Will Social Media Be the Next Big Industry to Be Disrupted by Blockchain Technology?
The average person spends 2 hours on social networks every day. It’s an enormous part of our lives. However, it could also be a part of our lives that will change in the near future: social networking could be the next industry to be disrupted by blockchain technology.
In an opinion piece on Coin Central, Ryan Smith described social networking as “an industry ripe for disruption”. By migrating to the blockchain, social networks could embrace the future and stay at the cutting-edge of technology.
Most of today’s social networks emerged in the mid to late 2000s. They’re based in centralized servers and use centralized data management techniques. They’ve experienced data leaks, data usage scandals, advertising scandals, and other issues over time.
Could blockchain really solve all of these issues? Here are some of the points illustrated by Ryan Smith in his recent piece.
Social Media Introduced the “Freemium” Business Model
“The digital social network experience has ushered in a new type of business model, the freemium one,” explains Smith at Coin Central. “Almost all successful tech-based social media platforms these days offer free access to their content. Facebook, Twitter, LinkedIn, Reddit, you name it, they all provide it.”
Of course, these social networks aren’t charities: they don’t provide their services free-of-charge through the goodness of their hearts. Instead, they’re for-profit enterprises, and that’s why we’ve grown accustomed to the freemium model.
Today’s social networks make money primarily through advertising and analytics.
Social media networks sell advertising slots on their webpages. Users don’t pay to access the webpages, but the webpages are filled with ads. The social network earns revenue based on each ad view or ad click.
Social networks also make money through analytics. Facebook sells its user data, for example, to virtually anyone willing to pay for it. Businesses buy this data to learn more about their consumers. They can discover what their consumers are interested in, how much money they make, and what kind of products they wish to purchase.
Could blockchain technology disrupt these revenue models? Let’s take a closer look.
What Are the Problems Faced by Today’s Social Networks?
We don’t have to look to the future to find a good example of a blockchain-based social network. Instead, we already have one: Steem is one of the oldest examples of a blockchain social network.
As we saw with MySpace, Nexopia, Digg, and other early social networks, the early adopters don’t always dominate the space. Steem is a popular network – but it could also be crushed by its second-generation competition in the future.
To determine how blockchain could help future social networks, we need to look at the problems faced by today’s social networks, including:
- Fake news on Facebook
- Excessive trolling and bullying on Twitter
- Censorship and demonetization on YouTube
- Plagiarism on Instagram
- Outright scams across all social networks
It’s easy to say “blockchain will solve all of these problems”, but it’s harder to actually implement a viable, blockchain-based solution that will solve all of these issues.
How Blockchain Could Help
Blockchain could significantly change the way social networks operate. It could solve some of the problems listed above. Here are a few of the ways blockchain could help social networks, according to Smith at Coin Central:
Transparency and Governance
A blockchain could allow for greater transparency and governance among social networks. The blockchain could allow information and transactions to be verified by different servers, developers, and users. Social networks could implement a democratic process of how the network is run. Users might be more open to joining a democratically-operated social network as opposed to a closed, privately-operated network.
Aragon is one good example of how this can work in practice. Aragon is tackling blockchain governance and digital jurisdictions head-on, allowing anyone to build decentralized organizations with more horizontal company structures.
Blockchain could also make it easier for content creators to monetize their content. Making money in today’s social media environment requires handing your content to a third party – the social network. The network owns your content. Content creators also have to contend with plagiarism. You don’t have to look far online to find stories of people writing a tweet and getting 10 retweets, only for a more popular parody account to post the exact same tweet and get thousands of retweets.
Blockchain-based social networks, like the Brave browser and its Basic Attention Token (BAT) are attempting to solve these issues by removing the social network as the middleman. Value is transferred directly between publishers, users, and advertisers.
Brave has another advantage: users can opt-in to advertising. Users who opt-in to receiving advertising will get paid to do so. If you don’t mind seeing advertisements, then the network will share a cut of the ad profits with you.
Control Over Your Own Data
Blockchain helps users remain in complete control of their data. A blockchain-based identity management system, for example, makes it easy to share your secured identity data with authorized users only.
Civic is one blockchain project pushing towards a secure identity ecosystem. With Civic, you can manage your blockchain-based identity, then share that with authorized parties. There’s no need to worry about social networks selling your data to shady third parties.
Risks of a Blockchain-Based Social Network
Blockchain technology won’t solve all of social media’s problems overnight. In fact, it might create new problems – or just give scammers new ways to target victims. We’ve already seen some of these problems appear on the Steem platform.
One of the problems is that users have skin in the game: when money gets involved – say, when users get paid to post high-quality content – it gives users a financial incentive to cheat the system.
Blockchain-based social networks aren’t immune to plagiarism. We see plagiarism on Steem and other leading social networks. This is where a centralized social network can actually be superior: Google has advanced algorithms that can detect duplicate content, for example – the same algorithms that detect and punish duplicate content on its search engine. Blockchain-based social networks are struggling to address this issue.
Bots are a threat on all social networks. Developers can comb through lines of code looking for exploits, and it’s only a matter of time before an exploit is discovered – whether it’s a centralized or decentralized social network. We see bot accounts on Twitter and Facebook frequently, for example.
The Steemit network, meanwhile, has its own bot problem. Many users complain about bid bots destroying the platform and disincentivizing manual curation. As long as money is involved, clever developers will find ways to circumvent the system.
Blockchain-based social networks aren’t immune to the fundamental motivators of economics. In fact, they encourage them. When users collect a large number of tokens, they can become too powerful for the social network. These “whales” can dictate the direction of the network, for example, while holding significant sway over the community.
First Mover Advantages
A blockchain-based project isn’t going to roll in and beat Facebook in a day. It took Facebook 14 years to get to 2 billion users. Even if the world’s best social network was launched on a blockchain-based platform tomorrow, it might take years before it becomes a household name.
Blockchain can undoubtedly solve a number of problems with social networks. However, it can also create new ones, and certain problems will never be solved. With the value of Facebook and Twitter tumbling, we’re at an interesting turning point in the history of social media.