Is BitClout A Scam?
Blockchain would not be whole without its own social media platform, or at least one that claims it is!! BitClout launched on private Beta on March 24th, and it has already attracted hundreds of millions worth of funding from some of the most noted venture capital firms. But it also managed to wind up of a lot of major players in the industry, with some even taking it a step further and going as far as filing a cease-and-desist order against the new digital currency project. The creators of the blockchain-backed social media platform are under the name of “Diamondhands”, but there are speculations that @nadertheory is the mastermind behind all this.
The decentralized social network and marketplace allows creators to monetize their following using a new type of asset called “creator coins”, which users can buy and sell with the platform’s native cryptocurrency, BitClout. Every profile on the platform gets its own unique creator coin that can be traded freely on the market. The value of that coin depends on the owner’s “clout”, hence the name. So, if a celebrity tweets positively, the price of his/her goes up, and if he/she engages in racial slur, the price plummets.
The reason why a lot of people are hitting out at the platform is because upon launching, BitClout pre-loaded its network with the top 15,000 accounts from Twitter; an ingenious idea according to Mario Nawfal, a high-end investor on the platform. Moreover, many crypto-savvy users were added to the platform without their consent. In an interview with “Diamondhands”, the latter explained why they decided to turn away from the traditional social media model. The loaded accounts have tokens tied to them, and are reportedly worth millions of dollars. That’s only a fraction of the controversies surrounding BitClout. The launch did not go down well with many prominent figures from Twitter, and there were claims that the usage of people’s images was intended to lure in investors in a type of pyramid scheme that promotes a new digital currency. @prestonjbyrne did not hold back at expressing his anger following the usage of his name and image on BitClout.
However, it’s not all bad news, and much like everything else blockchain-related, BitClout also had a rocky start. The BitClout ship has attracted major investors in its first round. North Island Ventures, Coinbase Ventures and Alexis Ohanian are part of a long list of names that joined the action. There are several reasons to why the BitClout ship will catch wind, and keep sailing in to the far future:
1.Bitcoin growth and the cryptocurrency boom:
Daily active addresses almost doubled between March 2020 and April 2021. Cryptocurrency transactions have become more accessible during the past year, thanks to platforms like Coinbase, Robinhood, and PayPal. With 8% of American adults now owning crypto assets, the tide is surely about to turn.
2. Trading made easy:
With stock exchange made accessible for small investors through companies like E*TRADE, TD Ameritrade and WeBull, trading enthusiasts will see BitClout as an attractive trading platform.
3. Social media censorship:
We all know that Facebook and Twitter control your posts and tweets, and lately, they have upped the scale on the Do’s and Don’ts. BitClout’s unique selling point on the other hand, is that you have complete control over your own content, and no one can shut your account down. That is how decentralization works.
4. Creators getting their share from their following:
With each creator having his own “creator coin”, monetization is now at a whole new level. Influencers can offer different forms of incentives to their investors according to the amount that they put in. Other social media platforms have had similar systems in place, including Twitch with its “Sub-only” access feature, and the new craze swooping the industry, OnlyFans.
5. The hype on NFTs and crypto assets, and how BitClout will follow suit:
Jack Dorsey recently sold his first ever tweet as an NFT for just under $3M, and Crypto Kitties have been auctioned off for $60M. The blockchain version of Twitter will surely surpass those numbers.
We had a chat with Mario Nawfal, one of the early whales on BitClout. Like many successful philanthropists on the platform, he gave us his insight on why showing up early on BitClout is crucial.
Having made his millions early on in his career, he describes BitClout as place of high-risk, high-reward. In his own words, the way this blockchain works is that no one owns their BitClout, and the latter is frozen upon usage. There is no supply and demand; when you use BitClout to buy someone’s coin, that coin is created and received by the buyer. The BitClout is not received by the coin creator because it too becomes frozen within the blockchain. When you want to sell a creator coin, you burn it and receive the BitClout value at the current time.
The price fluctuation is the result of the “bonding curve” concept the platform is based on, where the price goes up fast in earlier stages. Mario claims that he invested ten thousand dollars initially, and within a few hours, his investment was worth forty thousand dollars as a result of him being one of the first investors on the platform. When asked what makes him one of the most appealing accounts on BitClout, he discussed how his investors will benefit. The top ten investors in Mario’s coin get notified when celebrities are dropped so they can invest in them early. They also get a one-on-one call with Mario personally. Between his top 10 and top 20 investors, they also get notified, but at a later stage than the first 10, in addition to Mario’s support. All of his followers gain access to his mailing list.
Surrounded by a whole team of growth hackers and with a considerable following on Instagram, not only does this make Mario one of the best accounts to invest in, but with him also investing in newcomers and keeping a close eye over the community, it is one of the best signs that this model is going to succeed.