From Doom Scrolling to a Vibrant Creator Economy: Web3 is Rewiring Social Media as We Know It
Often referred to as “the internet of social,” Web2 has been responsible for the inception and culture-altering dependency of social media. What started out as a social revolution has in recent years become portrayed as a dystopian environment fostering misinformation, doom scrolling, and poor self-esteem. The root cause of this evolution is the ad-based business models that dominate social media monetization by a wide margin. The attention economy is the only game in town. As a result, Addiction Center notes, “Social media platforms [...] produce the same neural circuitry that is caused by gambling and recreational drugs to keep consumers using their products as much as possible.” In addition to behavioral concerns, Web2 has limitations around monetization opportunities for creators, control over one's personal information and portability of networks.
Enter crypto and Web3. While there are already dozens of start-ups claiming to be the next social media giant, it is likely that the industry needs to go through one or two more hype cycles before the most important elements of the technology break through.
However, there are already signs that the next wave of Web3 innovation is going to come from founders who are able to take advantage of decentralized networks and technologies to create financially sustainable alternatives to ad-based businesses. Based on what we are seeing today, we can expect that "social Web3" is going to rely on innovations such as self-sovereign identity, portable social graphs, and the peer-to-peer creator economy.
Rather than having to opt in or out of revealing all of our data to companies like Twitter, self-sovereign identity means that our identity is a mosaic of traits, achievements, choices and relationships, and that we choose to reveal only some of them depending on the context in which we need them. Today, the world's most widely adopted form of self-sovereign identity is our self-custodial crypto wallet address. For example, I currently have around 10 wallet addresses. Each of them is associated with a specific context (personal, professional, throwaway), demonstrates a certain level of investment success or lack thereof (crypto balances), has a track record of activity on some applications (soul-bound tokens), and even has a personality and visual identity thanks to the NFTs associated with it.
While decentralized projects such as Cronos ID, EPNS and Dialect still have much room for improvement when it comes to the prevention of bot activity and the use of proof-of-humanity to combat spam, they are showing the way towards a shifted power dynamic as data ownership falls back in the hands of individuals.
Portable Social Networks
Web2 social media platforms have amassed immense political power and are subject to unrelenting pressure from shareholders, governments, regulators, and Twitter-happy billionaires. Platforms like Twitter and TikTok derive some of their power from the fact that they prevent users from exporting their social relationships. Of course, I can always export the list of my followers, but I cannot make them become my followers again on another platform.
Web3 will enable users to enjoy total ownership of their content, including the ability to transfer followers and friends from one platform to another without having to start from scratch. For example, Lens Protocol, incubated by Aave, is a blockchain-based project that aims to introduce standards in terms of how to codify and store social relationships, and to allow any developer to create social applications.
This is valuable for influencers and creators who may feel at risk of de-platforming or censorship. That being said, it is unlikely that creators will move to another platform en masse simply because it offers network portability. In order for Web3 social platforms to gain the same momentum, they need to deliver a polished user experience and attractive economics for creators.
From an economic standpoint, Web2 social platforms have proven effective marketing tools for businesses and creators alike, yet those looking to monetize tend to rely on advertising, sponsorships, and partnerships rather than peer-to-peer payments.
Looking ahead to Web3, creators will be able to deploy smart contracts across physical borders to automate subscriptions, loot boxes, NFT, sales referrals, and commissions to name a few. Artists, influencers, and NFT creators will most likely lead the widespread adoption of Web3 social media, as they stand to benefit the most in the near term.
While Web3 looks to rewire social media as we know it, users, builders, founders, and creators alike have room to learn from the trail that Web2 has blazed. For starters, decentralized social media will likely face similar cultural and ethical challenges as Web2 platforms. If not censorship or deplatforming, how does this new ecosystem hope to manage bots, hate speech, and misinformation? With that said, public sentiment towards data-hungry and manipulative platforms is clear. The future of social media is not only decentralized, but built upon trust, ownership and portability.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.