Social tokens, considered the next big thing in the cryptocurrency universe, are at the crossroads of many emerging trends, including decentralised autonomous organisations (DAOs) and non-fungible tokens (NFTs). With celebrities like Salman Khan recently launching India’s own social token Gari, mainstream media is taking stock of the new era of tokenised communities. But what is the entire buzz around social tokens, and what makes these tokens valuable? Let’s find out:
What are social tokens?
Social tokens are a type of cryptocurrency that a brand, community, or influencer can use to monetise themselves beyond the typical means. Many influencers, celebrities, and businesses these days use social media or other media streams to monetise their skills or services. Typically, in such scenarios, the medium or platform that they use, for instance, Facebook or Instagram, shares the revenue and exerts artistic control on their content.
With social tokens, the content creators can eliminate this barrier and bring forward a new principle of ownership in the digital economy.
Social tokens are of two types: personal or creator tokens and community tokens. These tokens are decentralised and secured by blockchain. They are constructed on the same model as common cryptocurrencies like bitcoin or ethereum.
Personal/creator tokens are created by individuals to exchange forms of labour. These individuals are usually public personalities like entrepreneurs or artists.
Community tokens are created as a means to gain access to a community. These are similar to membership cards but based on the blockchain.
Several companies have mushroomed over the last couple of years to leverage the power of social tokens. Seed Club is an incubator for new social tokens. Fyooz operates a token marketplace. The Rally project enables token development and the launch and design of loyalty programmes. BitClout allows users to buy, trade or sell cryptocurrency based on the reputation of celebrities.
But, how are they different from NFTs?
NFTs are a part of the broad category of social tokens. The basic difference between social tokens and NFTs is the fungibility factor. NFT, as the name suggests is non-fungible and each of its unit is unique. Social tokens, on the other hand, are fungible. Each unit of a social token has the same value as another, just like a currency or cryptocurrencies such as bitcoin or ether. So, each bitcoin will be the same in value as the other and so it is easily interchangeable. In case of NFTs, however, one painting, for example, will not have the same value as another and it is not easily tradable. This makes them unique.
Put simply, social tokens provide the same benefits, privileges, rights to the piece of artwork or music to all investors invested in them. NFT owners, on the other hand, have unique rights to a particular piece of a creator’s work.
How do social tokens work?
A talented singer, comedian, or social media influencer can easily form a community of loyal followers. Here lies the opportunity for such content creators to launch their own social token where relevant content can be shared with their followers. Besides, celebrities can use social tokens as a gatekeeping mechanism by offering premium access to content only for their largest token holders.
Let’s understand with an example. If you have faith that a particular artist’s work will garner more following in the coming years you can buy the token issued by them early on. Each new token that the artist issues will typically be at a higher value than the previous one. The value of your token rises as the community grows and more tokens are issued.
Benefits of social tokens
Social tokens, as digital assets, are already starting to play a crucial role in the creator ecosystem with widespread adoption among crypto artists and celebrities. We are currently witnessing an explosion of different kinds of experiments. As the technology undergoes continuous evolution, social tokens will be accepted by larger communities, such as large publishers or online communities built around products or brands. Moreover, they have massive potential to redefine the way companies can generate targeted business opportunities. By building a decentralised and secure ecosystem that caters to only their genuine customers or fans, it will ultimately result in long-term growth prospects that directly influence the value of their respective token.