Episode #22 22

WHAT ARE SOCIAL TOKENS?

Aug 11, 2021

If you’re anything like me, when some-one says “Social Tokens” to you, the first thing that comes to mind is grizzled 70 year old men in flat caps exchanging bits of paper for pints in the local social club.

Not cool.

But guess what? Social tokens ARE COOL.

So cool in fact, that NASDAQ.com have just called them the “NEXT MASSIVE CRYPTO TREND”

Why? Because they can do things no other tokens can… Give you access to real world events, the influencers doing the moving and shaking at the forefront of art, sport, finance and culture… and even the opportunity to vote for who fights who in the UFC.

So hang around, and I’ll show you how they’ll do a hell of a lot more than buy you a pint in the local boozer. And, given that social tokens are all about community – how about joining ours? Give that subscribe button a little tweak. And hit the bell whilst you’re at it. You won’t regret it.

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The idea of communities creating currencies customised for their own specific needs is not all that new.

Did you know that back in the 80s and 90s, hundreds of communities in the US issued their own local currencies, not via a central bank but the collective assent of community members?

And more recently the cities of both Calgary and Belfast have experimented with local currencies aimed to achieve growth of the local economy via integration and incentivisation.

But what’s this got to do with crypto you ask? Well, the same principles apply, but the crypto space means these communities can add a whole new level of functionality, incentivisation and benefits to those who take part.

SOCIAL TOKENS first hit crypto in the bull run of 2017, but success didn’t come immediately. Several questionable influencers hyped dubious token projects. Traders piled money into ICOs with unclear roadmaps and practically zero intrinsic value. It didn’t go well.

But in the time since then, social tokens have really evolved. They offer an opportunity to REALIGN THE INTERESTS of both creators and their communities.

THE SPECTRUM OF TOKENS

So, let’s break it down. SOCIAL TOKENS can be simply described as a type of cryptocurrency that is based around an influencer, community or brand, thus giving us THREE CATEGORIES:

PERSONAL TOKENS – which are issued and controlled by a primary individual.

COMMUNITY TOKENS – which are issued and controlled by a group, often managed by a DECENTRALIZED AUTONOMOUS ORGANISATION, or DAO. More on how they work in the next episode, by the way.

And SOCIAL PLATFORM TOKENS – which represent control over a platform that facilitates social token issuance and exchange.

PERSONAL TOKENS

Let’s start with the PERSONAL TOKENS, whose benefits can include unique access opportunities, potential discounts and connection to the INDIVIDUAL who issued the token.,

BITCLOUT falls into this category, being a token which is designed to enable INFLUENCERS to monetise their FOLLOWINGS.

BITCLOUT’s lead creator, unsurprisingly called DIAMONDHANDS, claims that matching incentives is key. “If you can mix speculation and content together, you can not only get a 10x product that creates innovative ways for creators to monetize, but you also get a new business model that’s not ad-driven any more”.

Our buddy DIAMONDHANDS goes on to claim that the difference between BTCLT and the other platforms doing a similar job is that rather than attempting to monetize the posts, or the content – they monetize the person.

Got your head round it yet? Don’t worry if not, because my extremely personal opinion is that it’s probably not the future. Why? Because the speculation here is on FUTURE value, rather than INTRINSIC value. And you remember what we’ve said about that kind of speculation before, right?

COMMUNITY TOKENS

Moving on, COMMUNITY and SOCIAL PLATFORM tokens bring holders together through a different governance model.

What better place to start than talking to some of the people involved…

When it comes to COMMUNITY TOKENS, one in particular has caught the news recently – WHALE.

What’s it about? Well, Whale Shark is an influential NFT collector, and by owning WHALE tokens you get to have a fractional stake in his collection.

There’s currently 10 million tokens in circulation with a fully diluted valuation of 330 million dollars. Not a small change. The tokens are soon to be governed by a DAO, giving holders governance rights and influence in this niche community.

Another you might have heard of: FRIENDS WITH BENEFITS, or FWB. No, it’s not some kind of 1970s style free sex group, but a community where access to the various Discord channels is managed by the amount of tokens you hold.

You essentially BUY IN, and once you’re in – you’re part of an exclusive club, with access to influencers across sectors as diverse as trading, music, events, DeFi and art. Like WHALE, the idea is to bring together a community anchored by culture and providing a wide range of perks.

Originally minted by a single creator, software engineer Trevor McFedries, FWB has recently moved to a DAO model of governance.

So that’s the COMMUNITY TOKENS. What exactly are SOCIAL PLATFORM TOKENS?

SOCIAL PLATFORM TOKENS

Well, you may have heard of RALLY, CHILIZ or SORARE.

Let’s have a look at CHILIZ. Chiliz provides SPORTS CLUBS with tokens that enable FANS to engage with the club.

So how does it work? $CHZ runs on the Ethereum network and serves as the digital currency for the chiliZ and Socios.com platform. Once you’re on the socios.com platform you can use your CHZ tokens to acquire FAN TOKENS, which are specific to particular sports clubs. Which clubs, you ask?

Well, CHILIZ has a range of partnerships with football clubs like BARCELONA, MAN CITY and JUVENTUS, as well as the UFC, with fans recently choosing who they wanted to see fight each other via tokens bought on the platform.

Ownership of fan tokens allows fans to participate in these kinds of voting decisions, as well as serving as a ticket into a secure, exclusive inner circle of fans. And the more tokens a fan holds, and the more often they vote – the higher the clout rating they get, enabling them ultimately get access to the biggest VIP benefits on offer.

It’s a sensational way to get unique, real world experiences and has the potential to revolutionise the very concept of fan engagement with sport.

Pretty cool.

If you stop and listen out into the void, like I often do… You might hear the wise words of MR MIYAGI floating in the ether. Listen to them and you’ll know that you should always seek BALANCE.

Social tokens are a fresh and exciting way for you to engage with the brands, people and sports clubs you love, but as with all things in life there are a SPECTRUM of projects out there.

When you look at tokens and are tempted to jump on board, just ask yourself – are you getting involved because you think the concept adds value, or because you think the price will go up?

One thing to be aware of is that many social tokens force the VALUE CREATION onto the token and not the work, or content that’s being created. This clash of incentives can mean that there’s an expectation for the CREATOR to pump the token and not the work.

So, as with all things in crypto – go in with your eyes open. Don’t fomo. Choose wisely… and just maybe you can surf the next biggest trend in crypto. With a pint in hand.

You’ve been watching School of Block, presented by Ledger and the Defiant, demystifying decentralisation, one block at a time. Don’t forget to subscribe, drop us a like if that’s what you’re into, and as always – here’s to your financial freedom.

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