In 2016, Steemit pioneered the world’s first blockchain-based decentralized social network and in my view remains one of the most important blockchain projects today.
Boiled down to its simplest form, Steemit is a kind of reddit with the property that creating interesting content, or curating it effectively, will earn users real money on the platform in the form of a cryptocurrency called Steem. There is no barrier to entry. Just create an account and start earning.
The money to cash out Steem comes from a speculative market of investors who are willing to buy and hold Steem because they believe it will grow to be a large social network whose collective attention is truly valuable. This is fine. It is similar to VCs who hold Uber private equity because they believe one day the company will become profitable. Unlike Uber stock, though, Steem is liquid with a few million dollars of volume a day.
Here are some other reasons why Steemit is important.
It remains, after a year, one of the few consumer blockchain applications which has converted hundreds of thousands of mainstream users and maintains a semblance of gender balance in its audience.
It demonstrates a cryptoeconomic system that disintermediates high network effect social networking incumbents by buying customers. It is funny and satisfying to watch speculative run-ups in Steem price drive engagement of Steemit users. Conversely, customer retention is tricky on Steemit, as speculative downturns in price lose customers — a challenge for speculative capital backed systems.
Steem is one of the largest demonstrations in production of blackchain-as-backend and serverless architecture. Users are building services from URL shorteners to Twitter clones backed by the Steem blockchain.
Decentralized reddit is great, you say, but what about microblogging?
“I will never pay to use Twitter”
The funny thing about cryptocurrency is that not only will you pay to use Twitter, you’re going to really enjoy it. Leeroy.io is an amazing demonstration of decentralized social networking in the form of a bare bones, fully decentralized Twitter clone built on Ethereum.
Today Leeroy is a challenging proof of concept. It requires a MetaMaskinstall. It’s slow, implemented using only on-chain Ethereum transactions. It’s currently expensive, costing about $0.01 worth of Ether to post, follow, or to perform any other action. But just last year, it was hard to fathom Leeroy could exist at all.
Yet using Leeroy is a liberating experience that feels fair and free of privacy-invasion and advertising. It also has a novel technical architecture worth reviewing.
Here are some reasons why Leeroy is an important proof of concept.
The Leeroy backend system has no central authority that will impose its desires, goals, and economic needs on the customer. The fees users pay on Leeroy go directly to the Ethereum network, and the platform is a demonstration of operating the social network “at cost”.
Users transfer value to one another using microtipping. There’s a wonderful feeling associated with rewarding someone a $0.10 microtip for saying something funny or useful. Requiring users to pay up-front operational costs is a barrier, but it is an economically optimal one that also discourages bots and spammers.
Even today, you can cover the cost of using the network by producing some interesting content and receiving a microtip. The return on great content is typically multiples of the posting cost. Focused on the microtip reward, users are driven to anticipate how content creates value for othersfirst.
I made the following slides for a talk on cryptoeconomics I presented at an Aragon team event. They outline a simple argument for why the construct of economic barriers might raise the signal-to-noise ratio of decentralized social networks.
Other networks to explore
Steemit and Leeroy are but two examples of decentralized social networks. There are many others. Just to name a few:
Golos is a licensed fork of Steemit for the Russian audience, maintained by the people behind cyber • Fund.
Akasha, a peer-to-peer social network built on Ethereum by Mihai Alisieas a P2P desktop client with microtipping and a custom token, has been in alpha for many months.
Cent is a Quora-like social network with Ether bounties, currently in beta.
Yours is a micropayment channel enabled network by Ryan X. Charles, which has been using Bitcoin, then Litecoin, then Bitcoin Cash as its underlying network.
In summary, I am on record that decentralized social networks are in development and perhaps gaining momentum. These products are likely to be some of the first mainstream application of blockchain networks. Especially given scalability solutions, they are poised to put a dent in traditional media in a big way.
The most important features of decentralized social networks are:
They can disintermediate incumbent network effects through (cryptoeconomic) speculative capital that is used to pay customer acquisition costs.
They demonstrate various architectures (for example, serverless or stateless smart contract architectures) which can be used to serve mainstream users.
They run an important type of application without central authority on politically and economically neutral software.
The economics of decentralized social media apps theoretically raise the signal-to-noise ratio of online content.
Today these platforms are nascent, small, slow, costly, and varied in their architectures and approaches. But once viable strategies are determined, Twitter and Facebook should watch out. Users are going to realign the mechanics of social networks to be more democratic, compensatory, and free of pesky centralized organizations who interject their own interests into the course of socializing.