One of the most intriguing trends of Crypto Twitter influencers in 2021 was the rise of alternative social media profiles on BitClout. Few platforms generated that much publicity in the crypto scene, so it’s worth looking into what all the fuss about BitClout really is about.
How BitClout works
BitClout is an alternative decentralised social media platform that lets users buy and sell tokens representing Twitter accounts. It’s a clever way of combining content and speculation and enables creators to monetise their content directly, without selling merchandising or using complicated ad models.
Unlike existing social media platforms, BitClout isn’t a company but a proof-of-work blockchain. An anonymous group of developers created BitClout and its native BTCLT token.
However, the real kicker is that BitClout uploaded many profiles onto the platform themselves without asking Twitter accounts for permission. This was done to generate publicity, and it certainly worked. However, it also generated a lot of backlash from Twitter profiles that disagreed with having their profiles scraped without their consent.
The problem with BitClout
The social tokens representing influencers are controlled by automated market makers, meaning users trade with an algorithm instead of other users. The more tokens get minted, the more expensive the marginal token becomes. BitClout’s real problem, though, is not having a way to cash out BTCLT tokens. Users need BTCLT to buy social tokens, but they cannot sell BTCLT for Bitcoin. BitClout has been called a scam and Ponzi for that reason more than once.
BTCLT tokens
2 million BTCLT were pre-mined for founders and investors, and 500,000 BTCLT will go out to miners over the next few years. To earn more trust, BitClout sought out major crypto investors that would back the project. The list includes illustrious names like Sequoia, Andreessen Horowitz, Social Capital, TQ Ventures, Coinbase Ventures, Winklevoss Capital, Arrington Capital, Polychain, Pantera, Digital Currency Group, Huobi, Variant and others.
BTCLT tokens are used as gas and are planned to be used for governance to manage the project’s BTC treasury. The code for that will supposedly be open-source to allow new nodes and miners to join.
The future of decentralised social media
While BitClout isn’t the first or the only crypto social media network, it’s one of the most intriguing and innovative. Its anonymous founder Diamondhands argued that platforms so far have focused on speculating on the content rather than the content creators. BitClout emphasized the content creator value, not the value of the content, according to Diamondhands.
Users can join by creating an account on BitClout or activating their reserved account if they have been big enough on Twitter to have their account automatically claimed for them by BitClout. Users can set a tax on newly minted tokens, thereby claiming a share of every token purchase that increases new supply.
In practice, many celebs and influencers already have a substantial market cap on BitClout, although most of them have not actually claimed their accounts. BitClout allows and even encourages anonymity, following the spirit of cryptocurrencies and early social platforms on the internet.
While it’s probably a bit too early to assess BitClout’s success, there is little doubt that it’s one of the projects worth watching in the following months.