is being traded by speculators. The company has even coded the blockchain to steer users in that direction, giving 50% steem power and 50% steem dollars when awarding users for content.
Although tech-savvy users will be able to divest or "power down" steem power into regular steem to trade on exchanges for speculation, Scott said. And steem dollars will be able to be cashed out into fiat currency through exchanges as well.
"We recognize that the whole volatile world of crytpocurency is not for everyone," said Scott. "We’re not telling everyone to get into a risky business; we’re just creating a fun gaming platform for rewarding good content."
Overall, these platforms are advancing a dialogue about how social media platforms can be more user-centric and sustainable.
Facebook, Twitter, LinkedIn, Instagram and Snapchat have taken over social media, and it will be difficult to get users to switch after building profiles on those platforms for years. But Konforty doesn’t think it’s impossible, especially as more people become aware of the dangers of centralizing these platforms.
For instance, there has been outcry over Facebook’s manipulate OS user newsfeeds for profit, selling information to the highest marketing bidder, and the psychological experiment it conducted in 2012, finding that they could shift political sentiment of users.
Twitter has also been through the ringer for the increasingly number of fake accounts and bots. And recently, people have been complaining about LinkedIn where political commentary and memes are finding it’s way into the feed developed for career networking.
According to Synereo, more people will join these decentralized social networking platforms once the open-source tech community starts developing expressive applications and empowering tools for the platform, like better control over one’s data.
"What we all know by now is that the current social networks are based on centralized entities where the user is the product," said Konforty.
In this way, he suggested that any of the negative connotations of digital currencies are perhaps outweighed by their benefits over existing systems.
Bailey Reutzel is a veteran finance reporter, most recently covering the intersection of tech and finance for PaymentsSource.
Her latest project Moneytripping is a Gonzo-style journalism project focused on exploring money, politics and finance in America.
Image credit: weedezign / Shutterstock.com
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.