Why Speculation Can Be a Foundation of Decentralised Media Business Models.
In my previous post, I introduced a metaphor of the blockchain as the ‘persistent social graph’ (or the persistent link-graph). The main argument was that the chain of transactions on the blockchain creates a persistent, immutable graph of connections between addresses. Once we assign an identity to the address on the blockchain, the transaction graph becomes a public social graph of financial transactions.
For the pure currency applications, this is actually a very undesirable feature. The chain of transactions has to be obfuscated, meaning that you actually don’t want anyone to be able to understand who is transacting with whom. Therefore, in the case of Bitcoin, you should use a new address for every transaction, to maintain your transaction privacy.
But this quality of the public ledger is a feature when you want to design a social graph where money is used as one of discovery signals.
In this category of applications, you actually want to get discovered and having an identity tied to a public address is the first step.
Owning your social graph is MUCH more valuable than owning your content. In fact, in the networked attention economy, you cannot separate content from its link structure. And by the link structure, I mean all the inbound and outbound likes, hyperlinks, stars, hearts, tweets, friends, followers, fans etc.
These links affect your discoverability and ranking in the context of a particular social platform.
But what advantages the blockchain social graphs (and apps built on top of them) could offer when compared to the traditional centralised social networks?
Turning Cryptocurrency Speculation into Content Speculation
Speculation is one of the leading use cases of cryptocurrencies. When I’m writing these words there are 674(!) various cryptocurrencies being listed on coinmarketcap.com. Most of them have no other use than speculation and won’t survive till the next month.
Speculation has a lot of negative connotations but the reality of life is that people are natural born speculators.
What blogs did for journalism & publishing, the blockchain does for speculation and trading. By allowing everyone to create and trade digital assets, it has created a new breed speculators trading with cryptocurrencies. Activities that were reserved for professionals and heavily regulated before are becoming available to everyone (at with all positive and negative consequences).
Services like Augur.net will open up possibilities for speculation even further. With its prediction market, it will allow everyone to bet on the outcome of future events.
But this is just the tip of an iceberg. What I’m excited about is the possibility of creating new user experiences based on speculation but in the context of content discovery.
The critical feature of the blockchain, that’s going to unlock a multitude of new, speculation based applications is called ‘timestamping’. Time stamping allows you to prove that a particular statement was made at a specific moment in time (measured by the block number).
So why is it relevant to our blockchain-based social graphs?
Because it introduces a whole lot of possibilities for content speculation — who was the first to link or like a particular ‘person’ or a ‘piece’ of content.
Combine it with the monetary value that can be attached to ‘likes’ or ‘links’ and suddenly you have two extra dimensions (time and value) embedded directly in your social graph.
Let’s make it more tangible with an example.
Look at the one of the most successful YouTube videos ever — the Gangnam Style. It has accrued billions of views over the years and became one of the greatest hits in the history of YouTube. But what I’d like to know is who was the person that was the 1st , 10th or a 100th to share or like this video. Before it actually went viral.
Today, it’s impossible to determine that without digging deep into YouTube’s or FB’s databases. And even if it was possible you couldn’t tell whether their administrator didn’t quietly change the records. You don’t have the ‘objective’ timeline.
The blockchain gives us the objective reference for time-based events and applying it to linking in all kinds of social graphs has a massive potential.
Imagine the alternative reality where ‘Gangnam Style’ went viral on the blockchain-based social network. Where all the links are time-stamped and carry a monetary value. As the ‘Gangnam Style’ video is getting more popular, this popularity is automatically transferred to the nodes in the social graph that were first to connect (‘like/link’) to it.
How does this popularity get ‘transferred’ though? Because in this alternative reality, it makes sense to create a discovery system that ranks people who were first to recognise the future popularity of content. And it makes even more sense to connect to these people/nodes earlier that later.
How Would You Invest Your ‘Likes’?
Timestamping of links in the social graph creates a new dimension of ‘time-scarcity’ and in this dimension, it matters when you ‘liked’ or ‘linked’ something.
At any given block, you can only link to a limited number of other nodes so your timestamped linking pattern becomes your immutable and public footprint on the ledger. It is your link equity to use the terminology from the Google SEO world.
Various ranking algorithms can be used to analyse this graphs of individual footprints but the objective timestamp and attached value will be always there.
Wouldn’t you be interested who was the first person to link to the Bitcoin whitepaper? And how much monetary value they invested in it?
With Timestamping, Micropayments Become Microinvestments.
If we recognise the importance of timestamping and persistent linking on the blockchain then micropayments cease to be just the simple transfers of value. They become microinvestments in building one’s social graph and the mental models of users change completely in this scenario.
In the traditional micropayment or tipping model, my motivation to initiate a micropayment is altruistic. I enjoyed what you’ve created so I’ll send you some small amounts of Bitcoin or some other currency. If you put up a paywall and request me to pay, I’ll probably go elsewhere because I have the abundance of other options. In both cases, the mental model I have is the ‘payment’ model. Value is deducted from my account and added to yours.
But if we recognise the timestamp and the persistent link that is created in the blockchain social graph with a transaction, the micropayment automatically becomes a ‘microinvestment’. I’m not paying you anymore.
I’m publicly voting/investing/creating a connection between our nodes. My motivation is selfish now — I’m ‘investing’ in my social graph and I want to invest in the most valuable connections AND do it as early as possible. Because with each passing block, the value of my potential ‘timestamp’ decreases by one. I’m no longer in the ‘customer’ mode, I’m in the ‘speculator’ mode.
Is this content/person worth linking to NOW? How does this link reflect on me? How does this affect my future chances of getting visibility and being linked to? How much should I invest? etc.
In both scenarios, the actual transaction will look exactly the same on the blockchain (not counting the metadata). But its meaning to a user will be totally different.
In the first case, a user is paying someone small amounts of money in exchange for access to content, a classic ‘buy/sell’ transaction.
In the second case, the user is investing in their own social graph and speculates how valuable this link might be in the future. Consequently, they might ‘invest’ much more than they would ‘pay’ in the first scenario.
Attention and Discoverability Is Where It’s At
You might have noticed there’s no ‘content monetization’ embedded in that model. Attention is the value that the nodes compete for. Transactions between nodes are the primary way of competing for attention and building a persistent reputation on the network.
If I want to get noticed by the ‘Kim Kardashian’ node I have to either send a high value transaction today or send a lower value transaction back in the day when the ‘Kim Kardashian’ node didn’t have so many incoming connections.
It doesn’t matter whether the Kim Kardashian node produces high quality content or is a creator of any sort. What does matter is that nodes the ‘Kim Kardashian’ node links to, become valuable due to the link equity that Kim Kardashian has.
It’s like the Web where all the links are on the public ledger but anyone can apply their own Google PageRank on top of it. The only difference is you don’t have to crawl the entire web to understand the link structure. It’s right there- on the blockchain.
But What About The Scalability?
Obviously, the blockchain tech today is not ready for mainstream deployments of the on-chain micropayment schemes. However, we can already experiment with with on-chain economies at the ‘Harvard scale’ equivalents of the future social networks.
Right now, we don’t even know what economic models for content monetization will gain traction. Bitcoin tipping or microtransaction paywalls are the first step but they still follow the classic ‘buy/sell’ paradigm and don’t take full advantage of the blockchain’s potential.
Product and UX will be key
To create successful ‘open social graph’ models we’ll need new UX metaphors.
- Web 1.0 came with pages & links metaphors — ‘the web of static documents’
- the social Web 2.0 came with feeds & likes metaphors and was shaped around ‘people and profiles’.
- what metaphors will be appropriate for the blockchain-based Web 3.0 where time and value become the first class citizens?
The key to creating successful ‘open social graph’ models will be discovering new UX metaphors that make sense in this new contexts.