If you want to invest in future social media stars, BitClout may interest you.
In March, BitClout was released. BitClout claims to be a new social network where you can buy and sell tokens representing people’s identities, the decentralised nature of the network has quickly attracted attention. Bitclout’s creator goes by the name Diamondhands and is most prominent on the BitClout platform. This article will briefly explain what BitClout is, why its popular, and how you can get involved.
How does it work?
BitClout is not a company. Instead, it is a ‘proof-of-work’ blockchain designed for social media, created by a group of anonymous developers. With the rise of decentralisation and Bitcoin, this is obviously one of the reasons for the site’s immediate success.
For individuals to use the site, they need to purchase BTCLT by using Bitcoin (BTC). With the BTCLT they can then buy coins of individuals on Twitter, ultimately speculating on there future popularity and success. Simply, the coin price of individual creators is related to supply and demand, thus when a coin is purchased the price of creators coin increases, and that is how investors can profit.
There were 2 million BTCLT tokens pre-mined for founders and investors, and Diamondhands has explained that the supply cap of coins is about 19 million. This scarcity of course brings value to BTCLT tokens. Additionally, investors in BitClout include Sequoia, Andreessen Horowitz, Social Capital, TQ Ventures, Coinbase Ventures, Winklevoss Capital, Arrington Capital, Polychain, Pantera, Digital Currency Group (CoinDesk’s parent company) and Huobi. The supply cap and prominent investor list gives legitimacy to the social media network.
Notably you cannot currently trade BTCLT back to BTC. This is where the biggest issue arises. As James Prestwich, the founder of Summa states, there is “no venue to sell BitClout.” Why would someone put money into something if they cannot take it out for a profit? Ultimately, this one of the biggest questions facing BitClout at present.
Here is an example of the website, and Kanye West's BitClout:
How to join?
An invitation from a user is needed to access the BitClout website. To activate an account, a user needs to tweet out their BitClout address. This verifies the owner & helps with publicity of the platform.
When an account has been activates, the owner can choose to create a ‘tax’ on new token emissions if they decide to do so. Therefore, when someone makes a purchase of their token, some portion of the token supply will go to the person whose token has been bought. Therefore, it is in the creators’ interest to join BitClout as there is profit to be made.
Additionally, there were about 15,000 pre-loaded accounts with varying degrees of tokens set aside, chosen by their follower count – basically implying that there is incentive for these celebrities to join the platform. You can tell if an individual is on BitClout because they will have a blue check next to their name.
A final interesting point is that an individual does not have to pair a Twitter account with a BitClout account. You can stay anonymous and just buy other people’s tokens from your wallet using BTCLT. As Diamondhands says: “The awesome thing about BitClout is it lets you be totally anonymous, which most platforms in general don’t even allow.”
This gives a brief introduction to BitClout. Clearly it is an up-and-coming platform with popular investors, and incentives for celebrities to join themselves. As with all products that challenge the status quo, there are questions to be answered, namely, when will we be able to convert BTCLT back to BTC? Once that has been answered, if this goes mainstream, it could be an interesting new social network to be involved in.