There has been a great deal of change in volatility involving cryptocurrencies over the last few years. Digital coin has certainly made an impact on the financial and investing worlds. From Bitcoin to Ether, everyone is trying to determine the future of these new currencies. But amidst this backdrop, new players keep entering the game. One of the latest involves a unique type of cryptocurrency entitled BitClout. Unlike other digital coins, BitClout can best be described as a social cryptocurrency. In other words, instead of dealing with purely financial capital it deals with social capital.
This new so-called social cryptocurrency platform is relatively new, only launching in March. But despite its relative newness, the platform has already attracted thousands of investors. Some express concerns about BitClout being a scam. Others, however, including some reputable venture capitalists, see it as necessary as the creator economy evolves. (Read more about the rise of the creator economy in this Bold story.) Understanding this, the social cryptocurrency platform does offer a means by which creators can thrive. But at the same time, it may also introduce a degree of commercialism that undermines creativity as well.
“With BitClout you can buy someone’s coin and then retweet them, which makes it so that you’re not only along for the ride financially if they blow up, but you also get bragging rights.” – BitClout white paper to investors
How BitClout’s Social Cryptocurrency Platform Works
Like other types of cryptocurrencies, BitClout operates based on a supply and demand type of system. Investors look to buy specific coins, called BitClout, based on the relative value they believe they have. However, BitClout is unique in that this value is based on the perceived reputation of someone’s future value. Thus, it truly represents a social cryptocurrency that can be traded among platform users. If someone is recognized for an incredible achievement, their BitClout value will increase. Likewise, a derogatory statement or negative action could reduce their coin’s trading price.
The social cryptocurrency that exists on the platform is referred to as a creator coin. In essence, every person has a creator coin that is worth some value. For example, the highest priced BitClout coin belongs to Elon Musk, which exceeds $50,000. Kim Kardashian has a creator coin worth just under $6000. Not everyone has verified or claimed their coin within the platform. But at the same time, claiming a creator coin does not award anyone any specific earnings. Investors only lose or make money based on the creator coins they purchase. The platform simply provides an opportunity for anyone to trade in social cryptocurrency based on their assessment. Like any investment exchange, the goal is thus to buy low and sell high.
“If you look at people’s existing relationships with social media companies, it’s this very adversarial thing where all the content they produce is not really theirs, but it belongs to the corporation that doesn’t share the monetization with them.” – BitClout’s anonymous founder (Pseudonym Diamondhead)
A New Opportunity for Creators to Cash In?
Any investor using BitClout can earn investment money through proper speculations of others’ reputation. However, creators do enjoy a few other opportunities to capitalize on their social clout. For one, if they claim their creator coin, creators can collect some transaction fees for those who trade their coin. In addition, they can also earn additional value by making social media posts on the platform. If other users value their post, their social cryptocurrency value increases. And like other social media sites, BitClout allows posts, messaging, and other user interactions. At least from this perspective, it seems the platform offers creators new opportunities to earn income.
That being said, there are plenty of critics of this new platform. One of the most notable criticisms involves BitClout’s lack of connection to a cryptocurrency exchange. It deals in Bitcoin, but the lack of any exchange prohibits anyone from cashing in on their earnings. Reportedly, this will change in the coming months, but at the present time, such opportunities do not exist. Other critics also complain that this social cryptocurrency platform commercializes creative activities. In other words, all creative content and creators will soon have a monetary value. While this may be welcomed as a way for creators to get paid, it could also undermine creativity in general. As a result, some perceive BitClout as exploitative.
“I think monetization of the creator economy is still in its early infancy. I think it’s only going to grow to continue to remove the middleman and allow creators to monetize themselves in direct ways.” – Matt James, a BitClout investor and most recent contestant of “The Bachelor,” ABC
An Unexpected Rise to Fame
While the founders of BitClout have chosen to remain anonymous, they have not been completely silent. The original launch of the social cryptocurrency platform in March was not expected two boom the way it did. But within a few months, the platform now boasts over 300,000 investor profiles. It has also been valuated at over $1 billion. Given the fact that creator coin values are somewhat arbitrary, justifying this valuation is difficult. Regardless, several well-known venture capitalists support the platform and see great potential. Perhaps, this is one reason BitClout grew so much, so fast.
Of course, BitClout is not the only platform that attracts users to invest in social cryptocurrency. Calaxy Is another such company that lets users buy tokens based on others’ social capital. However, unlike BitClout, Calaxy provides token purchasers more tangible items in exchange for their investment. This may include live chats with celebrities, private content, or prerecorded videos that are otherwise inaccessible. As is evident, BitClout is clearly taking a more monetary and stock exchange approach to the situation. Calaxy, founded by NBA player Spencer Dinwiddie, is expected to go public this summer.
Social Cryptocurrency with Some Similar Issues
As with other cryptocurrencies, BitClout operates in a system that is not regulated and is subject to high risk. This may be especially true when dealing with social capital and others’ interpretation of reputation. Not only are these assessments subjective in nature. They also have the potential to be quite volatile. As a result, investors should proceed cautiously when dealing with such a platform. Especially in an environment where cancel culture is prevalent, BitClout earnings could evaporate quickly.
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