How The Blockchain Can Solve Social Media's Biggest Problems
As we look back on 2017, one of the most significant developments this year was the emergence of the blockchain into the greater collective consciousness. Many have watched closely (and profited greatly) as the value of Bitcoin has skyrocketed (and more recently, fallen), and in perhaps the best indicator of public traction, cryptocurrency (and by association, the blockchain) became a Thanksgiving topic, as evidenced by digital currency exchange Coinbase adding approximately 300,000 users during the holiday week.
To date, blockchain technology has gained popularity primarily in industries concerned with cybersecurity and payments, due to its ability to execute smart contracts and secure, rapid transactions. In a previous article, I covered how the entertainment industry is poised to benefit from advances in blockchain technology; in this article, I want to make the same argument for social media.
Identifying and Rewarding Value in Social Networks
Much like in entertainment, where YouTube, SoundCloud, Netflix and others control user consumption, we consume social media on a handful of platforms that have achieved massive scale: Facebook, Instagram, Twitter, LinkedIn and Pinterest, among others.
These networks rely on ad-based business models, which share a major shortcoming: users, creators, and platforms are unequally compensated for their participation on the platform. For example, Barack Obama produced the most liked tweet in Twitter’s history, but received no reward for doing so. An artist named Helen Green created a GIF of David Bowie upon his passing, but eventually lost attribution as it became widely shared across Tumblr and Instagram.
By utilizing the private ledger the Ethereum blockchain provides, companies can better track user interaction with content. This will enable the quantification of user’s worth to the network, and therefore a better idea of how they should be compensated for their activity.
Although this notion of equally spreading the wealth across the network is somewhat radical, there are several attempts to try to make this a reality across a range of applications. Here are three that are particularly exciting in the realm of social media.
In-app currencies supported by blockchain technology can fundamentally restructure how users consume content socially. While emerging companies such as Rize, from the popular live streaming app YouNow, are seeking to restructure the social media model, one of the most popular attempts is by an existing incumbent in the space, Kik. The teen chat app recently launched a cryptocurrency called Kin and raised just under $100 million in an ICO (Initial Coin Offering).
Kin is designed to offer incentives to developers and network contributors for bringing digital services, applications, and other value adds to the network, sans any middlemen. The long-term vision is to curate an in-app marketplace where brands can advertise directly to users via chat (e.g., access to VIP groups, coupons) and collect payment, while users can sell services to other users on the app.
Kik’s hope is that by moving its currency to the blockchain, it can generate both in-app value and real-world economic value. Any individual, whether a Kik user or not, can buy and invest in the currency, and all investors will ideally have incentive to participate in the Kin ecosystem, not just utilize Kik for chat. Imagine investors helping with introductions for the management team, brands bringing product promotions or launches onto the platform, or influencers moving their content from YouTube to Kik to improve their revenue stream.
This incentive model is no surefire success, however, as it invites investors to buy up tokens and bet on the volatility of their underlying value instead of contributing to the community. If token holders are not the main users of the app, the economic value will not only fail to engage users, but also expose the currency to large price swings based on short-term investor sentiment.
Access to Content
In countries like China, North Korea and Syria, citizens can be blocked by the government from accessing social media and certain content, including news, music, and more. Although VPNs offer a way around these restrictions, governments are also cracking down on these services.
The concept of decentralized content offers an alternative to combat internet censorship. One company currently developing an open-source protocol to completely decentralize premium content is DECENT, which raised $4 million in an ICO in 2016.
By providing a distributed ledger, DECENT ensures no entity can block valid access to content. Individuals can participate in the DECENT network by purchasing their native token, DCT, which they can use to both pay for content from other users and publish their own content.
Beyond the difficulties of getting enough users to sign up to reach meaningful scale, a major barrier for blockchain-based social media adoption will be the initial purchase of the token, as consumers have become accustomed to accessing social media services for free. In countries where access to content is not always guaranteed, however, the token could be a small price to pay for consistent access.
Blockchain could remedy social media’s most problematic issue. (Credit: Shutterstock)
One social media application of the blockchain that has gained more notoriety is combating fake news. The last U.S. presidential election saw a rise in targeted false content on sites such as Facebook and Twitter that was used to sway voter emotions and viewpoints. The platforms’ attempts to fix this problem have centered around partnerships with independent fact checkers, but the blockchain offers a potential solution that doesn’t require third parties.
Userfeeds is one company looking to solve this issue by economically incentivizing users to rank content correctly. While the ability to control the spreading of written content is extremely relevant right now, the future of fake news may go beyond the written word. Recent improvements in AI and machine learning make it possible to create realistic audiovisual copies of people. A great example of this is the video of Obama giving a speech created by researchers at the University of Washington.
The possible use cases this technology opens up are staggering. Any group that utilizes propaganda as tool for recruiting and marketing could cause serious damage if the technology were made available to them, underscoring the importance of a proven validation system. Fortunately, startups like Prover, a video verification platform built on top of the Ethereum blockchain, offer promising solutions to verifying the authenticity of user generated videos.
While a social giant like Facebook is in no imminent danger, the blockchain offers a unique solution to many of the industry’s deep-seated problems. By bringing together social networks and blockchain technology, it creates the possibility for a more interactive, trusted and rewarding experience on social media.
Originally published by Forbes in February 2018. Sunny Dhillon is a founding partner at Signia Ventures, a $100m seed and series A venture capital firm based in the San Francisco Bay Area. He invests in consumer and enterprise startups. He previously worked as the first business development employee at a venture backed spin-off of New Line Cinema, directly for the Lord of the Rings trilogy producers (hat tip to Mark Ordesky), as well as in corporate strategy for Warner Bros., before launching his own startup and becoming an investor.