BitClout is a new type of social network that lets you speculate on people and posts with real money, and it’s built from the ground up as its own custom blockchain.
In short, it’s creating a market based on betting on people and their content.
Its architecture is similar to Bitcoin (the protocol), only it can support complex social network data like posts, profiles, follows, speculation features, and much more at significantly higher throughput and scale.
Like Bitcoin, BitClout is a fully open-source project (although the code has not been released to the community yet) and there is no company behind it-- it’s just coins and code.
Creator Coins
After you’ve signed up and created a profile, your profile name is the Creator coin that’s uniquely attached to you. For example, I have a coin called $mrsk on the platform.
The price of each coin goes up when people buy and goes down when people sell. So if you think a coin is going to become more popular then you will probably make money if you buy it early.
Popular is the key word there. There is no inherent value to the coin, like you'd have by owning stocks or shares in companies. You're merely speculating on the relevance or popularity of a profile.
When people buy my coin, I get 10% of the transaction credited to me set by a Founder Reward (someone buys $100 of mrsk coin, I get $10). The more popular mrsk Coin becomes, based on demand, the more our jointly owned coins goes up in value...
For example, you can see a list of $mrsk coin holders below.
I know, is this is what our lives have come to…
Just to be clear, this is probably going to fail. Or it could be a complete scam. The largest network usually wins, and it probably makes more sense for Twitter to roll something like this out.
But this is where things get interesting. Basically every major VC is backing this project. The list includes: Sequoia, a16z, Social Capital, DCG, Pantera, Huobi, Winklevoss Capital, Alex Ohanian (Founder of Reddit), and so on.
Does this VC backing reduce the likelihood of failure? Probably not.
Does it reduce the likelihood of a scam? Probably yes.
And that’s all that matters. The opportunity cost of not tinkering around with the platform is too high, for me.
Skeptics and Ethics
Probably one of the most controversial growth hacks in recent times, BitClout decided to pre-seed 15,000 of the top Twitter profiles on its platform without their consent. If you think about it, they basically created 15,000 Initial Coin Offerings based other people’s reputation.
In order to incentivise people to be okay with that, they offered them a piece of a pie —> all they need to do is login to BitClout and post their account public key on Twitter to get verified. Kill 2 birds with one stone. They’ve created a marketing and verification loop for BitClout on Twitter. LOL.
The great part about projects being on public blockchains is that, well, they’re public. The explorer lets you see every transaction or event that has happened on BitClout. Every coin purchase, profile update, follow/unfollow, everything.
The genesis block, Block 0 mined on Jan 18 at 5:42 UTC contains 1 transaction: BLOCK_REWARD. That reward is a whopping 8 million $BitClout coin.
By their own valuation, 1 coin is currently trading at $158, so that’s $1.26 billion worth of pre-mine. This is widely considered unethical by the crypto community. This capital has been used to artificially pump the valuation of the most popular Twitter profiles. So VCs have been able to purchase stakes in these profiles at much cheaper rates before they’ve been open to the public. Sounds a lot like startup investing but yeah…
If you enjoy investigating these kind of rabbit holes, here’s a great thread by @cryptoshiro
Right now, users must purchase around $55 of the site’s native currency BTCLT to buy coins, including the coins tied to their own profile. Any such purchase must be paid with Bitcoin, but the currency conversion only goes one way—it’s impossible for a user to trade their BTCLT back to Bitcoin.
The Pseudonymous founder claims that eventually you will be able to trade out, but it's really important to note that this does not currently exist. $206m has been funnelled into a single wallet and there is no guarantee of it getting out.
Why are you even bothering with this?
That’s probably the question on top of your head after previous section. It all sounds so dodgy. All the signs point to Scam City 101.
You see, category creators are asymmetric bets. Even though BitClout could fail miserably there are many interesting dynamics embedded in the platform that make the risk worth it. Just like Airbnb (you want to let strangers stay in your house?) Imagine how that sounded in 2010.
Betting early on category creators is why the upside is dramatic and the downside is cost of capital.
How did we get here?
The journey to Social Currency as a new category of assets is important to map out. It may provide insights on where we’re headed in the future. This is my mental model for it:
If you want to bet on the future earnings or value of a company, commodity, assets, you can do so on a stock exchange.
If you want to do bet on the future earnings or value of a company, commodity, assets from your phone, with 0 fees, you can do so on FreeTrade, Robinhood, or a wide range of apps now available to you.
However, where do you go when you want to bet on the future value of people or creators? Again, this human condition already exists. BitClout is just naming and claiming it. Poorly, but it’s still executing on it.
Add all the Creator Economy juice on top of it, and BitClout makes perfect sense.
It’s still very early days for the platform, and it’s come with it’s fair share of controversy and criticism. I’d recommend playing around with it IF you can afford to.