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Is it time blockchain technology disrupts social networks?

Blockchain technology was the product of cryptocurrencies. Now it’s being considered for centralized industries including social networks.

Facebook, the parent company of the popular social network, is now one of the five most valuable companies in the world. Its valuation reached 500 billion dollars for the first time in July 2017. The site has more than 2 billion active monthly users, scrolling through the feed, liking and commenting on the posts, and sharing important updates with their friends. The leading social media website has kept its design and development focused on mobile technologies. Facebook is now the first webpage users visit when they open their browser. The social media app is just 13 years old, keeping its consistent design and winning more number of active users than anything in the history.

Now let’s go back to the part where we said users like, comment, share, update. What’s in it for users? They are practically generating content for Facebook but are not really getting anything in return. Same is the case for Instagram, Pinterest, Linked-in, Snapchat and others.

A study reports that 80% of millennials - who are the majority of social network users - log on to one social media website at least for two hours every day. That makes up to 730 hours per user every year. Shouldn’t users get something in return for all this time spent. The bottomline is social network industry is now ripe for disruption.

How are social networks up for a disruption now?

It is now largely believed if the product is free, then chances are that you are the product. So, all the content you upload and share on social networks, all the time you spend scrolling the newsfeed, all of it generates revenue for these neworks. Just like Youtube, Facebook also shares the revenue with the content providers. One of the reasons these social network websites are so valuable is that they have free flowing information of users - something inherently embedded in their design and development. Facebook and other social networks, Instagram, Twitter, provide their clients with better customer targeting for their advertisement and marketing campaigns.

Social networks get a win-win by -

-Using user data and selling it to companies
-Charging the companies for target advertising

In both ways, data is controlled by these social networks. So even when companies spend millions of dollars every year for social media marketing, they have access for only a certain category of their consumer data. This coupled with the fact that there are a handful of players who are controlling a majority of user data because even while you are browsing other social media, e-commerce, sports or content websites, you have the option of signing up using any of your social media handles.

This is why the social network industry is ripe for a disruption now since users are becoming more aware and protective of their privacy, companies are questioning the various analytics provided by social media platforms and a lot of money and stakes are being put into social media ads and marketing.

Enter Bitcoin

Unless you have spent the past year in a submarine or in the north-pole, without any means to receive any news, you have heard of Bitcoin. The same crypto-currency that you could have bought when it was close to, and in some cases significantly less than, a dollar a coin. It’s trading at $ 17,000 per coin right now. The mysterious inventor(s) of Bitcoin wanted to create a way to exchange value without any interference from any third party(banks/governments etc.,). The biggest challenge which decentralization advocates have always faced is, who will decide the intrinsic value of the commodity/currency, who will keep track of all the transactions? In other irony filled words, who will play the role of government for such currencies?

Cryptocurrency leads to blockchain technology

Satoshi Nakamoto(the inventor of Bitcoin), came up with a way to keep track of all the information of the Bitcoins in such a way that it is with everyone at all the times, albeit in such a way that unless you know the key to the transactions you want to look into, it is next to impossible to decipher the information. Hiding in plain sight, all of it. These continuously growing records, or blocks,linked and secured using cryptography, form what is called a Blockchain. Blockchain is defined as an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. It is typically managed by a peer-to-peer network, with each node of the network adhering to a protocol for validating new blocks. Blockchains have achieved decentralised consensus due to their extremely secure design.

Blockchain hinges on decentralization

It didn't take technical community long to endorse blockchain. After-all, it had solved a seemingly impossible problem. Once the solution was out, Blockchains are now being used to solve a number of issues apart from transaction recording and management for cryptocurrencies. Blockchains are being implemented to record events and other data, medical records, voting records, identity management etc.
With blockchain finding more and more applications, it's not surprising that entrepreneurs who envision a truly decentralised web have it in mind when they think of the next generation of social networks. This means blockchain technology would enable disruptors to allow users to own their own data and create a more de-centralized social networking where users are paid for creating content.

Case study # 1 Indorse

Indorse is an Ethereum(another cryptocurrency) based professional social network that does not own any of the data of its users and the users are paid as per their contribution to the growth of the network. As the network gets bigger, and the more correct information it has, the more it solves the hiring and job-seeking problem for its users.
Lesson from Indorse: Use a similar concept for a personal social network which has even more participation than Facebook from its users as the users will be part-owners too. This will also solve the content-quality and credibility issues that Twitter, Facebook, Instagram have to deal with. Many technical publications have already predicted disruption of traditional social media by blockchain based social networks.

Case study # 2 Jetcoin Institute

Jetcoin Institute is a unique platform that allows fans of sports players and celebrities to participate in the journey of these celebrities. The institute hunts talents and uses blockchain technology to decentralize sports and entertainment business. It offers a platform where anyone can own IP rights of promising athletes and talents and these fans are paid in Jetcoins. Fans get paid for being fans.
Lesson from Jetcoin Institute: Create platforms to reward users and pay them by cryptocurrency vouchers. Involve users in brand journeys for better relationship building.

Building social networks with blockchain

While Bitcoin is mainly used for transfer of monetary value, Ethereum enables users to write Smart Contracts and embed logic directly in the blockchain. Now entrepreneurs considering social media website design and development need to pair, say Ethereum with other emerging technologies like Payment Channels for a truly decentralised social network platform.

In blockchain-enabled social networks, the user will not just be the product, but the owner too. User will be valued for and as per their contribution to the network. Implementing social networks using blockchain will also mean solving the data ownership, privacy and security issues. A truly decentralized social network will provide everyone with an easy way to connect with their contacts, while ensuring that their online presence and activities are not being used to map out a consumer profile to be sold to anyone who needs it. Fake profiles and content-theft are two big issues for the social networks right now, which will cease to exist in a user-authentication driven network blockchain can provide.

For social media app design and development, the first mover advantage will work for those who implement it first and the best. The best time to start working on this concept is now, like the best time to buy Bitcoins was the time we all missed buying it. So if you are considering social media website design and development, it’s time to act.

Blockchain based social media app design and development is the next big thing on the horizon, and given the security and the decentralised ownership it provides, it is here to stay.

Vinfotech, with their experience in social media design and development, and their in-depth knowledge of blockchain application can help you integrate the two technologies to create a killer social network application. With a history of customer oriented design, and known for their excellent command over development/testing and marketing, Vinfotech can help you not just in bringing your vision to reality, but also in growing your platform.

IN A NUTSHELL
  • Social networks don’t pay users for their data
  • Social networks earn from users and companies
  • Users are more aware of privacy
  • Companies want more value for social media dollars
  • Blockchain can decentralize social networks
  • Blockchain with social networks will disrupt current social networking

About Vinfotech

Vinfotech creates world's best social networks for brands, interest groups and sports fans. We promise initial set of real engaged users to put turbo in your social network growth. Our award winning software vSocial™ allows us to build stellar customized communities faster and better. Our customers include Aston Martin, Burberry, Arabian Gulf League and Snapdeal.

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