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True Freedom | A Decentralized Social Network
The Blockchain Sector @ 2023-02-17
Recently there has been a bit of hype in the Ethereum developer community about soulbound tokens. Many people have taken this to be very similar to a non-fungible token (NFT), and I have seen a lot of implementations that have an ERC-721 NFT contract and have just disabled the transfer function. So essentially, you have an NFT linking to off-chain storage that cannot be transferred or sold, but is simply stored in your wallet. While this is a simple and effective solution, it is important to note that the potential for Soulbound tokens goes much further than this.
There is the opportunity to store large amounts of on-chain data and have ownership of that data held by the user themselves. Instead of giving all of your data to Facebook or Twitter and allowing them to monetize it through advertising, you could pay for the service through transaction fees on a sidechain, app chain, or layer 2 or 3 solution. These fees, even if they are just fractions of a cent, would go towards paying for the storage of your data on a decentralized network.
There has been some criticism of Elon Musk's recent takeover of Twitter and perhaps the problem is not just Elon but letting any central authority have control over our freedom of speech. Social media has become a crucial way for us to express ourselves, communicate, and share our opinions on everything from politics to emerging deep tech.
At the moment, this technology is not yet viable because Ethereum and other blockchains do not have enough scalability or fast enough data throughput and transaction confirmation times. However, the architecture is being developed and the Ethereum sharding update, likely to be released in Q2 2023, will increase the capacity of layer 1 and improve the efficiency of layer 2 solutions.
These improvements will give orders of magnitude improvement over the current system, and we may see what is impossible today become viable in the next couple of years.
Assuming everything goes well and on-chain data becomes fast, reliable, and cheap to use, what is the next bottleneck? What is stopping us from having a decentralized Twitter or social network?
One of the biggest obstacles is that not everyone has a digital wallet, and they may not want to sign a message with MetaMask every time they do a transaction. This is something that needs to be considered from a UX standpoint, as many people are used to traditional username and password systems or signing in with their phone.
Is there a hybrid system where we can offer users a magic signing link via email or a text confirmation code, allowing them to create a temporary account?
If they want to increase security and use a decentralized platform completely or even a third-party platform, they can then use their digital wallet. This way, we have a system where a central authority or multiple entities manage the private keys for new users, and as those users mature, they have the option to migrate their accounts to a separate wallet like MetaMask.
We have a traditional sign-in form at the start that will onboard users in a familiar and user-friendly way, while also giving more experienced users the option to upgrade to a truly decentralized platform.
Now, we need to send a message to store information on the chain. If a central authority is managing your private keys through a traditional web server with a username and password sign-in, there is a balance to be struck between making the user experience more friendly and relying on central parties. In my opinion, there is justification in using central parties, but we also need immutable data and no gatekeepers who can censor what you want to say.
We also need the user experience to be able to compete with mainstream platforms. Not everyone wants to manage their own private key or practice self-sovereign identity management. If the platform is filled with nerds like me and you, it will not be very interesting.
Another bottleneck may be that people do not want to pay for services, even if it is just a fraction of a penny. We expect social media to be free to use because it always has been.
Perhaps VC funding could cover some of the operational costs and transaction fees for a simple, centralized wallet service. This service could be pre-funded with 10 cents per user in the native currency for the app chain, allowing them to post their first thousand messages. For 99% of users, this might be enough to keep them going.
Power users could then subsidize the service by paying a fee, similar to how Twitter charges $8 per month for the verified blue checkmark. There may also be ways to gamify and monetize the platform through social proofing, but it is important to not turn users off by charging them to create content.
If we are building something that is 10 times better than what we currently have, it should not be monetized through ads and people should not have their data monetized in that way.
A decentralized social network would likely start out looking similar to Twitter, with a feed of text and image-based content. Image content would need to be stored on a third-party service like IPFS, and video content might be even more difficult to store at scale.
But I think actual text content needs to be stored on the chain, and not only stored on the chain, but a user should have ownership over their own content.
This is where we loop back to soulbound tokens which I’ve spoken in depth about in this blog post: https://jamesbachini.com/souldbound-token/
The next difficult thing is growth; how do you pay for growth? How do you acquire users if it's not actually making any money? Potentially, there could be some kind of DAO or governance token, which drives any monetization on the platform. I don't think people want a lot of monetization; for it to be much better, people don't want to have to pay, and they don't want to see loads of ads.
So, assuming monetization is going to be low, there's not going to be much revenue coming in to excite VCs to pump billions of dollars into it, and provide a big marketing budget. Without a marketing budget, it needs to be bootstrapped to a certain extent, perhaps some kind of viral growth.
You think about how TikTok just became one of the largest social networks almost overnight. A lot of the reach was through word of mouth; they had an exceptional product which no one had seen before, and it was extremely addictive.
In my opinion, decentralisation alone isn't enough. Joe Average down the street isn't going to care if his data is stored on a centralised server or a blockchain. To him, there's no perceivable added value, and any explanation of the benefits, such as censorship resistance, are abstract enough that it would be hard to communicate as part of a sales message.
Perhaps the ideal of a censorship resistant, truly open protocol for social networking is enough. I hope so.
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