Social Media’s Path to Web3
Co-authored by: Jian Hao Lim, Shawncky & Desmond Teo
Nothing following this constitutes financial advice, please do your own research. All data presented henceforth are accurate as of 31 December 2022.
1. TLDR
Existing social media giants are moving towards the web3 space for reasons such as providing free speech, digital ownership, and monetization for users, which has seen increasing demand. However, these players have encountered problems such as privacy concerns and barriers to entry, faced by both users and platforms. Lastly, we will update you on the current developments made by these platforms.
2. What makes something Web3?
Underlying technology
Before understanding the technology behind Web3, we must first identify the difference between Web 2.0 and 3.0. Web3 is really just the next evolution of Web2. We are already getting glimpses of what it will eventually be. However, a distinct feature of Web3 is that it is building off the past generations and adding to it through blockchain technology. It is considered the read-write-own version of the internet. Decentralization, privacy, machine learning and safety are some trends that Web3 is associated with.
One main difference between blockchain technology and past infrastructures is databases. Blockchain allows anyone to create systems that can be audited by anybody, which develops trust with users who use the apps.
Encryption is another part of Web3. It ensures that no one can access data except for the intended parties. While we already use encryption to protect our data, as Web3 continues to evolve, we can use it to ensure data can be both publicly transparent and privately owned.
Digital Ownership (NFTs, Wallet addresses)
Since 2009, blockchain technologies have been steadily advancing on previously intractable problems around ownership, transfer, and use of copyrightable digital assets around the world. Blockchain technologies allow us to identify original and subsequent owners of digital files, allow for the permissionless and trustless transfer of those files, and provide economic incentives for the recognition and enforcement of these records.
Non-Fungible Tokens (NFTs) act as proof of ownership. The details of the NFT’s holders are recorded on the blockchain, and everything is managed by the token’s unique ID and metadata. If I choose to sell my NFT, the change in ownership is tracked on-chain in real-time, and the smart contract ensures that the royalty fee is deposited directly in my wallet.
Applications
There are many applications that Web3 have been pushing out over the last couple of years. The most known example would be blockchain technology, the technology that influenced the concept of Web3. Another famous example would be cryptocurrency, “crypto”, which is decentralised digital money that is not under the jurisdiction of a bank or a central authority. Another example would be Non-Fungible Tokens (NFTs), which are a type of cryptocurrency, but are entirely distinct from one another and cannot be traded.
In the context of social media, the top web3 apps can shift the dynamics of control towards the end users. These apps can also revolutionise the social media experiences of users by offering rewards in the form of digital assets such as NFTs.
3. Pros and Cons for transiting to Web3
Pros
Free speech (Transparency)
While censorship policies are well-intentioned, social media platforms are screening more content than ever before, resulting in an increasing number of instances where valid initiatives and contents are being censored while invalid contents are not. Another problem with current censorship algorithms is that they are often made by a group of people in the organization, making them rather subjective with little transparency.
Many believe that the decentralized system of a Web3 social media platform will address this problem as decisions are made by consensus among all stakeholders. Minds is one of the rising Web3 social media platforms that aims to provide users with a transparent platform where they have free speech.
Ownership
Ownership is a major concern for content creators on Web2 social media platforms.
Content creators do not “own” their audience but rather “rent” them from the social media platform and hence, they are paid ad revenues — a significantly small amount compared to the brand deals paid to the social media company. Furthermore, depending on the privacy policies of the social media company, social media companies may also reserve the right to use the contents made by creators in any way they choose. This means that creators do not have control over their creations and the social media company can use them for additional revenue or promotions.
Many believe that Web3 will address the current ownership issue as a social media company that utilizes blockchain technology is decentralized, removing the need for a centralized supervision mechanism. This will result in a platform where content creators have full ownership and sole right of use over their content, resulting in more efficient ways of monetization.
Monetization
Monetization is another concern that goes hand in hand with ownership. With full ownership creators have over their content on Web3, creators will have more flexibility on how they choose to monetize their content according to their preference. They are no longer restricted to the limited choices of Web2 but can choose multiple methods to generate income such as selling a portion of their content, create NFTs, etc.
WUBITS is a platform that is empowering creators to sell their content through tokenization and fractionalization.
Cons
Privacy concerns
While blockchain have the potential to increase privacy for users, it can also be a cause of privacy concern as every transaction will be recorded on public blockchain. Since the wallet owner’s public keys are recorded and publicly visible, wallet owners can be tracked, providing private and confidential information such as their financial information.
Another potential concern arising from Web3 social media is that it may be difficult for users to remove/delete their comments or posts, due to the immutable nature of blockchain. This can have a negative impact on users personal and professional life. It is therefore important for Web3 social media platforms to address this issue.
Barriers of entry
As blockchain is relatively new, the idea of a Web3 social media dApp will be confusing for those who are not familiar with the crypto world. Unlike traditional social media platforms where transactions can be done via traditional payment methods, Web3 social media platforms will likely see a shift towards transacting via tokens.
The process from getting a crypto wallet to making payments on the social media platform may in itself deter non-crypto natives from being a user. Additionally, the high transaction fees of crypto wallets will deter users from making purchases on the social media platforms.
4. Current Development
Telegram
The popular messaging app has commenced on its transit into Web3 since 2018, using The Open Network (TON) designed by Telegram. TON’s fully operational mainnet is currently used for payments, staking, governance and transaction fees using its token, Toncoin (TON).
Telegram has recently launched a blockchain-based marketplace, Fragment, for username auctions, where users can own and auction their Telegram handles. This allows users to prove their ownership on the TON blockchain.
Users can also now send TON to any Telegram user simply through a user-friendly bot on Telegram, @Wallet, or from a list of non-custodial wallets available here. Telegram has plans to explore decentralized storage, bitcoin and EVM crosschain.
Reddit has collaborated with Polygon to boost the adoption of digital identity through its Reddit Collectible Avatar. As an owner of the collectible, you can customize your avatar, trade them, and sell it on the marketplace. Within 3 months of its release, more than 3 million unique wallets were created, also known as Vault wallet.
Though Reddit uses blockchain technology powered by Polygon, they avoided all the fancy crypto or Web3 lingo and never mentioned “NFT” at all. Could this marketing technique be the way to onboard normies?
Meta
Meta has been developing its Web3 ecosystem aggressively for the past year, especially on the social media platform, Instagram. Using the Polygon sidechain, they allow users to mint and trade NFTs within the platform, with non-custodial wallets like MetaMask. On top of that, user’s metadata are stored on decentralized storage provider Arweave. Fees are waived until 2024 as part of Meta’s effort to ‘helping creators make a living’.
On the other hand, Meta’s vision on building the metaverse, with VR and AR technology, has racked in combined losses of almost $16 billion. It is popularly known for its Meta Quest Pro, a high-end VR headset, which goes for $1499.99.
Since September 2021, you can tip your favorite content creator on Twitter with Bitcoin over the Lightning Network.
One year later, Twitter enabled users to verify NFTs and display their collection of NFTs on their profile. Not only does this help to weed out fake news and accounts, but decentralized identities also preserve users’ autonomy over its data as well as a more targeted and relevant form of advertising.
Twitter also launched NFT Tweet Tiles, where links to an NFT on certain external sites will expand to show a full-size image of the NFT.
Spotify
According to Spotify’s job posting earlier this year, it appears that Spotify has plans to integrate NFTs on its platform. It has conducted paid interviews with selected individuals about displaying NFTs on artists’ profiles. In May, Spotify also collaborated with Roblox through the creation of Spotify Island in the Roblox Metaverse. It claims to be a meeting place “created with the goal of bringing artists and fans closer together as they play, explore, and connect”.
Appendix
https://slf-svrgn.medium.com/moving-towards-a-new-form-of-digital-ownership-in-web3-0-ead5f1b170d9
https://venturebeat.com/data-infrastructure/web3-and-the-transition-toward-true-digital-ownership/
https://slf-svrgn.medium.com/moving-towards-a-new-form-of-digital-ownership-in-web3-0-ead5f1b170d9
https://venturebeat.com/data-infrastructure/web3-and-the-transition-toward-true-digital-ownership/
https://101blockchains.com/top-web3-applications/
https://ethereum.org/en/developers/docs/web2-vs-web3/
https://nftnow.com/guides/why-web3-social-media-platforms-are-the-future/
https://autoconversion.net/blog/opinion/content-monetization-ownership-web3/
https://hackernoon.com/decentralized-social-media-and-the-future-of-content-creation
https://supraoracles.com/academy/the-pros-and-cons-of-web3/#web3-reduced-privacy
Telegram:
https://techcrunch.com/2022/10/27/telegram-announces-username-auctions-on-ton-blockchain/
Reddit:
Meta:
https://blockworks.co/news/meta-to-expand-nft-feature-to-select-facebook-instagram-users-this-week
https://blockworks.co/news/meta-metaverse-unit-has-lost-5-7b-this-year
Twitter:
https://blog.twitter.com/en_us/topics/product/2021/bringing-tips-to-everyone
https://cryptobriefing.com/twitter-introduces-tweet-tiles-for-nfts/
Spotify:
