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Why token-fueled communities are the social media killer we have been waiting for.
The internet was born, first and foremost, as a communications tool. Some of the earliest networked applications were databases and message boards that stored and communicated text between users. We have seen communications online evolve since the early days. The 1990s brought instant messaging, search engines, and email to the world. The 2000s saw multimedia downloads and streaming as well as the early incarnations of modern social networks take shape. These waves of innovation across these 20 years were met in society generally with optimism and utopianism. There was a belief that with an explosion in communications tools, the internet could be the domain where anyone can find a community and belonging. It wasn’t until the 2010s, when these innovations truly reached ubiquitous size and scale, that we began to see the social and societal cost to the internet be measured.
There has been a lot of debate about the monopolistic consolidation and reach of internet communications companies in recent years. Above all else, it has forced us to wrestle with a pretty existential question: do we, as a society, want Facebook, Twitter, Google, or Apple to govern and influence this much of our speech and attention? While most have turned to federal governments to answer these questions, I believe we are also seeing solutions to this question be explored in consumer behavior. Facebook, Twitter, and Google won the second phase of the internet by making their ad-powered businesses more efficient at information distribution and profitable through influential ads and speech than the niche message boards and communities of the 1990s. But now, more and more niche communities are popping again up on platforms like Discord, monetizing their presence through unconventional methods. Perhaps nowhere has this been more obvious than the NFT boom of 2021.
Plenty have given their opinions on the reasons for the NFT boom in 2021. Common wisdom seems to be dismissive of the value these products actually create or why people would spend money for them. Most see millions of dollars changing hands for thousands of lazy JPG cartoons and assume the only value here is speculative scams that are only possible in an unregulated market while billions of federal stimulus is being handed out during a pandemic. While there is certainly truth in this, I believe the projects that have retained their value and continue to attract more buyers tell a deeper story.
What most outsiders don’t realize is that one of primary value drivers of the most successful NFT products is access to a community of other token holders. While some communities in the space are quite shallow, dedicated only to either “pumping” the value of their NFTs or coordinating expensive publicity stunts possible only in a bull market, others are home to some of the nuanced and deep conversations, and collaboration, on the internet surrounding their domains. For every Krazy Koala or Chibi Dino project, there is a Krause House building a thriving home for internet basketball fans (who also want to be the first to buy an NBA team). Countless others fit this mold, from the marquee projects like Bored Ape Yacht Club or Nouns, to other smaller upstarts like StoryDAO or JokeDAO. Why would someone spend hundreds of dollars for access to communities like this? Because the depth of conversation and belonging people experience in these communities reaches a level that the social media giants cannot replicate on the platforms optimized for broad appeal and engagement.
One great example of a niche community that has used NFTs to support their financialization and growth is Poolsuite. Poolsuite began as Poolside.fm, a hyper-stylized website with streaming music. It’s hard for me to write about Poolside.fm, it’s a vibe that just needs to be experienced. And that’s the point. The joy of hanging out on a webpage stylized like an old school Mac OS 9 desktop pumping out jams worthy of a Miami poolside club in the 70s and 80s just can’t be replicated elsewhere on the internet, especially not on Twitter, Facebook, or Instagram. But how does Poolsuite then monetize that experience? Through merchandise that both extends and builds community around the Poolsuite vibe in the form NFTs. People can buy NFTs that prove they are “Executive Members” of the Poolsuite and get early access to new Poolsuite experiences, access to a members-only Discord chat server to socialize and collaborate, as well as discounts to Poolsuite products like clothing and sunscreen that can only be described as a “vibe”. The fact a community can exist online and profit without selling attention and influence in the form of advertisements should not be overlooked when considering the potential value and impact of tokens for society.
Niche communities are not new on the internet. In fact, these token-enabled communities now look a lot more like the message boards and instant message rooms of the 1990s than the massive platforms we’ve seen grow to monopolistic sizes in the 2010s. The difference now is that blockchain technology and NFTs open the door to coordination and financialization of niche communities that empowers them to compete as an entity greater than the sum of its parts against the modern tech giants. Poolsuite may not be able to compete directly with Facebook, but Ethereum, the blockchain Poolsuite uses to produce and sell verifiable digital goods for its members, can. Through that lens, one can view Ethereum as “Facebook” and Poolsuite as a “Facebook group”. Only Poolsuite can now sell itself directly to its community members as a luxury brand. Think of it like the hipper, more pleasant local pizza shop, while its equivalent Facebook group feels more like the 10,000th Dominos franchise. Who wouldn’t want to hang out more in a pizza shop than Dominos?
This does not mean the death of the big platforms. I do not believe platforms like Facebook, Instagram, or Twitter will ever go away. There will always be a market for the tabloid-style digest-able content that has dominated these platforms. It will also be very difficult for anyone to compete with their hyper-efficient algorithms built to connect eyeballs to the content that will most interest them. But for those who want to chill and take a digital breather with friends instead of argue about Beyonce with strangers, they will find their home in this rising category of niche, token-enabled “micro” social networks.
If entrepreneurs want to build competitors to Facebook, Instagram, or Twitter, the opportunity now is not trying to build yet another monopolistic platform, but in products and tools that support the facilitation and monetization of niche communities. These niche communities will become “micro” social networks, and the tools and protocols that support them, including upstarts like Lens, will create a “macro” network of networks that will pale in comparison to what a singular legacy social media platform can achieve on their own.
