What is BitClout? The New Crypto Social Network Cashing in on the NFT Hype
Since the creation of bitcoin in 2009, considered by many to be the original cryptocurrency, the growth of the crypto industry has erupted. More recently, the hype around NFTs (non-fungible tokens) - a kind of sellable, digital asset - is what’s been catching people’s attention.
If this all sounds a little bit alien to you, you’re definitely not alone. For many in the social media industry, cryptocurrency hasn’t really been particularly relevant or accessible until recently. However, the arrival of the latest addition to this exploding crypto scene, social crypto-exchange platform BitClout, has turned cryptocurrency, NFTs and the tech world into a hot topic of conversation and something that’s definitely worth keeping up with.
So what actually are NFTs? What do you need to know about BitClout? And what does this new platform’s arrival potentially mean for digital creators? We’ve put together everything you need to know.
What are NFTs?
NFTs, or non-fungible tokens, are a type of digital asset. Each token represents a unique object, which can be digital (such as art or video) or physical (such as real estate or cars). Each NFT has a digital signature linked to the account that owns it, allowing the ownership to be traced and verified at any time through blockchain technology. For digital creators and artists in particular, NFTs have presented a new way to monetise their content and art by eliminating the need for galleries and opening up the potential for monetisation longer term through future transactions.
In recent months and over the last year in particular, the hype around NFTs has grown and many creators and artists have begun to create and invest in them. A study in February of this year by NonFungible.com and L’Atelier estimated that the total value of NFT transactions rose 400% to $250 million in 2020, and this will almost definitely continue to grow.
To mark its 10 year anniversary, a one-of-a-kind NFT of the iconic Nyan Cat GIF was sold for nearly $600,000.
What is BitClout?
BitClout is a decentralised social network that, rather than tokenising digital and physical objects, tokenises celebrities and creators (i.e. represents them as NFTs). The NFTs on BitClout are called Creator Coins and the value of each coin is evaluated based on the celebrity’s popularity, making it possible to make gains from the sales by speculating on the coin of each celebrity or creator - think the stock market, but based around people’s ‘social clout’.
What does decentralised actually mean in the context of creators using BitClout? Well, the decentralised nature of BitClout differentiates it from other traditional social networks because it is not regulated by centralised moderation policies. This means that, among other things, the platform will not be able to implement bans or deplatform celebrities (i.e. there’ll be no cases like Twitter banning Donald Trump). Depending on your own views about social media policies and moderation, this could be seen as a good or a bad thing for both its creators and users.
It’s worth noting that BitClout was actually shut down on 12th March 2021, but was relaunched the following week (17th March), having already received financial backing from some of the biggest names in tech, including Reddit Co-Founder Alexis Ohanian, Winklevoss Capital (AKA the guys who sued Mark Zuckerberg) and Sequoia Capital.
So what does this mean for creators?
The potential for creators to make money through NFTs has already been demonstrated, so BitClout definitely presents a new and exciting opportunity for creators to monetise themselves. Ian Shepherd, Founder and CEO of The Social Store, is excited about the potential opportunities BitClout presents for creators:
“The pitch from BitClout is that it promises creators the opportunity to benefit directly from their popularity in a more controlled environment. The network is on a decentralised platform which means that creators can view all of their data, and are able to build on top of it to create unique, innovative social media experiences. It also means that it can't be moderated, or implement bans like that given to Donald Trump. I'm excited about the prospect of investing in new and emerging talent - some will buy as an investment with the hope of benefiting from the success as their social 'clout' rises, whilst others will do it to support their favourite celebrity.”
What problems are BitClout facing?
As we’ve already touched on, there are inevitably some problems facing BitClout. Firstly, though BitClout is probably the most high-profile company right now jumping on the NFT hype and focusing on tokenising social currency, it’s definitely not without its competition. Other companies such as Roll and Rally aim to allow creators to directly monetise their internet presence and allow their fans to bet on them. And as the understanding and excitement around NFTs and cryptocurrency continues to grow, there’s likely to be a number of similar companies trying to capitalise on it in the same way.
The second problem faced by BitClout is consent. The platform has already pre-populated celebrities’ accounts - more than 15,000 to be exact - and begun selling coins without their permission or knowledge. So, for example, the profiles of Kim Kardashian and Justin Bieber can be found on the platform (their profiles copied from Twitter), despite them not requesting or signing up to be there and with thousands of cryptocurrency tokens already assigned to them. The creators can claim their accounts, and some of the money associated with them, by tweeting about BitClout. Ian Shepherd of The Social Store acknowledged that there are lots of questions around the pre-populating of accounts: “The founders claim that [pre-populated accounts] were created to prevent squatting. And whilst the platform will transfer a proportion of value of a celebrity account's, they require the owner to promote BitClout via Twitter - clever marketing!”
The biggest issue with the platform thus far is that users cannot cash out funds from the platform - a bit of a red flag that has a few industry followers digging up the infamous Bitconnect scam (Google it at your own peril). Its users can only purchase BitClout’s cryptocurrency through acquiring bitcoins; when users deposit bitcoin into the platform, it instantly converts to the BitClout currency which can in turn be spent on creators inside the network, but “it’s currently impossible to get it out”. And while Ian says the ability to cash out “will happen in time, the relaunch feels very rushed, no doubt to jump onto the NFT hype.”
So what does the future hold for creators in the crypto space?
With NFTs soaring in popularity and the hype around crypto very much present across the social media industry right now, the future potential for creators in the crypto space is fascinating to say the least. Ian Shepherd says he’s “bullish” about both cryptocurrencies and NFTs: “The underlying technology offers so much scope to create new and unique payment structures to monetise the most loyal fans and offer unique fan propositions. It's still super early and we are only just scratching the surface for what can be done. We are actively advising creators on how to explore opportunities in the digital collectibles and NFT space. You can find out full information on the project at bitcloutwhitepaper.com.”
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