Is the next big Internet SocialFi thing?

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Social media has revolutionized the way we communicate and interact. He definitely sent the old telegram service to the vaults.

On average, we spend two hours a day on social media. Social media platforms have perpetually rewired our brains and made us accept a radically different world we live in. -For better or worse.

Undeniably, it is now a key part of each of our lives. So much so that a person without a social presence is sometimes described as maladjusted.

However, the current market is dominated by Web 2.0 platforms such as Facebook, Instagram, Twitter and TikTok. These centralized actors have monopolized the space, giving them the power not to always act in the best interest of the user.

How is SocialFi different

SocialFi is the latest offering from the Web 3.0 stable that intends to infiltrate the current status quo. Simply put, SocialFi -sshort for ‘social finance’ is a fusion of social media and decentralized finance (DeFi).

Forged under the Web 3.0 ethos, SocialFi provides the ability to create, manage and own the content generated on a social media platform. As a result, participants have more control over their privacy and multiple ways to monetize their content and followers.

In short, SocialFi solves the equation and puts the power back in the users.

The platforms run on the blockchain, and key decisions around tokenomics, content moderation, and engagement are handled by decentralized autonomous organizations (DAOs).

What does it offer?

In September 2021, Facebook whistleblower Frances Haugen said that there were “conflicts of interest between what was good for the public and what was good for Facebook”, and that Facebook “consciously chose to optimize for its own interests, such as making more money” .

While such acquisitions were common at the time, this was the first time an insider had spoken publicly on the matter. It kind of precipitated the belief that massive changes were needed for social media as we know it.

The personal data market is worth billions of dollars, which makes it quite lucrative for traditional social media platforms.

Whenever you use a social media platform, they make you agree to their terms and conditions, which often seek to collect personal data such as hobbies, health information, browsing history, etc. If you didn’t know, TikTok even collects biometric information from our faces and voices for reasons that are still unknown.

In a Pew Research survey81% of respondents felt they had little or no control over how their personal information is used.

Social networks are obviously free. but “if the product is free, you are the product”. Each year, a single user contributes approximately $36 Google’s advertising revenue.

Of course, Google is not a social network. However, the figure serves as a decent indicator of the value of each user for those megacorporations that make money by monetizing customer data.

There is an apparent misalignment of interests. SocialFi’s current positioning as a decentralized platform aims to address these issues by allowing users to have much more control over their data.

Instead of keeping everything on a centralized server, data will need to be stored through a series of web nodes. Thus, reducing the risk of breach and single point of failure.

Plus, SocialFi opens up a whole new world of financial independence. First, web nodes are rewarded for storing data, and second, influencers have plenty of opportunities to monetize their content.

Current trends

Even though space is just beginning to spread its wings, some platforms like Aether an alternative to Reddit, Diamond a Twitter and Torum-like micro-blogging site began to attract attention.

These apps mainly use social tokens to boost the economy. Influencers have the ability to manage their economy on the platform through these in-app social tokens.

They can, for example, create their own utility token that powers their mini-economy. Holders of the particular token can interact with influencer content according to assigned privileges decided by the influencer.

If the social weight of the influencer increases, the value of the token also increases and vice versa. Thus, also providing followers with an opportunity to grow with their favorite influencer.

Integrating non-fungible tokens (NFTs) becomes much easier with SocialFi apps. Anyone can directly create and distribute NFTs on the platform without having to rely on a third party.

Users can interact more openly with NFTs. While NFTs as avatars are already used on several Web 2.0 platforms, SocialFi can also integrate the avatar with a futuristic metaverse.

Another persistent problem with traditional platforms is freedom of expression. Although free speech is most often misused in the online space, centralized platforms constantly come under heavy criticism for how they handle hateful content.

SocialFi can liberalize the entire ecosystem as it will not be pressured by higher authorities such as state governments.

Challenges

As the internet moves towards decentralization, SocialFi is destined to grow in importance.

However, a major challenge would be infrastructure. Facebook generates four petabytes of data every day. This means that for SocialFi to work, it must create a storage capacity of millions of gigabytes.

Obviously, current technology is not yet ready to handle a massive user base, but things are expected to improve as systems improve.

Despite the current challenges, SocialFi has the potential to add immense utilitarian value to the crypto and NFT space and radically change the way we communicate. much like centralized social media platforms did in the 90s.


Liam Peak is the founder and CEO of the web 3.0 publishing company Coinmash. He specializes in covering blockchain, DeFi, NFTs, and other crypto-related topics.

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