According to Raoul Pal – CEO of RealVision, Social Token will be the next leap in the cryptocurrency market and it has the potential to change the traditional creative and entertainment industry. This is also considered an attractive form of investment in the future.
- What is Social Token?
Social Token is a type of cryptocurrency that can be created by a community, a brand or an influential individual such as a celebrity, content creator, etc. Each type of Social Token will have different applications, allowing the owner to have exclusive access to certain content or benefits. This is regulated by the individual or organization issuing it.
Social Token operates on the principle of “ownership economy”. The more the community owns the token, the higher its value will be.
Its operation is similar to stocks, but the difference is that not everyone can buy it. The token owner and transaction will be decided by the issuer.
- Benefits of Social Token
Through the issuance of Social Token, celebrities or influential organizations and communities can earn money from themselves in addition to popular ways of earning money today such as being a brand ambassador, advertising.
Monetization
Social Token can be used as a payment tool. Owners use tokens to exchange for an item, accessory from a brand or idol they love, or even a discount voucher when paying.
According to the regulations of some issuers, when holding a certain amount of tokens, the owner has access to some benefits like unlocking a membership level.
In addition, social tokens are also used as a tool to raise capital directly from the community without going through a third party. Issuers or owners can also sell their social tokens when they need capital.
Promoting Network Effect
As mentioned above, the more people join the community or own social tokens, the more valuable the social token is. This is the network effect.
- Characteristics that allow promoting network effects
Scalability
Owning tokens is similar to owning stocks. To increase the value of the tokens they hold, owners tend to build and develop a strong community, spreading this cryptocurrency to other subjects.
Symbolic
Instead of using conventional cash as rewards, owners can give Social Tokens to others and thereby make them part of the community of Social Token holders.
Use value
For the issuer, creating Social Tokens does not require much effort and cost. To increase recognition with minimal cost, that person can use tokens instead of cash or equivalent papers to pay rewards.
- What types of Social Tokens are there?
Based on the issuer, there are 3 most commonly used types of Social Tokens today.
Social Platform Token
A token representing a platform. This platform helps create and trade Social Tokens. For example, Bitclout (CLOUT), Rally (RLY), TryRoll (ROLL).
Personal Token
A token created by an individual and representing that individual. Fans buy this token in exchange for certain benefits or services from the issuer.
Community Token
This is a token representing a group. Owning a token will give you the right to participate in the community and enjoy the typical benefits of that group. For example, WHALE, FWB.
- Some Social Token projects
To better understand how Social Tokens work, you can refer to some prominent Social Token projects today.
Rally
Rally (RLY) is a platform that allows users to create their own social tokens. Buyers of social tokens on the platform will enjoy certain benefits from the token creator. This platform is relatively easy to use for both knowledgeable and non-savvy crypto users. Moreover, because it is built on a separate blockchain, Rally has low costs.
But because of that, tokens created in Rally can only be used on the Rally platform. To create tokens on this platform, you need to fill out an application and wait for approval.
Tryroll
Tryroll is a platform that creates some famous community tokens such as ERC20 tokens or WHALE. For ERC20 tokens, you can trade this token on exchanges, create pools and provide liquidity… Tokens created from Tryroll all have the features that current ERC20 tokens have. Similar to Rally, to create your own token, users need to fill out an application and wait for approval from the platform. These users need to have knowledge about Crypto and ERC20 tokens. The cost of creating tokens is not cheap.
Bitclout
This is a social network similar to Facebook or Twitter but operates on a decentralized mechanism. Any Biclout user can create their own social tokens, can send tokens or invest in tokens of any other user on the platform. Transaction costs are very low because Bitclout develops its own blockchain.
Social tokens created on Bitclout can only be used within the scope of this social network. In addition, because users need to pay with Bitcoin or buy on CEX to create an account on Bitclout, this social network is difficult to access for non-crypto users.
Personal Token
There are some interesting personal token issuances such as the $ALEX and $KERMAN tokens. Owners of these tokens can vote to make important life decisions for the token issuers Alex and Kerman. A portion of the revenue will be used by Alex and Kerman to buy back tokens.
Whale
This token is issued on the Ethereum blockchain platform and is the first community token supported by NFT collections. This collection is worth over $2 million. The WHALE ecosystem includes artists, collectors, and other individuals who are passionate about developing WHALE through community campaigns.
Friends With Benefits
Participants in the Friends with Benefits community are people who share a common interest in developing Web 3.0. This community is active in many aspects such as sharing technology knowledge, ideas, solving problems, etc. Community participants must own FWB tokens to be able to join the Friends with Benefits closed Discord group.
Hopefully, with the above information, you have a clear understanding of what a Social Token is. Although this is considered an attractive new form of investment, it also has certain risks such as the value of the token depends on the continuous content production process of the creator to maintain the community or the risk of false advertising about the benefits of owning the token.
