A mysterious website called BitClout, that was selling Crypto coins for celebrities was shut down on Friday, 12 March 2021, and was back on the following Wednesday afternoon. BitClout, a decentralized social network and workplace has been accused of selling celebrity backed-NFTs without authorization. The “iFan-esque”, which claimed to be backed by top venture capitalists, had suddenly been shut down. Some information about BitClout still claims it to be a fully-open sourced project, with no company behind it.
Before we explore BitClout, let’s answer a fairly simple question – what is clout?
The meaning of the word refers to a person exerting a particular influence on others due to their power/personality. See where we’re going?
BitClout is a decentralized social network based on blockchain technology that allows you to speculate on the reputation of influential figures online. Mimicking Twitter in its user interface and the functions it allows, there are a few stark differences.
Firstly, it is the crypto version of social media sites and requires users to buy a token before making use of the services it has to offer. Here, the services in question are posting content, messaging, changing profile pictures, etc.
Secondly, the platform aims to become a premium service that caters to fans and supporters of significant personalities (the creators) who buy ‘creator coins’ of that person.
How does BitClout work?
If you want to use BitClout (or BitClout Pulse – the other name it goes by), you first trade in bitcoins for the native cryptocurrency called ‘BitClout.’ This will allow you to use several services on the platform, as already mentioned. You can also use BitClout to buy another asset called ‘creator coins.’ Creator coins are coins every user on the platform has. When you make a profile on the network, you generate your own creator coins for yourself. Your profile’s worthiness is then determined in what we could call BitClout price.
Similarly, celebrity figures on the network also have creator coins. To extend your support to them, you might decide to buy your favorite person’s creator coin. This, in turn, increases the value of their creator coin.
The simple idea here is that the price of each coin goes up when people buy and goes down when people sell.
NFT on BitClout
The value of each celebrity’s respective Creator Coin was evaluated based on their popularity. Therefore, people could be able to make gains from the sales by speculating on the coin of each and every influencer.
Non-Fungible Token or simply NFT, has been making a lot of buzz in the crypto world these days. Lately, Beeple’s digital art sold one of their art collections, ‘Everyday: The First 5000 Days’ through NFT, and it was bought by Metakovan for a hefty price of $69 million. On the same day, CryptoPunk alien bought for $15k in 2018 and sold for $8 million recently. Amidst this uprising fame, BitClout announced the sale of celebrity backed NFTs without obtaining any consent from them. According to Billboard’s report, the company had created NFTs using identities of over 15,000 Twitter influencers and celebrities.
Value of each creator coin
The FAQ on their website says, the value of each creator coin of the respective celebrity depends on the reputation of an individual, rather than a company or a commodity. This means, if a celebrity does something great and creates buzz, more people end up buying his/her creator coin. This makes the value of their coin go up. On the other hand, if the celebrities get slashed, fail publicly or commit an offensive act, the value of their coin goes down.
Straightforwardly, this is the celebrity stock market where users bet on the reputations and popularity of others. People buy their shares (in the form of creator coins by trading clout with the platform). When a person buys another’s creator coins, the value of that person’s creator coins rises. He/She becomes more valuable in terms of this ‘social currency.’ With further developments on the platform, these users who buy another personalities’ creator coins will benefit from exclusive premium content. Interaction opportunities via messages can request promotional posts and a hand in that creator’s financial acquisitions.
To date, nearly $190 million has been locked up through purchases of creator coins, demonstrating the public demand for speculation.
To buy these creator coins, users need to purchase their BitClout cryptocurrency, and this can be acquired by only bitcoins. Allowing only bitcoins could probably limit their audience. The price of every BitCloud doubles after every million BitClouds are sold. It is designed to promote scarcity and increase the value of BitClout.
Re-emergence after being shut down
Before the site was shut down on Friday March 12th, there was a countdown timer running for 12 PM PST, which indicated that the site would be re-launched, but the plan didn’t go accordingly. The network was reportedly slow as the search bar was broken and the entire page was buggy. Anyway, the website was back on Wednesday, March 17th.
In the aftermath of BitClout site’s re-emergence, executives of the music referred to the platform to a ‘Black Mirror Episode’ on their clubhouse audio chatroom. For now, the biggest question standing in front of the audience is whether the creators will be claiming their coins or not. Nobody even knows if it is legal for a social network to monetize potential users even before signing up. Jake Udell, the founder of TH3RD BRAIN management firm said, “ On one side, it looks like copyright infringement lawsuits waiting to happen. On the other side, who are you going to sue?”
Celebrities on BitClout
Few of the priciest creator coins are the one representing Elon Musk, which is currently trading at $68,000 and the other, representing Katy Perry, which is trading at $17,500. There is almost 430 million locked in Elon Musk’s profile on BitClout. Kim Kardashian’ s and Justin Bieber’s coins too, are trading at $14,500 each.
Apart from these celebrities, there are also creator coins set up for almost every famous music artist, including, Ariana Grande, Kanye West, Drakem Billie Eilish, Lady Gaga, and even public figures like Donald Trump. These personalities had their identity tokenized and sold on BitCLout’s platform. According to Billboard, prices for Elon Musk and Billie Eilish’s creator coins soared right before the website shut down. The creator coin for Kanye West had skyrocketed to $7,000 and the market price for each unit of Bitclout’s native token was just $88.
As a decentralized platform, BitClout gives a lot more opportunities to creators online. On the usual social media sites, the data, the content you post, the revenue your viewers generate flow through the hands of the central authority in control. This has subsequently resulted in creators not getting paid as much as they should. Further, they are dependent on brand promotions to support themselves financially.
In contrast, BitClout seems more open about the earning opportunities and transactions. All posts, their form of tweets called ‘clouts,’ and other activities are public for the users to observe on the network. This also includes the creator coins every profile has, their BitClout price, etc. It has the potential to develop the relationship between viewers and creators without the interference of third parties.
Due to this, users have the independence that the incumbents didn’t allow them before and access to a public feed system with equal footing for everyone. There remains no party that can curate content everyone sees or support the more financially robust, but rather, this is only in the hands of the users themselves.
However, it is questionable how the speculation based on the personalities of the creators is done. Reputation and popularity are precarious to speculate on, especially since these are somewhat subjective topics for different types of people. Due to these parameters not being something you can easily depend upon (or on the individual himself), this investment could be a tricky one.
Then, of course, there is the idea of how monetizing individuals would turn out. People are much more used to financially investing in entrepreneurial concepts or businesses rather than people themselves.
On the other hand, all of this would only be possible if these creator coins could be converted back into actual money invested. From what has been found on the site and the user experiences online, BitClout cannot be traded back into Bitcoin.
However, this looks like it will soon be changing according to an exchange called WithdrawBitClout, which is the first to facilitate this conversion that will finally make the coins earned on BitClout meaningful. According to GlobeNewswire, they’ve recently reached #7 on the BitClout leaderboards as they’re now worth $4.5 million. This makes them the only account on BitClout’s top 10 list that doesn’t have a blue-tick verification.
Is BitClout legit?
Before launching, BitClout had pre-loaded the top 15000 influencers from Twitter onto the platform. This was done without taking permission from these people. It means that even though the personality might not be on the platform, users can still buy their creator coins. The whitepaper claims that the creator coins purchased on these profiles will be accessible to them once they join the platform and tweet their public key.
Some of the top influencers have already done so on the platform; however, there seems to be no mention of them joining it on other social media sites.
Although the platform seems to be backed by investors like Sequoia, Andreesen Horowitz, Social Capital, Coinbase Ventures, Pantera Capital, and Reddit co-founder Alexis Ohanian, many are still doubting it and calling it a Ponzi scheme.
The founder of BitClout, who goes by the pseudonym ‘DiamondHands,’ mentioned that he and his co-creators felt like they needed well-known names to make the public feel confident the project was real. (Source)
BitClout is Trending
Not surprisingly, everyone is now talking about BitClout on social media. This may be the fastest growing brand we’ve ever seen!
I’m so confused how tf does this work? https://t.co/PGXVzEVIpe— SBF (@SBF_Alameda) March 17, 2021
Unless I’m mistaken, the Bitclout scheme has so far been able to raise 2,705 BTC, which is ~$155M.— Larry Cermak (@lawmaster) March 17, 2021
Address here: https://t.co/R0jDmSpTCx
Do NOT buy my bitclout coin.— 0x_Infinitum (@CryptoMessiah) March 17, 2021
I am literally going to dump this on you guys.
If you buy it… you are accepting this fact.
My coin will have no purpose.. or utility.
Only utility is dumping on dumbasses. https://t.co/2WRzNYmUhc
This might be revolutionary in terms of social networking. However, it is bad that the tokens were sold without the consent of the celebrities. None of the celebrities have claimed these profiles on BitClout so far, but they could be real. The actual person behind the reserved profile can claim it through a verification process. They can also claim a percentage of their creator coins and there is no cap on that percentage. Through this, many celebrities could easily translate to millions of dollars.
How is BitClout different from Patreon and OnlyFans?
Patreon and OnlyFans are two of the most popular platforms which allow users to get premium content from their favorite online figures by paying them. More or less, BitClout is trying to achieve the same on a blockchain network. Apparently, this provides more transparency, flexibility to both the users and content creators, and quality interaction. Furthermore, seeing the rise in the number of users, it is expected that BitClout will become very popular indeed.
So there you have it. The blockchain manifestation of social media. It seems to have become more exclusive. Perhaps, not introducing cash inflow was why it was all wrong in the first place.
While some say that it will make interaction with the creators much more selective and valuable, others are quick to say it is changing the world as we know it. It just might, but we are yet to see whether it does so for better or worse.
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Hitesh Malviya is the Founder of ItsBlockchain. He is one of the most early adopters of blockchain & cryptocurrency enthusiast in India. After being into space for a few years, he started IBC in 2016 to help other early adopters learn about the technology.
Before IBC, Hitesh has founded 4 companies in the cyber security & IT space.
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