This week’s story: Social networks integrating crypto
Social networks have changed our world.
Not only have they helped us find millions of people sharing our interests and views, they have also allowed to interact with each other with an ease that would have been totally unimaginable before.
Social networks have shifted a unilateral Web1, where people merely consulted content, to a bilateral Web2, where people started having real conversations and create content themselves.
We all know where the Web evolution is going: in addition to consulting and creating data, Web3 allows actually owning it, using blockchain as an independent ledger recording that ownership.
So far Web3 has mostly been developed as a separate technology, but the idea of plugging it into social media has been in the works for quite some time. Now, with Elon Musk buying Twitter and Telegram rolling out a crypto wallet, the trend of crypto in social media is getting bigger, although it is still not quite clear which form it would take.
We thought about three main functions of crypto that would be of a great use to social networks – crypto for enabling payments, verifying user identity and fighting spam. And it looks like Elon Musk has already set his eyes on all of them ?
Crypto for payments
There was a time when trading and interacting were almost synonyms: markets were the places where information circulated the most. Nowadays these two functionalities are separated, and for a good reason: transferring value is a separate business requiring complex banking arrangements and a thorough compliance with a number of intricate regulations.
Enters crypto.
The job of transferring value is done by a network of independent contractors (nodes) that use algorithms to make sure everything’s correct.
Value transfer is easy, fast and (mostly) cheap – a great news for social networks, which did not escape Mark Zuckerberg back in 2019. The crypto and social networks match looked like it was made in heaven, and Libra project quickly got on board some very influential companies, like Visa, PayPal, eBay, Uber… They have all backed off when regulators decided that plugging a payment functionality into the already all-mighty Facebook would give it too much power (that they prefer to keep to themselves of course).
Since then, several modest attempts of introducing crypto to social networks saw the day.
In the end of last year Reddit introduced the possibility of converting users’ karma points (given for each upvote their content gets) into crypto.
About the same time Twitter launched its crypto tip jar functionality, allowing users tip their favourite content creators.
Both initiatives stayed under the radar: Reddit’s one is rather niche, and Twitter’s tips are powered by payment provider Strike, which is compliant in most parts of the US, El Salvador and Argentina. Accounts outside these areas cannot use the feature (the “tip” button only allows to copy the account’s Bitcoin address).
The first serious attempt to introduce crypto payments to a social network was done this week by Telegram. The feature was rolled out as a wallet bot allowing to send/receive TON and BTC to/from other Telegram users. TON is a native currency of The Open Network blockchain, launched in 2020 by Telegram, which has since distanced itself from it. While this wallet bot is most likely linked to Telegram itself, this is not compulsory: Telegram allows creating automated activities on it, which means that others can create their own wallet bots. In theory, this could be possible on Discord as well, since it also allows bots.
For the moment it is unlikely that big social networks will fully integrate crypto wallets, mostly out of fear of a regulatory crackdown. The idea of a third party putting its wallet at users’ disposal is much more likely, and also more reassuring, as centralized social networks won’t be able to access their users’ crypto data.
Elon Musk promising to make Twitter code open source, and thus allowing anyone to build on it, is a step in that direction.
Crypto for user identity
NFTs revolutionized the way digital property is ensured, and they could be used by a social network in a number of ways.
Twitter has enabled a verified NFT avatars feature, allowing users to show they really own the image on their profile picture. Meta’s Instagram is reportedly considering doing the same.
However, NFTs can do more than proving that you own a fancy monkey image, they can also prove that you’re you. Imagine a DID (decentralized identity) service attributing an NFT to a user who has completed a certain number of verifications that prove that they are human, or that they are this particular person, or that they own this particular business… Such NFTs would be of great help to filter the bots from humans – the eternal social networks problem, but also help testify “official” accounts of public persons or pages.
Upon buying Twitter, Elon Musk has declared that he will “authenticate all real humans” – crypto can help with that, and in a way that will not endanger people’s personal data (that will never be stored on a social network’s platform).
Crypto for fighting spam
Another declaration Elon Musk has made about his Twitter’s plans is that he will “defeat the spam bots or die trying”. Crypto can help here too, and the ideas abound.
To fight spam posts, Twitter could require users to put up a small amount of crypto, which they will lose if anyone (who has also deposited some crypto) contests their post and a human confirms that it is a spam. If the post appears to not be a spam, it is the contestor who loses their crypto. Marc Cuban has posted this idea on Twitter, using DOGE as an example of such crypto: cheap, fast, and Elon’s darling.
To fight spam in DMs Twitter could introduce a small charge required to send a message, and a security deposit to verify the trustworthiness of a sender. This idea, put forth by Michael Saylor, has the benefit of providing an additional source of revenue to Twitter.
Crypto allows sending small amounts in an automated way, bypassing human verification and other old-world banking hurdles, which makes it perfect for micropayments destined to fight spammers and bots. Elon Musk must understand this, and so far his response to such proposals has been enthusiastic.
Crypto integration into social networks is inevitable: the tech is too important to be ignored, and those who will could find themselves left behind quite fast. A platform that finds a regulation-neutral way to enable crypto payments can become world’s biggest marketplace, while those that find a way to effectively fight spams and bots, as well as authenticate real people without intruding their privacy, will attract most people.
Will it be Twitter? ?
