Social Tokens: The Next Big Thing In The Crypto Space
It is no longer news that blockchain technology is leading transformative impacts across multiple industries around the world. One of these transformative impacts is the elimination of intermediaries, and it...
It is no longer news that blockchain technology is leading transformative impacts across multiple industries around the world. One of these transformative impacts is the elimination of intermediaries, and it has been gaining momentum and is on course to disrupt many industries. The media and entertainment industry is arguably the first that the concept of social tokens will disrupt. Over the years, content creators have led the media and entertainment industry.
However, the relationship between these creators and their fans has always been via third parties that have a certain level of artistic control. This means that content creators don’t benefit directly from their works. This is where social tokens come into play. They are a special kind of cryptocurrency asset whose value is reflective of the enthusiasm of the fans. With the advent of these social tokens, content creators are set to become their own economies.
Overview of Social Tokens And How They Work
Social tokens are a type of cryptocurrency that is built around a community, influencer, or brand. It is a way that helps internet personalities or celebrities to monetize their works without relying on third-party platforms or agencies. The current social tokens are not the first time in history that creators have tried to monetize their work. Back in 1997, Davis Bowie launched an asset-based bond known as Bowie Bonds as a way to securitize the income from his past albums and paying an estimated 7.9% annual interest for the next decade. According to reports, Prudential Financial paid an estimated $55 million for these celebrity bonds.
Social tokens have made it possible for content creators to build and reward their fan community as well as compensate themselves for the creative work they deliver all the time. Imagine visiting a news website to read news, and then you are rewarded with a crypto token. Due to how they are designed and set up, these social tokens are like real (fiat) money. Only a limited number of these tokens exists, there will be high demand, and the value will increase. In addition, the creator can include more benefits for the community members and attracting more fans in the process.
The advent of social tokens in today’s internet space shows the transition of the internet from Web 1.0 to Web 2.0, and then Web 3.0 where users are curators of their own content. As true products of Web 3.0, social tokens directly connect the content creators and consumers. It is different from the concept of celebrity bonds because there is no intermediary in the transaction process.
How People Can Earn From Social Tokens
There are a number of ways people can earn from these social tokens:
- They can perform an action within the community where they give them tokens and then exchange the tokens for ETH and from ETH to cash.
- People can hold unto the token they have earned to appreciate in value, then exchange it for ETH, and finally cash.
- Some of the social tokens give holders access to make purchases with them. Holders can essentially get certain items for free.
- Someone can buy a social token at a price he believes is lower than the growth of the community. For instance, if you find a community with content you love and believe that others will love it too, you can buy into the token early. When the communities grow and earn more social tokens, your token also appreciates in value.
Big Non-Fungible Token (NFT) Collections With Social Tokens
There are quite a number of NFT collections with social tokens; some of the big players include:
Melon is a one-stop-shop platform for non-fungible tokens and social tokens. It is the first and only NFT platform built for content creators and their fans. Although Melon is a relatively new player in the NFT market, the platform innovates by opening up a new category in the NFT market known as viral NFTs. By combining social media virality and the scarcity created by NFT technology, Melon has differentiated itself from other competitors in the market. On the platform, there is no restriction on how creators choose to monetize their content. The vision of Melon is to bring top social assets from across the decentralized web together in one easy-to-use interface.
Rally is a platform designed specifically to enable creators and their communities to build their independent digital economies. Creators can launch their own social token that facilitates transactions, access, and more efficient solutions for their economy. It is designed to encourage fan engagement to be part of creators’ economy as creators reward them with social tokens. With Rally, creators can provide their community with access to private groups and exclusive content.
The Whale is a social currency platform that is backed by tangible and rare non-fungible tokens. For Whale, the holders get a stipulated stake in Whale Shark’s non-fungible token collection. The whale shark is a very influential collector in the NFT market and owner of several values pieces. There are currently 10 million Whale tokens in circulation with a fully diluted valuation of $330 million.
How Creators Can Set Up Their Social Tokens
The creator will need to have a community in the nature of a blog, forum, or something of that nature. Once that is in place, the creator can develop an ERC-20 crypto-token, exchangeable for ETH, as ETH is exchangeable for cash. When the token has been set up, the creator has to say the number of tokens that will be available for the community. Every token given out or bought will have a higher value than the previous one. Therefore, as more tokens go out to the community, the valuable they become. This will be a great way to attract more members to the community.
The Use Cases Of Social Tokens
Social tokens can be used in three major ways:
To Gain Access
Some fans simply buy these social tokens because of the access they provide. For instance, a band is known as “Portugal The Man” gives fans who purchase 10 of its social tokens access to the band’s audio archive, text and video chats, and other benefits. Also, Lil Yachty’s coin gets gift boxes that his mother curates.
Social tokens can be used as a medium of exchange. In place of things like “tip jar” on some websites intermediated by Venmo or PayPal, fans can donate tokens as compensation for creators.
The fact that the token supply is limited means that there will be rising demand, which in turn increases the value of the tokens. Therefore, one can buy the token early and then redeem the monetary equivalent when the value appreciates. However, creators can take distributions to augment their income.
Social tokens are undoubtedly a new frontier in the NFT and crypto space. They make the creator-fan relationship a two-way thing. Content creators can be confident of getting the true worth of their effort without the intermediation of third parties that see them as a mere “tool” instead of worthy partners. We are currently seeing the tip of the iceberg, the full impact of these social tokens will be known with time.