I Have Seen The Future, And It’s Decentralized
Ok, that title is a bit hyperbolic, but it’s rare that I get this excited about a new product (BitClout, a decentralized social network, launched about three weeks ago). And look at how many of my blog posts are dedicated to new products… it’s rare, and my job is to invest in them.
Instead of explaining what it is, I decided to create a post of my favorite resources so far to learn more about the future of
crypto social media with something like BitClout — the twitter-esque product built to be a decentralized network (instead of owned by a corporation) designed around clout and value of opinion (instead of just follower counts and like/retweet numbers) and built on currency as the value of exchange (instead of attention and advertising engagement).
Here is my recent 10 min podcast episode with me answering a recent call-in from a listener about the concept of BitClout below.
And if you are looking for a primer on how to start using BitClout, this is where to start (20 min video that you can listen to on 1.5x speed, full resource here):
Next: Go and create your profile at bitclout.com — and *SAVE* your secret passphrase somewhere. You will see what I mean when you sign up, BitClout doesn’t use typical email/password combinations, and instead uses secret passphrases to log in… So when you see that part when signing up, *SAVE* that passphrase somewhere.
Next: Feel free to poke around the site (imagine Twitter at 3 weeks old), and if you want, you can buy bitcoin on an exchange like Coinbase (for simplicity if you don’t know much about cryptocurrency) and then transfer that bitcoin to the address given to you on bitclout. It can take up to an hour to transfer.
Next: When you have currency in your account, then you can either hold BitClout itself (as its own currency that is likely going to appreciate) or you can buy “Creator Coins” that are the coins tied to individual accounts — like @ElonMusk, and you would buy this if you think that Creator’s coin will go up over time.
Next: Start posting and have fun, or just invest and do not look at the monetary value of your investment for 5 years. Not one to tell another how to invest, but that is what I am going to do to avoid all the ups and downs that is bound to happen — and it’s how I’ve done alright with crypto since 2013. As the adage goes “short-term brains get short-term gains.”
Other resources that I’ve found really useful:
Bitcloutpulse.com (bloomberg of BitClout)
Reddit.com/r/BitClout/ (community reddit around BitClout news)
Youtu.be/2jOGbGFAz4s (another YouTube, this one is 1hr long but goes into even more detail that the first video above)
All in all, if you check out these resources, I’m willing to bet you have a similar reaction to me… day one, you’ll say “What the hell is this?”… and by day three, you are saying “I have seen the future.”
I’m certain there will be more (and better) resources in the future, but it’s extremely early days right now.
Enjoy your BitClouting. Feel free to follow me: bitclout.com/u/jamesbeshara
1) Isn’t this pure speculation? // Yes, it’s speculation that a product like this will gain traction and be useful, and the BitClout coin is kind of like shares in Twitter’s IPO, except you are buying into an IPO 3 weeks into launch.
2) Is it pure speculation and meme-investing when buying Creator Coins? // Yes. Like buying a rookie baseball card.
3) So why do it? // Why buy stock in a company (especially stock without voting rights)? Why buy a collectible like a baseball card that sits in a safety deposit box?
4) Can I cash out? // Not currently, but I expect that to be live within 3 months.
5) Why is this better than Twitter? // Twitter is based on volume of voice and tweets. It’s like cable TV where the loudest channel is always shown first to you. This is because algorithmically, they use volume and likes/retweets to judge what will get others to engage — and they need *as much engagement* as possible to serve a commercial value to advertisers. They need your eyeballs, and they need more and more of them over time to exist. They are at odds with you as a user, your mental peace, and your desire to be informed but not enraged. BitClout is engaging, but doesn’t need anyone’s eye balls. You might be making a speculative bet that more people will be on it, but you can benefit from buying into it now and then logging out for five years, and seeing how you faired with your investment in the currency. Yes, it’s cool that it’s decentralized and it likely won’t kick people off / ban them like Twitter has. But nothing is as cool to me as the fact that it does not need to ever monetize via attention/outrage/advertising.
7) In a nutshell, why is this interesting? // As Charlie Munger famously said, “Incentives are everything.”… and BitClout, for a social network, nails the incentives (for all parties) better than anything I’ve ever seen. Start using it, and you will see what I mean. And on top of the incentives for joining and using the platform being better in the long-term for everyone (over something like Twitter), the reason this will end up being 5x more engaging than something like Twitter is that it is basically a combination of social media + financial media + stock trading, all in a single platform. Information, entertainment, and financial stakes (and winnings) make for a compelling platform.
8) What are the main risks to BitClout sticking? // There is currently no off-ramp once you buy the currency, so the execution of that off-ramp will be a critical milestone in how the team behind it treats users. That is the final major piece of the foundational puzzle. Controversy around public profiles of celebrities, smaller foul-ups in building, crashes of bitcoin (which BitClout is tied to) are all going to happen. Will they get in the way of this sticking? I don’t think so. They are risks, and the massive fluctuations of bitcoin affecting the platform are going to happen, but the main one (and I could be wrong) is the off-ramp mechanism and execution. However, all incentives and previous thoughtfulness points to a competent execution here.
9) Who is the team behind it? // So far, we know the primary founder is someone named @diamondhands. It’s pseudonymous, but their identities aren’t a complete secret. I won’t reveal their identity (aka dox them), but I will say the competence to build and scale something like this is very, very high. It’s exactly who I’d bet on as an angel investor for a project like this.
10) Is it weird and childish to buy into a product built by someone called DiamondHands? // The world is getting weirder, faster every day… but this isn’t as weird as bitcoin with a truly unknown founder, to be honest. And I’m extremely bullish there too. So this makes a bit more sense in that respect. Side-note: Deep down, we all crave a little more weird and a little more childishness in our lives anyhow. If you don’t believe that, then this isn’t a bet worth making.
1) Beyond being a startup founder and investor, what makes you so sure? // I built a social network around money that was acquired by Airbnb in 2017. We were building on regular monetary rails. What we were building vs BitClout’s capabilities on cryptocurrency is like a snail vs a hover craft. And again, they have nailed the incentive structures better than anything I’ve ever seen in social.
2) You’re an investor in social apps like Clubhouse (audio social network) and IRL (event-based social network) that are growing fast. Isn’t that the future too? // Yes, I think we’re seeing audiences look for alternatives to Facebook, Twitter, and other legacy social platforms primarily because these products, that used to be on the side of the user, are now at odds with what’s best for the users (in search of what’s best for advertisers and revenue). They aren’t evil for that, but it is not a good sign when a company has more engineers working on ad products than on improving the user experience. That’s why companies like Amazon or Airbnb likely have longer “arcs” as companies than advertising-based platforms. [Tweet I wrote about this coming wave of social apps 18 months ago: https://twitter.com/jamesbeshara/status/118]
3) I’ve seen articles of cease-and-desists being sent their way and a backlash during their launch? // Yes, individuals have asked for their names to be taken off the platform, and their launch a few weeks ago was kind of clunky, and definitely rubbed some people the wrong way, but Facebook had a much shadier inception on every vector, and well, people got over that too.
4) What’s the least talked about aspect that makes this compelling? // One is that with an open protocol, the application user interfaces and feature sets within this are going to explode, but I think the least talked about but most interesting aspect of a social network built around money will be the way companies will use a too like this over time.