Is SocialFi the Internet’s Next Big Thing? – Enrich of Tech Updates Across the World

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Social media has revolutionized the way we communicate and interact. It has permanently sent the old telegraph service to the cash registers.

On average, we spend two hours on social media every day. Social media platforms have permanently rewired our brains and made us accept a radically different world in which we live – for better or worse.

Undoubtedly, it is now an essential part of each of our lives. So much so that a person without a social presence is sometimes labeled as a misfit.

However, the current market is dominated by Web 2.0 platforms such as Facebook, Instagram, Twitter and TikTok. These central players have monopolized the space, giving them the power to not 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 aims to infiltrate today’s status quo. Simply put, SocialFi – spush for ‘social finance’ – is a combination of social media and decentralized finance (DeFi).

Forged under the ethos of Web 3.0, SocialFi presents the opportunity to create, manage and own the content created 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 reduces the equation and returns the power to the users.

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

What does it offer?

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

Although such takeovers were common at the time, it was the first time an insider had spoken publicly about the matter. Somehow it accelerated the belief that massive changes were necessary for social networks as we know them.

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

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

In a Pew Research81% of respondents felt they had little or no control over how their personal information was used.

Social media is of course free – but “if the product is free, you are the product”. Each year, an individual user contributes approx $36 to Google’s ad revenue.

To be sure, Google is not a social network. However, the number serves as a decent indicator of the value of each user to those big companies that make money from monetizing customer data.

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

Instead of keeping everything on a central server, data should be stored through a series of web nodes. Thus, the risks of breach and single point of failure are reduced.

Also, SocialFi unlocks a whole new world of financial autonomy. First, web hosts are rewarded for storing data, and second, there are many ways for influencers to monetize their content.

Current trends

Although the space is just starting to spread its wings, some platforms like Aether – an alternative to Reddit, Diamond – a Twitter-like micro-blogging site and Torum are starting to garner attention.

These apps mainly use social tokens to drive 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 that token can interact with the influencer’s content according to the assigned privileges – the influencer decided.

If the influencer’s social influence increases, the value of the token also increases and vice versa. Thus, also providing followers with the opportunity to grow alongside their favorite influencer.

Integrating non-fungible tokens (NFTs) becomes much simpler with SocialFi apps. Anyone can directly mine and distribute NFTs on the platform without the hassle of using a third party.

Users can interact with NFTs more openly. While NFTs as avatars are already used in many Web 2.0 platforms, SocialFi can also integrate the avatar with a futuristic meta-universe.

Another persistent issue with traditional platforms is free speech. Although freedom of speech is most often misused online, the central platforms are constantly under fire for how they handle hateful content.

SocialFi can unleash the entire ecosystem because it won’t be under pressure from higher authorities like state governments.

Challenges

As the internet moves towards decentralization, SocialFi is destined to gain prominence.

However, a key challenge would be infrastructure. Facebook creates four petabytes of data every day. This means that in order for SocialFi to work, it needs to create millions of gigabytes of storage capacity.

Obviously, the current technology is not yet ready to handle a huge user base, but the expectation is that things will improve as the systems improve.

Despite the prevailing challenges, SocialFi has the potential to add enormous utility value to the crypto and NFT space and drastically change the way we communicate – just like the mainstream social media platforms did in the 90s.

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

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