What Is a Social Token?

In the age of social media, people are uniquely capable of making an income through digital content creation and building a personal brand. Even though this is a more independent way of generating wealth, creators are still heavily reliant on intermediary platforms or social media companies in order to get paid. A new front of DeFi (decentralized finance) that is on the rise are Social Tokens.

What Is a Social Token?

Social Tokens are meant to be the next big innovation in cryptocurrencies and in the field of decentralized finance. They are a revolutionary way to create monetized tokens within a blockchain, similar to Bitcoin and Ethereum, in order to empower organizations, companies, celebrities, digital influencers and individuals who wish to gain passive income through social media or other online businesses without being exclusively reliant on third party companies to forward them their earnings.

This has high disruptive potential, especially in terms of how artists and other creative professionals are able to be rewarded by their professional and intellectual efforts. Up to date, intellectual property goes either unrewarded, or it has to run by an intermediary business that pays the creator what it defines as a fair value: such as social media companies, record labels, publishing houses and other means of publication.

By creating digital tokens in the form of a type of cryptocurrency that is unique to one person or community, now individuals or creators are capable of having an economy of their own, revolving around their material`s value, and their fanbase. It allows creative professionals to be directly supported by their public without the need to be subjected to digital algorithms that decide their income, or even market protocols to which third parties are subjected.

Types of Social Tokens

There are a few types of social tokens, and they are able of fulfilling different needs for creators:

Participation (or Social) Tokens allow customers to be a part of a rising community or blockchain network. It helps to build up a project financially, and through a digital token, early participants may even be able to get exclusive privileges.

Community Tokens can work as a subscription or membership pass. Some online communities charge an entrance fee in exchange for the chance of accessing exclusive content: a discord server, a newsletter, a secret members only app or website, etc.

Personal Tokens are the digital tokenization of an individual within a blockchain, representing someone’s time, labor or creations. The economics behind this type of token is based mainly on a person’s reputation.

The three types mentioned above have one thing in common: they are tokens that represent ownership of a fraction of a person’s online reputation, and this is the essence of social tokens. They represent a fraction of a community.

Use Cases of Social Tokens

The idea for social tokens is not new. There have been efforts on many different fronts throughout the past five decades to create ways to expand the control that creators have over their own revenue, as well as the need to empower, fund and grow communities. Because of this, tokenization within the context of the so-called Web 3.0 came to address this in an innovative way.

The first social tokens consisted of personal tokens that represented a slot of time in exchange for a service. A user would pay for that and hold it until they could get a consultation, a service or an art commissioned. There was the possibility for them to be traded, given and exchanged, depending on the goal of the holder.

$ALEX

Other types of social tokens were Income Sharing Agreements (ISAs), which served as a token for a share of someone’s future income. This model was adopted by Alex Masmej, Founder of Showtime. With the advance of his token $ALEX, he has been able to create an entire community around this cryptocurrency. Currently, token holders are able to vote and influence Masmej’s real life decisions, and not simply have a share of income.

Friends With Benefits (FWB)

FWB is an international community of cultural creators, thinkers and builders who constantly work together to collaborate in shaping the future of Web 3.0. Their token $FWB gives holders access to exclusive content, to their discord server and to events. It is a hub for innovation and creative thinking within the community.

BanklessDAO

Another interesting example of the impact that these tokens are capable of having is the BanklessDAO, a decentralized organization which started as a community online which had the goal of expanding financial decentralization. Through the token BANK, their native governance token that was distributed to active community members and used primarily to help coordinate activity, they were able to transition from a community to a Decentralized Autonomous Organization (DA), with the purpose of onboarding new users into the crypto universe, through media, culture, education and art. 1 billion tokens were minted, representing the 1 billion users they would like to enroll in the world of cryptocurrency.

WHALE

WHALE is a social token that is backed by valuable NFTs. Token holders within the community are able to gain access to exclusive content, opportunities and NFT giveaways by up and coming artists.

What Are the Differences Between Social Tokens and NFTS?

When it comes to the monetization of art, creators and assets through blockchain solutions and cryptocurrencies, there is still some confusion about the differences between those two concepts. While both operate within the same basis, still there are some key differences in how they work.

Non-fungible Tokens (also known as NFTs) are digital creations that rely on blockchain authentication to make them one of a kind by placing a type of cryptographic fingerprint within an asset. Through this technology, digital art can be monetized, sold, traded and created without the fear of it losing authenticity, through the internet.

Social Tokens, on the other hand, utilizes blockchain to create a digital currency that is reliant on a community or person.

While these concepts may seem similar in the sense that they both present an ownership model and monetization for creators, the major difference between Social Tokens and NFTs lies within the intrinsic value of these assets. A social token value is defined by the popularity of the community or person producing the cryptocurrency that is being sold, almost as if the person itself is a means of monetization. NFTs, on the other hand, are valued by their artistic and cultural value.

While both reward creators, their objective is different: NFTs have value within themselves, while social tokens are about the value within a community.

Conclusion

Cryptocurrencies and Web 3.0 are bringing groundbreaking innovation by taking many different industries by storm and handing the power of decision-making to consumers. The same can be said about social tokens.

There are many benefits that can be derived from having means of monetization that are independent from big companies. With these types of assets, digital creators are no longer dependent on building communities throughout multiple channels in order to try and generate income on different venues. Not only does this lend creative minds the freedom to innovate without having to limit the content they create to algorithmic optimizations, but it also helps them build a closer relationship with their audience, by providing better channels of communication, content that is original, as well as authenticity.

While there is a fair amount of debate on the tokenization of people from an ethical standpoint, the positive impacts seem to reverberate throughout many industries: from digital marketing, to music and publishing houses. Through this type of monetization and creation of assets, creative minds are finally able to get revenue that is based on what they have to offer the world. Communities are able to be more sustainable, without the need to rely on third-party investments and there is room for a better overall creative experience, as well higer innovation rates, through open communication and digital economics.