Something is rotten in the land of social media. The current behemoth social networks are tearing our country apart, while making money hand over fist. Even technology executives won’t allow their kids on social networks. For the first time since 2012, Facebook just reported a decline in daily visitors in the US and Canada. Inc. wrote that the big social networks “are centralized in every way, decide what you will see and not see through their algorithms, and completely lack transparency. This sounds like something ripe for disruption.” Queue the rise of blockchain social networks.
Many have heard of blockchain’s application in crypto-currencies, but the technology is now being applied in a variety of industries from financial services to pharmaceuticals. It has already been tested in voting applications, and could allay voter fraud concerns while generating higher voter turnout. Social media is one of those nascent blockchain applications.
Why are these new networks different from Facebook and the other large players? Users of the traditional networks consist of a few content creators and many lurkers. With few exceptions, there is little incentive to create great content. The traditional networks monetize the content created by users and sell advertising against the eyeballs it generates. Stealing a page from Reddit, blockchain social networks reward content creators for creating great content. Users decide what is great content. There are no algorithms.
Content creators and active participants are rewarded with some form of cryptocurrency and the rewards structures are relatively easy to understand. And, as of yet, they have no advertising. Consequently, they create a more engaging environment with active contributions from the people you actually want to hear from.
Numerous blockchain social networks have launched over the last year. Steemit (https://steemit.com) squarely competes with Facebook and Instagram, and its video platform could take on YouTube. It is the largest blockchain network and will soon have over a million users. It rewards creators and active users with Steem Power and its proprietary Steem cryptocurrency that can be exchanged for popular cryptocurrencies like Bitcoin and Etherieum.
Twenty-one-year old Sven Lucas earned $4,000 by posting in his free time. While this is nothing compared to professional YouTube contributors, it is a significant incentive for casual users who earn nothing on the big networks. He writes that he is “sticking around for the great content.”
Indorse is still in Alpha and is aimed squarely at LinkedIn. It promises an authentic presentation of skills without the fake endorsements that plague LinkedIn.
So how will this impact the big social networks? Some of the emerging blockchain networks will certainly be swallowed by the big guys, as Facebook acquired Instagram and WhatsApp. All of the big networks are already experimenting with blockchain applications and will liberally copy successful features of the blockchain networks. They will experiment with greater rewards for content creators. But given their advertising model and huge scale, it is doubtful they could reward all contributors and active participants.
But they may not have to, as the blockchain social networks may be forced to meet them in the middle. As the new networks grow, they will have to figure out a revenue model to keep the lights on, reward content creators, and generate a return for their investors. Brand marketing will likely play a role. These new networks will have to balance their need for revenue with the needs of users, many of whom could be fleeing traditional networks because of privacy concerns and intrusive marketing.
But the ripple effects of blockchain social media could extend far beyond their initial impact on the big social networks. Apple’s current business includes an ecosystem of devices, iTunes, applications and more. It has disrupted several industries. But Apple’s business started with the Mac, which made computing easier. Amazon started by disrupting the book business, but has since built an entire ecosystem that is disrupting the grocery and health care businesses.
Successful blockchain social networks will foster similar ecosystems built on cryptocurrency and blockchain technologies. Cryptocurrencies and their underlying technology are complex and difficult to understand. The simple rewards of these new networks provide incentives for cryptocurrency adoption beyond cryptocurrency and blockchain enthusiasts, which will foster business extensions. The current plethora of blockchain start-ups, will explode as these networks take off. Disruption of the big social networks may be an immediate effect of blockchain social networks, but, longer term, disruptions will ripple into other industries as these start-ups gain traction.
As is often the case when new players disrupt the marketplace, the big winner is the consumer. They will see a more rewarding social media experience. This rewarding experience will ripple out to other industries as well. Traditional social media may be waning, but blockchain social media is alive and well.