Blockchain Social Networks

Using blockchains for monetization and data storage

Generic blockchain image

My previous post on decentralized social networks analyzed the differences between federated and p2p social networks. This post will provide a survey of social applications that have incorporated a blockchain into their design. Social applications that use a blockchain are decentralized to varying degrees. Some use a blockchain for data storage, some for monetization, and some for both data storage and monetization. I won’t try to list all the projects that exist, but will dive into the different design choices of a few relatively successful or unusual approaches.

Most blockchains behave like expensive, slow databases that sacrifice efficiency for immutability and global consensus. Blockchains are logically centralized, exerting great effort to make many untrustworthy computers behave like one computer. Even if next generation blockchains become much more scalable, they still seem ill-suited to store social media content which is mutable, ephemeral, and does not require global agreement on its state. Different users can have different views of the data in a social network depending on their social graph, and that’s fine. Despite the drawbacks of using blockchains to store social data, many applications have taken the approach of storing social content on a blockchain. Others have offloaded storage to p2p networks like IPFS that are relatively more scalable.

Decentralized social networks typically struggle with monetization. Networks that incorporate a cryptocurrency into their design have attempted to address this. Most allow users to make money off their content, and either charge to promote content, take a fee from transactions, or profit through appreciation of the token used.

However, a downside I’ve observed in social networks where content is monetized is that user behavior becomes transparently driven by monetary incentives in ways that feel less genuine. This applies to influencer culture on Instagram as well, but cryptocurrency social networks bake it in from the start. This may be the inevitable result of replacing intrinsic with extrinsic motivations, or there may be an incentive structure that strikes the right balance that has not been achieved yet. Money should ideally be a facilitator and not a driver of interaction.

Crypto-incentivized social networks initially form out of communities that are bullish on the cryptocurrency used, so discourse often revolves around price and the future of the currency itself. The oldest cryptocurrency incentivized social networks are only a few years old, so it remains to be seen if they will attract a broader audience beyond the cryptocurrency community.

Blockchains for data storage and monetization

STEEM

The Steem cryptocurrency was created for content monetization in social sites. Steemit was the first site built to use Steem, and mined 80% of Steem in the first week. Later, several other platforms including Dtube, a decentralized Youtube, also used Steem for monetization. Steemit benefited from the appreciation of Steem during the 2017 cryptocurrency run-up, but did not manage the bear market well and had to lay off much of its staff. When a company’s monetization strategy depends on a volatile asset, its leaders have to be prudent portfolio managers as well as good operators.

Steemit

Steemit is a Reddit/Medium-style social network that uses Steem to monetize user content. There are over a million users. User identities and post data are stored on the Steem blockchain. Other than depending on Steem price appreciation, Steemit monetizes through users promoting their posts. When users perform certain actions on Steemit, they earn Steem. Creating posts that get upvoted qualifies users to earn from a rewards pool. Upvoting posts that later become popular can earn voters a curation reward. Votes are weighted by reputation, which accumulates with age, so older accounts of early adopters have more power in the network. This, as well as the fact that Steem tokens could be mined easily early on, means that Steemit’s incentives are geared towards early adopters.

A Steemit account functions as a cryptocurrency wallet, and users are responsible for their own key management. There is no account recovery available, and funds can be lost or stolen if the key is compromised. Accounts cannot be deactivated or deleted, since they are permanently stored on the Steem blockchain. In order to reduce spam, new account creation requires an email and phone number, and must go through a review process.

Dtube

Dtube is a decentralized version of YouTube. There are about 187,000 user accounts, and 1.7 million visitors a month. It stores data in decentralized networks that scale a bit better than blockchains. Videos are stored in IPFS, and GunDB is used for messaging.

Dtube started out using Steem for monetization, but is currently launching its own token on a new blockchain. Creators of videos get tokens in proportion to the reputation of the users who upvote their videos, similar to Steemit. Users can use Dtube through Steemit accounts, or create an identity on the new testnet blockchain run by Dtube.

BCH, BSV

A few social networks have built on Bitcoin forks, using the cryptocurrency to monetize and to store data. Memo built on Bitcoin Cash (BCH), a fork of Bitcoin, and Twetch built on Bitcoin SV (BSV), a fork of Bitcoin Cash. For those unfamiliar with the history, these forks came out of the block size wars in Bitcoin. Those wanting larger blocks split off into BCH, and then another faction split into BSV. These communities have tried to use larger block sizes to develop new applications like storing social content on a blockchain.

Memo

Memo is a Twitter-style social network built on Bitcoin Cash. It stores user data permanently and publicly on the blockchain — each action is stored in an OP_RETURN transaction on Bitcoin Cash. It has a novel reputation system based on the ratio of how many people you follow are your mutuals vs how many have muted you.

Twetch

Twetch is a Twitter alternative built on Bitcoin SV. New users create a moneybutton account for sending and receiving money. Once users have a moneybutton, they can interact with the Twetch network, which looks and works like Twitter except most actions are monetized. A new user has to load money into their account to write, comment, like, or follow. It costs 2 cents to create a post — a feature most likely added for spam prevention. Liking a post and following a user costs a few more cents. Post data is permanently stored on the BSV blockchain.

A cross-post to Twitter feature exists in Twetch, and they use Twitter to gain visibility. During my account creation process, I was subjected to growth-hack marketing tactics like requiring new users to follow and tweet about them before they authorize an account. I would not tweet promotional text for an app I hadn’t tried, but a lot of community sentiment revolves around promotion of BSV, which means new Twetch users might be less annoyed by these tactics than regular users joining a new social network.

Blockchains for monetization

Minds

Minds is a Facebook alternative created before tokenized networks existed, but it has since added an ERC-20 token to monetize user content. The data layer and user identities are not decentralized. They have over 1 million registered users and around ~100,000 MAU (monthly active users). The platform itself monetizes through the promotion of content. Users can earn tokens by voting, commenting or uploading, and use these tokens to promote their posts. 1 token equals about a thousand impressions. Users can also tip each other.

Dlive

Dlive is a Twitch-style live-streaming platform that started out using Steem, switched to using its own token, and was then acquired by Tron and is currently changing tokens again. User identities and data are not decentralized, so it is essentially Twitch with cryptocurrency micropayments. It has around 5 million users. Popular Youtuber PewDiePie switched over to streaming on Dlive in April 2019, causing a 67% jump in user growth.

Blockchains for data storage

Peepeth

Peepeth is a “permanent Twitter” built on Ethereum and IPFS, with about 6,500 users. It focuses on decentralizing data instead of monetizing user interactions. Account information is stored on the Ethereum blockchain, and data is stored in IPFS with a link to it on Ethereum. The permanence of storing posts on a blockchain is treated as a design choice in Peepeth, meant to encourage users to be more mindful of what they write. The main Peepeth client has a few monetization strategies, including a 10% fee on user tips, and charging for verifications of social accounts. Users log in to Peepeth through Metamask, and their identities are registered by posting account info to a smart contract that associates it with their address. I was wary of publicly storing account info that included an email address on the blockchain, so I made a new one to sign up. Peepeth allows cross-post to Twitter.

Zbay

Zbay is a new social messaging app built on Zcash. It stores messages in the encrypted memo field of private transactions. Most social apps that store data on a blockchain offer no privacy because all interactions are permanently recorded on a public ledger. Zbay stores messages permanently on the Zcash blockchain, but they are only visible to holders of the private key controlling the address they were sent to. Usernames are registered through transactions sent to an address in a format that specifies an association between the username and its address.

Conclusion

Cryptocurrency incentivized applications have made some forays into monetizing decentralized social networks. They have also experimented with storing social data on blockchains. Storing mutable and ephemeral data like user posts on a blockchain is an inappropriate use of a global ledger, but using a blockchain to manage identities may be a good direction. Claiming a unique, human-readable namespace for a username requires global consensus. Features that may be contentious and hard to track in a fully p2p network, such as “like” counts, could also be reasonably put on a blockchain.

Feel free to mention your crypto social network of choice below in the comments. If there is a good technical argument for why it is novel and interesting, I will look into it.