Marina del Rey, CA, July 16, 2021 (GLOBE NEWSWIRE) — Stories about BitClout have been making the rounds on new sites and have sparked lively conversations across social media. Before we dive into what BitClout is, it’s worth taking the time to understand another trending technology — NFTs. Unlike in the real physical world, digital objects are not unique. In other words, the ones and zeroes can be copied perfectly as many times as you want.
NFTs, or non-fungible tokens, allow for the creation of limited run or one-of-a-kind unique digital objects. This is important because for the first time value can be assigned to digital objects. The explosion in the popularity of NFTs hints at the pent up demand for such an innovation. NFTs have been used to tie value to digital objects such as digital trading cards, art, or even music albums. BitClout is a related technology with a more ambitious goal, using its tokens to tie value directly to people.
BitClout is a crypto social network that allows users to monetize their followers and invest or speculate on other users. The basic user interface and actions resemble Twitter with posts, profiles, follows, likes, etc… However, unlike Twitter, Facebook, or Instagram, but similar to bitcoin, BitClout is completely decentralized and fully open-source. There is no company behind BitClout.
BitClout is such a new technology that has turned us towards an expert in the space to check our understanding and walk us through the possibilities of the new social network. Mario Nawfal, a serial entrepreneur and business influencer, started his first crypto business 4 years ago, International Blockchain Consulting (IBC). Mario was one of the earliest adopters of Clubhouse. His daily room “The Roundtable,” is the #1 room on business.
BTCLT and Creator Coins
There are two classes of tokens on the platform. BitClout is the platform, but also the name of the native cryptocurrency (BTCLT), which is required to use the platform. Mario says that “this helps fight against the high number of bots and spam on other social media networks.” Don’t worry, though, most normal actions on BitClout, such as posting and liking, are essentially free. Signing up on the BitClout platform gives new users a starting amount of BTCLT. BTCLT can also be purchased with bitcoin through the platform.
Creator Coins are the mechanism through which users monetize their reputation or invest in other peoples’. Every user on the platform gets their own coin that anyone can buy and sell. The price of each coin rises when users buy and falls when they sell. If you believe a coin is going to rise, e.g., the user will become more popular, then the earlier you buy the coin the greater you profit later.
Almost all of Mario’s excitement is aimed at the Creator Coins. Creator Coins allow users to invest directly in other users. Creator Coins allow users to frictionlessly turn their social capital into financial capital. Creator Coins are essentially a new asset class that ties value to the reputation of individuals.
How do Creator Coins work?
Let’s say user Alice signs up for BitClout. When Alice initially creates her profile, there are zero Alice Creator Coins, thus the price for purchasing her first coin is zero. If user Bob wishes to buy coins from Alice’s profile, the platform will create, or mint, the coins and sell them to Bob. The price per coin will increase based on a predetermined curve visualized below. Creator Coins are actually denominated in BTCLT, but for simplicity are translated to US dollars.
Note that the coins are very scarce because as more are purchased the price increases higher and higher. Once 500 coins have been created, each one will cost more than $10,000. Buying increases the number of coins in existence and the value of all coins based on this curve, but selling does the opposite. The number of coins decreases and the price falls based on the curve.
Every user on the platform can decide to keep a certain percentage of the coins that are created as a founder reward. Returning to Alice, if she decided to set her founder reward to 10% and Bob bought 100 BTCLT worth of Alice’s Creator Coin, then 10% of the purchased Creator Coins would go to Alice’s wallet instead of Bob’s. BitClout only pays founder rewards on net purchases. If Bob bought 100 BTCLT of Alice’s coin, sold it, and rebought 100 again, Alice would still only have 10%.
Mario, who is already one of the most active users on BitClout, advises users to set their founder’s rewards very low, preferably zero. “The best way for users to profit from their own presence is to buy their coin when they initially create their profile. The coins are very cheap early on when there are few coins.”
Possibilities of Creator Coins
“There are so many great ways to use your Creator Coins as incentives to investors,” says Mario. You can limit the people who can send you messages or comment on your posts to those who hold a certain amount of your Creator Coins. You can increase traffic to your profile by promising to purchase a more popular user’s coin in exchange for a retweet, or you could retweet a less popular user if they purchase your coin. You can create premium content to entice new investors and retain the ones you already have.
Mario has set up premium content for tiers of his top investors. “I’m proud to run the biggest growth hacking agency (WeAreGrowthHackers) and the interest in BitClout is substantial. We are helping a ton of celebrities and influencers launch on the platform.” Mario is leveraging his business for his investors on BitClout. “If you are a top 10 investor, you will get notified when we launch a celebrity. Remember, coins are very cheap early on.”
Other premium content can be things like, artists creating custom pieces for large investors, signed posters from celebrities, or simply communication access. Mario says, “I communicate and make myself available for my top investors.” Mario stresses that the key is to add value for investors, like any business. “With my incentives, I was able to raise $400,000 in four days, but that’s only the beginning,” says Mario.
Future of BitClout
Mario sees BitClout having exponential growth in 2021. “It takes time for people to get comfortable with new technology, but when they do, the growth reaches exponential status.” Mario is putting his money where his mouth is, he’s investing in the platform. “I am currently buying all the BitClout over-the-counter (OTC) I can get my hands on. In fact, if you want to sell your BitClout, DM me on instagram @marionawfal. We use an OTC Escrow service.” He is also in talks to start a BitClout fund.
Still, there are misgivings on Twitter, in news stories, and in conversations I’ve had with industry observers that BitClout is some sort of scam, perhaps a pump and dump scheme. Mario is quick to retort, “Look at the who’s-who of initial investors in BitClout. Sequoia Capital invested in Apple, Google, PayPal, LinkedIn and a dozen other marquee global brands. Andreessen Horowitz, invested in Facebook, Twitter, and AirBnB. You think they didn’t do their due diligence? You think I didn’t?” Mario is right that the caliber of investors supporting BitClout should do much to deflate the notion that BitClout is merely a scam.
“Bitclout is a place to start communities, and create long term value in those communities,” says Mario. If that is true, then the communities that make up BitClout, as well as BitClout itself will have a prosperous future.