Cryptocurrency is constantly evolving and introducing compelling use cases. It enables new ways of doing business, such as DAOs and DeFis, disrupting traditional financial systems and creating new opportunities for investors. Moreover, new forms of digital assets, such as non-fungible tokens (NFTs), are changing our perception of ownership and value in the digital world. Additionally, ‘Social Token’ is a recent entrant in this space that is empowering the creator economy. It’s a new way for influencers, creators, and communities to engage with their fans and followers.
Even though the crypto market might be going through a rough patch, social tokens are here to stay, and it’s worth paying attention to them. But what makes these tokens so unique?
Let’s find out what all the buzz is about and discover the value behind these trendy digital assets.
What Are Social Tokens?
Social tokens are like having a VIP pass to your favorite online community, creator, or influencer. It gives you access to their exclusive content, merchandise, and experiences. And the best part is you can buy, sell, and trade these tokens just like traditional cryptos.
Imagine owning a tiny piece of your favorite online creator, buying their merchandise, or accessing an exclusive event with the social token you hold. Isn’t that cool?
On the other hand, social tokens allow creators to monetize their work in a fair and equitable way, as there is no intermediary involved. Creators have historically faced challenges in earning fair compensation for their work. It’s because platforms such as YouTube, Instagram, Spotify, and TikTok eat up a substantial portion (close to 50%) of their earnings. There are also limitations on the type of content that can be shared on these platforms.
The concept of social tokens began to be explored during the ICO (Initial Coin Offering) boom. The crypto industry witnessed a surge of influencers paid to promote ICOs to fund blockchain-based projects.
Now coming to different types of social tokens, there are three in total: Personal, Community, and Platform tokens.
1. Personal tokens
These tokens represent an individual, such as a creator, artist, or influencer. They can grant early access to their premium content, new videos, or behind-the-scenes footage.
2. Community tokens
These tokens represent a community or organization, such as a fan club or a non-profit. They can grant early access to events or online meetups. They can also be used to vote on community decisions or to support a specific cause.
3. Platform tokens
These are tokens issued by platforms such as social media networks or marketplaces. One can use them to get early access to new features or the ability to curate content. They can also be used to trade goods and services on the platform.
How Do Social Tokens Function?
Social tokens function through the use of blockchain technology.
A blockchain is a decentralized digital ledger that records transactions across a network of computers. When a social token is created, it is issued on a specific network, such as Ethereum. Also, the token ownership is recorded on the network, and it can be stored in a digital wallet.
The token issuer can set rules and parameters using smart contracts. Rules can include how many tokens will be issued, how they can be used, when the token can be traded, or the number of tokens required to access certain perks.
Advantages of Social Tokens
Monetization is one of the most obvious benefits of social tokens.
Apart from that, below are some of the other benefits of social tokens.
1. Community building
Social tokens can be used to build and strengthen communities. They can be used to vote on community decisions or support specific causes.
2. Ownership and control
Social tokens give creators more control over their revenue and content. Instead of relying on third-party platforms, social tokens offer an effective way for people to monetize their online presence.
3. Transparency
Social tokens are built on blockchain technology, which provides transparency and immutability of transactions. This allows creators to have a verifiable record of token ownership.
4. Accessibility
Social tokens can be accessible to many users, regardless of their location or financial status.
How Are Social Tokens Different From NFTs?
Social tokens and NFTs (non-fungible tokens) are both digital assets built on blockchain technology.
But they have different characteristics and use cases.
1. Fungibility
- Social tokens are fungible, meaning each token is interchangeable with another token of the same type.
- NFTs are non-fungible, meaning each token is unique and cannot be replaced by another.
2. Ownership
- Social tokens represent ownership or membership in a community, organization, or individual.
- NFTs, on the other hand, are unique digital assets that represent ownership of a specific digital item, such as a piece of art, collectible, or virtual land.
3. Utility
- Social tokens have utility beyond just being a store of value. They can be used to access certain perks or experiences.
- NFTs have value because of the uniqueness of the digital asset they represent.
Social Tokens Examples
Below are a few examples of social tokens.
1. STEEM
STEEM is the cryptocurrency that powers the social platform, Steem. The platform aims to let users earn rewards for their contributions to its growth. Anyone creating content can become a stakeholder and earn STEEM as a reward.
2. GCR
GCR is the cryptocurrency of the research and investment firm Global Coin Research. The community uses GCR to fund investment initiatives. Also, members who hold the token have opportunities to interact with NFT artists and invest in upcoming projects.
3. WHALE
WHALE is a social token that an anonymous NFT collector named WhaleShark launched in 2020. The token value is based on WhaleShark’s personal NFT collection. In 2022, the collection’s market value stood at $73 million, a significant increase from its original market value of $500,000.
Conclusion
Social tokens may seem unusual, considering the existing ways for creators and businesses to make money. But, the idea is not only fascinating but also highly relevant in the context of the emergence of Web 3.0.
Social tokens could play a crucial role in this new internet economy that prioritizes ownership of people’s digital presence and creations.
FAQs
1. What drives the value of social tokens?
A combination of factors drives the value of social tokens.
- Popularity and engagement
- Perks and experiences
- Supply and demand
- Token issuer reputation
- Market conditions
It’s important to note that the value of social tokens is highly speculative, and it’s hard to predict future performance. As with any investment, it’s crucial to conduct research and understand the risks before investing in social tokens.
2. Are social tokens a good investment?
Social tokens can be a good investment opportunity for investors, but they also come with a high level of risk.
- High volatility
- Lack of regulation
- Limited track record
- Low liquidity
- Dependency on the issuer
3. What are the biggest social tokens?
The first set of social tokens is believed to have been launched in or around 2020. One of the earliest examples is WHALE, which was found by the private NFT collector WhaleShark. It is considered to be the pioneer of the social token trend.
Other popular and valuable social tokens currently include STEEM, GCR, JROCK, and RAC.
