When giants in the cryptocurrency space get behind something, it might be time to take notice. On June 15, Brian Armstrong, crypto exchange Coinbase’s CEO, tweeted his support for the new blockchain-based social network BitClout.
“Just setting up my bitclout 💎🙌” Armstrong wrote in the tweet. He also managed to include the link to his personal BitClout profile.
The Coinbase CEO’s post comes shortly after crypto exchange platform Blockchain.com announced they’d start supporting the platform’s native token $CLOUT.
BitClout is a controversial new platform that combines social media and speculation. The pseudonymous developer @Diamondhands created the decentralized platform, but little is known about the makers behind it. However, even before the recent public shows of support, there were notable names behind the new platform. Early BitClout backers include some of the top names in Silicon Valley, including Reddit co-founder Alexis Ohanian and the Winklevoss twins. But everyone isn’t on board. In the short amount of time the platform has been up, its alleged creator has already been the target of legal action.
Let’s take a look at this new platform, the people who support it, and the controversy surrounding it.
What is BitClout?
BitClout launched out of private beta in March, but investments were pouring into the new decentralized social media platform even before its launch. BitClout took in $160 million in investments in the span of a week, and since then, some big names have expressed interest. In April, rapper Snoop Dog tweeted about the platform.
So what’s it all about?
BitClout is similar to other social media platforms where users create posts that other users can interact with. Users can follow creators they like, share posts, and message each other.
What makes BitClout different is that the platform revolves around creator coins. Each user on the platform has one. Users on the site can buy and sell these creator coins and the price of the coin goes up and down respectively.
Influencers often use social media to increase the value of their brand. On BitClout, your brand has a literal monetary value that can fluctuate. The idea behind BitClout is that the value of a user’s coin should be tied to their reputation. It’s supposed to be a monetary representation of social clout.
“If people understand this, then the value of someone’s coin should be correlated to that person’s standing in society,” BitClout wrote in a post on their site.
All of this depends on how people assign value. If someone is a philanthropist who has dedicated their life to service, it makes sense that this person would have a good reputation. Theoretically, that’s a creator coin people can get behind – but that’s not how things work on the internet where value is subjective. Currently, BitClout seems to be favouring entrepreneurs in the cryptocurrency space.
BitClout’s top active creator at the time of this writing is Craig Clemens, founder of internet marketing firm Golden Hippo, whose creator coin is valued at more than $25,000. At $23,000, he’s followed by Chamath Palihapitiya, founder of Social Capital, an early investor in BitClout. Third on the list and valued at more than $20,000 is Balaji Srinivasan, an angel investor and the former CTO for Coinbase.
It’s fitting that leaders in the crypto space would be leading the pack on BitClout, a space built around crypto. The value of purchasing creator coins allows users to interact with top influencers, a promising proposition for crypto enthusiasts looking to engage with their heroes.
Now let’s look at what purchasing creator coins enable BitClout users to do.
Using Creators Coins
Creator coins are used to govern interactions on the BitClout platform. For example, creators can require commenters on their posts to own a certain amount of their coin before commenting. This protocol can reduce spam by forcing users to put their money where their mouth is literally. In this way, users must really invest in the discourse they’re having online.
Creator coins also govern the platform’s messaging application. Creators can require users to pay them in their own coin in order to message them. Users can also dictate that those who want to message them must hold a certain amount of their coin before doing so. They can also rank and prioritize messages from the largest holders of their coin to those with the least. This is another way of minimizing spam on the platform.
Users can also pay for sponsored posts using creator coins. Users who want an influencer to market their content can bid to have the influencer repost one of their posts. Influencers are used to getting paid for sponsored posts on other social media sites. However, most of the time, these sponsored posts are for big brands. BitClout enables individuals to get in on the action.
Creator coins also enable users to access premium content. Those who own a certain amount of a creator’s coin get access to special content. Others can use coins to pay a monthly subscription fee to access this content. This mechanism gives creators an avenue to get paid directly for the content they produce.
BitClout’s features give power to creators and influencers looking to profit from their brand tangibly. However, despite these benefits, the platform has received a lot of flack since its founding. We’ll take a look at that next.
When BitClout launched in private beta on March 24, there were already 14,000 users on the platform, including noted celebrities. The problem? None of these celebrities had actually signed up for BitClout. The majority of these “users” were actually premade profiles that had been copied from Twitter. BitClout created profiles for the top 15,000 influencers on Twitter. They included celebrities like Kim Kardashian, Ashton Kutcher, and Cardi B.
While many of these influencers have yet actually to get involved on BitClout, the value of their creator coins has climbed. At the time of this writing, creator coins for tech entrepreneur Elon Musk have the highest value at more than $57,000. At more than $38,000, the second-highest coin belongs to Naval Ravikant, the co-founder, chairman and former CEO of AngelList. But neither Musk nor Ravikant has claimed their profiles.
Influencers can claim their profile by navigating to the profile and clicking the button to tweet their BitClout public key. This allows them to gain full access to their account and a percentage of the creator coins associated with their profile. Only the owner of the Twitter account associated with a reserved profile can claim it.
However, not everyone is interested in claiming their account. In March, Brandon Curtis, the product lead for decentralized token exchange Radar Relay, sent a cease and desist letter to BitClout, calling for his likeness to be removed from the site. The letter was sent to Nadar Al-Naji, an entrepreneur who has been tied to the site.
“The right of publicity means an individual should be able to decide how they profit from the commercial value of their likeness and what organizations they collaborate with,” said Hailey Lennon, a partner at crypto-focused law firm Anderson Kill who sent the letter on Curtis’ behalf. Curtis’s profile was subsequently removed from the platform.
“It is well established that a person or company cannot knowingly use another’s name, voice, signature, photograph or likeness, in any manner … for the purpose of… selling, or soliciting purchases,” the letter said. “In order for Mr. Curtis to exercise any control over his name …. he would need to put his own money into your project or provide … personal information. Even messaging BitClout’s support team costs BitClout tokens. The cease and desist letter sheds light on one of the major issues critics have with BitClout. In order to claim their profile, influencers have first to purchase BitClout tokens.
Another major critique in the platform’s early days is that those who purchased BitClout tokens had no way to cash out. In March, BitClout didn’t allow withdrawals. At the time, when users attempted to withdraw money, they were met with an error message reading: “BitClout is under brief maintenance. All funds are safe. Thank you for your support. We’ll be back shortly.”
This issue has since been resolved. Today BitClout is available for live trading on Blockchain.com, and it’s also being tracked on Coinbase, CoinGecko, CoinMarketCap, and more. However, the uncertainty of BitClout’s early days has impacted the platform’s reputation.
Yet another issue involves BitClout’s security protocols. BitClout issues private keys that users need to access their accounts. These private keys are made up of a string of words. While these kinds of private keys are designed to be more secure, when users log in, the keys are cached in the user’s browser, making them vulnerable to theft. Additionally, BitClout also stores the keys on its own server, which can be a security issue.
Buying Creator Coins and BitClout
If the controversy surrounding BitClout hasn’t scared you away, let’s look at how you can get started on the new platform.
Buying creator coins is simple. To buy someone’s coin, navigate to their profile and click “Buy.” But to buy creator coins, you’ll first have to buy BitClout.
Originally, BitClout could be purchased with Bitcoin through the platform’s built-in decentralized “atomic swap” mechanism, available on the “Buy BitClout” page. However, the “Buy BitClout” page on the site now directs users to the Blockchain.com exchange.
Now let’s look at the tokenomics of creator coins and BitClout.
For every million BitClout sold, the price of BitClout doubles, creating a scarcity. Creator coins are also naturally scarce, with fewer than 100 to 1,500 coins in existence for each profile. This scarcity is created due to the way the coins increase in price. As more people buy a creator coin, the coin’s price goes up automatically at a faster and faster rate.
In the end…
Ultimately, the jury is still out on whether BitClout is a worthy investment. Unlike other social media sites, there is an upfront investment required to get involved. Creating a profile currently costs 0.01 BitClout ($1.76 USD). Users who verify their phone number with BitClout are given .003 BitClout, but you’ll still have to contribute something to get set up. The choice is yours.