Will Social Media Move to the Blockchain?

Social media irrevocably changed the way we interact with our loved ones and wider communities. In just a decade, life without social media platforms is almost unimaginable.

But how will these platforms evolve from here?

Well, several weeks ago, Chris Coney dove into the metaverse and its potential impact on how we interact with the internet and the world around us. He also reviewed the potential future of the internet via web3.

Now, Chris is taking these two foundations and combining them, asking how both together will impact how we connect to one another.

You can watch our latest Weiss Crypto Sunday Special ... or you can continue reading for the full transcript.

Chris Coney:

Hi there, guys, and welcome to this week’s edition of the Weiss Crypto Sunday Special with me, your host, Chris Coney.

So today, I want to talk to you about blockchain-based social networks. It’s just me today, so I’m going to give you one of my ideas and thought processes. So, blockchain-based social networks: I think of this sector using the very same logical framework that I laid out in the episode about metaverse investing. I called that episode of the Sunday Special “Why Facebook Just Bet Its Future on Crypto,” and that was when they changed their name from Facebook to Meta Platforms (Nasdaq: FB). In that episode, I talked about the various layers to that investing mindset.

So, check this out: At the highest level of abstraction, we have web2 and web3. That's the interactive web and the decentralized web. And inside each of those, you have a network. In web2, you have just one main network: the internet. In web3, you have many different networks vying for dominance, which adds an extra layer of complexity when considering an investment because we're not quite 100% sure which one of these networks in web3 is going to win ... or even which group of networks are going to dominate.

And actually, that's a good point. There might not just be one network to rule them all. I mean, the internet that is the one network to rule them all. But at the moment, we're not even sure if it's going to be just one blockchain to rule them all or not.

I mean, this episode in particular, talking about blockchains that specialize in serving the social media sector ... well, that gives us some clue. Some blockchains are more tailored to certain use cases — like social networks or betting platforms or whatever. And that means we're less likely to see just one massive blockchain to rule them all.

More likely the best optimized blockchain for each use case will be ruling that sector. Right? So, you'll get, like, one or two dominant social network blockchains. You'll get one or two dominant betting platform blockchains or whatever it happens to be. Right? So that's the basic thesis there.

So, we've got web2 [and] we've got the networks with inside those. And then within the networks, you have a number of apps — so that would be like Facebook, Twitter (NYSE: TWTR), YouTube and so on in web2.

And then for web3, it really depends on which network we are talking about, because each network, even right now, has multiple social media apps on it. And this is where the investing thesis is similar to what I laid out in the episode on metaverse investing: There’s picking the winning network, and then there’s picking the winning apps on those networks, assuming those apps have a token you can invest in, of course.

Now for the benefits of this episode, I’m going to use the web3 network that I personally am the most bullish on. And that is Hive (HIVE). So you want to visit the website, it’s hive.io. That’s the website for the blockchain itself.

So, Hive is a blockchain that has been specifically designed to serve developers who want to build decentralized social networking apps. The equivalent of Facebook or Instagram on Hive is called Ecency. So there are two, actually: There’s Ecency, [which has a] mobile app and it’s a very Facebook, cuddly kind of interface. And there’s another one, which is called PeakD. So [those are] the Facebook equivalents.

The Twitter equivalent on the Hive blockchain is called DBuzz. And then the YouTube equivalent on Hive is called 3Speak.

Now the Hive blockchain also hosts Splinterlands, which is one of the most used blockchain games in the world right now, with a quarter of a million users logging on every day. So, that’s mind-boggling. By normal mobile game standards, that’s pretty poor: a quarter of a million. But by blockchain standards, it’s really getting there toward what you might call mainstream adoption of a blockchain game.

What’s the investment case is the next question. Why are users going to trend toward decentralized social networks? Because if that isn’t going to happen, well, then it’s not a growth area.

There are [three] reasons why I think this will happen.

[The first is] privacy. If you’ve watched documentaries like The Social Dilemma, you’ll be aware of how the use of algorithms to increase user engagement and then boost ad revenue for the platform [has] gone too far, right? Safe to say it’s gone too far.

Blockchain-based networks like Hive, well, they have an element of transparency built in. Firstly, the content is hosted on a blockchain. And secondly, because the code tends to be open source, which means everyone can see what’s going on under the hood. Not so with the Facebook algorithm, say.

The [second] reason why I think this might happen is ownership over the content and the audience. If you build a business using a Facebook page, then your business is at the mercy of a giant corporation that may choose to change their policy on a whim. It's not so easy to move a Facebook-based business elsewhere. I mean, you can move an online store easily enough from one hosting provider to another, but not a social media-based business because Facebook owns your list of followers. At least with an online store, you have a copy of all your customer's details and their email addresses. So, the customer wouldn't know that you'd moved to a different hosting provider with different servers. [Even if they did, it] wouldn't matter. Facebook actually owns the network you're on ... so they basically own your followers.

With Hive, because it is based on a completely different mind-set, completely different technology, you own your own account at the network level. Just like having a Bitcoin or Ethereum wallet, all your Hive tokens, your account data, your content and your followers are all stored in that account. And then, you just share that data with any app you choose to log in. That means you truly own your account, your content and your followers.

If one social media app is no longer to your liking on the Hive blockchain, you just log out, log in to a different one and your hard work is right where you left off.

And then the [third] reason I think this might happen is rewards. The Hive blockchain creates a certain number of new tokens each day, which makes the whole system inflationary. Now those new tokens, just like newly mined Bitcoin.

With newly mined Bitcoin, obviously, those new coins are awarded to the miners for their mining work. Whereas in Hive, there's this inflation rate where new tokens are issued every day.

But with Hive, those new tokens are distributed seven days in arrears based on which users created the most valuable content for the network. And that is as voted by the community through the “like” button.

So, when the rules of a social network are transparent and you get paid as a user for posting on there, there's a strong incentive to spend your time socializing [and] creating content on Hive rather than Facebook.

So, what's the investing strategy, then in terms of blockchain based social networks?

Well, I've spent this episode talking about Hive because it's the one that showed the most promise to me after my initial round of researching all the options out there and testing a bunch of them. From there, once I'd settled on Hive, I did a deep dive into the network and have now made it my place for posting a mirror of all the content that I give to the public. When I make a video, one copy goes on YouTube ... and then one copy goes on the Hive blockchain by the 3Speak app, which is a video-sharing platform.

Now, my investment strategy in Hive itself is a little bit different from what most investors might do, because I happen to be a creator. And that means I have invested my time and energy in creating content that has then earned me Hive tokens. So, I’ve invested my time and energy to get the asset rather than my money.

To be clear though, my Hive account dates all the way back to May 2016. So, it's taken Hive a long time to start getting traction. But that's what I'd expect, considering this is such a radically new concept. Being a blockchain-based social network is a radically new concept that's still not quite understood by most. So, getting your head around the paradigm of how social networking changes in the concepts of blockchains is still a stretch for most people.

So as brilliant as blockchain technology is — as brilliant as Hive is — it's still so cutting-edge and so radical that it defies understanding for most people.

But that's a good thing. They'll get it. I think they will get it eventually. They'll have to because blockchain technology has taken over.

If you look at how Hive has performed pricewise in 2021, you'll see its performance has been pretty spectacular, going from around 11 cents to an all-time high of $2.98.

That's a 27-fold increase.

Now, while I can't give specific investment advice, obviously, the best way for investors to safely allocate to any asset is to accumulate it slowly over time ... and preferably when it's undervalued. That can be derived by just looking at the assets’ overall trading range from highest price to lowest price, and then see where it's trading relative to its highest and lows.

But last thing I'd say here is: Don't get stuck on Hive just because I mentioned it. The opportunity to become the dominant social network, social media blockchain rather, is so huge that there are many others vying for that crown.

The safest strategy of all would be to get a small allocation to a few different social media blockchains so that you've a higher chance of having a position in whichever one or group of networks wins out.

That’s going to do it for this week’s edition of the Weiss Crypto Sunday Special, keep a close eye on your inbox for next week’s episode. But until then, it's me Chris Coney saying, "Bye for now."

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