The innovative and irregular path to growth for the latest social media platform on blockchain and nearly 15,000 celebs who unwittingly play a role.
If Jake Paul jumped off a bridge, or onto a new Twitter facsimile, would you join him? And would it impact the overall value of his brand for fractional sale in crypto?
BitClout is giving social media users and crypto enthusiasts the chance to ask and answer these questions, not just in relation to Jake Paul but for all top 15,000 Twitter accounts, ranked by followers.
BitClout launched about 6 weeks ago, and has garnered more attention than a typical brand new blockchain project. Perhaps it’s due to the involvement of certain notable individuals like Elon Musk, Ariana Grande, Kim Kardashian, Rihanna, Ellen DeGeneres, and Lady Gaga.
In this case, rather than generating passive income, BitClout is generating passive involvement for potentially thousands of celebrities and influencers who are on the BitClout platform, complete with their own username, profile picture, bio, coin, a valuation, reserve, and market cap — all through no action on the part of celebs who ostensibly own these accounts and some portion of the coins.
There are a few celebrities who have been persuaded by the value of “their” coins to support the platform (including Jake Paul and Tiffany Trump). For those celebrities who haven’t claimed their account and personalized coin, the accounts are marked “Reserved”.
To unravel some of the details of this project, we spoke with Mario Nawfal, Evangelist for BitClout.
When asked what factors he felt are driving the buzz around BitClout, Nawfal said:
“The amount of capital flowing into the platform, the investors backing it (and) the celebrities joining it on a regular basis. And the whole concept of the platform itself is really intriguing, where it’s a social media platform that focuses on the monetization of a personal brand, above everything else.”
The project has done very well securing the interest of major investors including North Island Ventures, Coinbase Ventures, TQ Ventures, Social Capital, Sequoia Capital, Winklevoss Capital, Polychain, Digital Currency Group, and Pantera Capital.
“When you go on on BitClout.com, the first thing you do is you need to transfer BitClout to your wallet before you can actually use it. Once you transfer about $3 BitClout to your account, then you can start using it… then you can start posting on your account. People will invest in you if they see the value of your Creator Coin.”
BitClout.com and the BitClout blockchain use the utility token BTCLT (BitClout native cryptocurrency).
Users and pundits on Reddit and Twitter have expressed concern that until recently there was no way to withdraw BitClout from the platform — you could buy, spend, and transfer BitClout but not take the value off the platform. Nawfal said that this issue has been recently addressed.
“There is an OTC group where you can (withdraw your BitClout) at WithdrawBitClout.com… And the API for exchanges was just released about three days ago. It’s no longer much of a concern at all, since the opening up of the API,” Nawfal said.
Nawfal explained the decision to build on a proprietary blockchain network to meet their specific needs for capacity and throughput to support a large user base.
“Bitcoin is the blockchain for money. Ethereum is the blockchain for DApps. BitClout is blockchain for social, allowing you to build any social platform on top of it. That’s the objective of the platform and It’s heading pretty rapidly towards a complete decentralization similar to Ethereum and others,” Nawfal said.
For those of us who have hired influencers, negotiated prices with influencers who often have a very keen understanding of the value of their time and name, and waited weeks to get approvals just to use the name of a notable person or brand in a public statement, the idea of just using their name and likeness without securing permission is surprising.
Elon Musk remains consistently at the top of the Top Weekly Creators since the launch of the platform. Musk seems to be the most consistently mentioned notable individual on the BitClout platform — and up to this point has taken no action to suggest he supports or intends to participate in the platform which pre-emptively grants him a $21.8 million market cap and a reserve of greater than $7 million.
“There is no Elon Musk verified profile, there’s only one reserved for Elon Musk. So when the platform launched, the devs scraped all the top 15,000 Twitter profiles, and then automatically imported them onto the platform. And then people can invest in them without the permission of the people that own the Twitter account,” Nawfal said.
BitClout is ready for these Reserved Accounts’ owners to opt-out, should Musk or Ellen DeGeneres take the time to have their team make the request for them.
“The person that owns the Twitter account can request for their profile to be removed. But when they did, that brought a lot of attention and a lot of immediate use case for the BitClout token and for the platform,” Nawfal said.
It seems that until the famous person owning one of the top 15,000 verified Twitter accounts requests that their account is removed from BitClout, their name and likeness will be branded along with their Creator Coin.
“So people come in and start betting on those different personalities, even though those celebrities, or Twitter influencers, need to claim the account and tweet their public key. So they’ll have the public key link to their account, they need to tweet it from their original Twitter account, or email, the email, and then they’ll be able to claim it will be verified, and they can take the coins, the percentage of the people so if people invested a million dollars, there’s a certain percentage that they get to keep. All these reserve accounts get a percentage of coins as soon as they were created. So there’s like money sitting there or BitClout sitting there for all these Twitter influencers, which has an incentive to convince them to go come on the platform and open an account and then the hope which is materializing is when they open an account, they start using it as well and engaging and it worked really well,” Nawfal said.
Celebrities that have verified their accounts to claim their Creator Coins include Tiffany Trump, Jake Paul, Ashton Kutcher, Jordan “Wolf of Wall Street” Belfort, Cameron Winklevoss, Grant Cardone, and Tyler Winklevoss.
William Shatner remains unimpressed (if not irate) on the issue of BitClout.
However, BitClout said it’s not relying on the strength of these notable names as it once did six weeks ago because now it’s generating its own on-platform notoriety. It is hard to verify the solidity of this claim while not knowing the total number of users — though BitClout did share a page of user statistics that showed approximately 7,000 transactions on a typical day in April.
“It’s not as important now as it was before because the interest in those celebrities that haven’t claimed their account as much so as enough people that are on the platform and BitClout influences are such that it’s enough to not need celebrity accounts that are not claimed… But the point of concern is applicable, especially a few weeks ago, and anyone that requested BitClout to remove their name, their account would have their account removed. So it’s a very simple process of doing so. But there weren’t as many as you’d expect.”
We asked how many celebrities and influencers had asked that their profiles be removed from the platform, but Nawfal said that he was unaware of the total number.
We have profiled dozens of blockchain social media projects in the recent past, and none had the buzz that BitClout has had — it seems the tacit involvement of celebrities has had the desired impact, effectively hacking the project’s way to notoriety.
However, reckoning with unenthusiastic celebrities is not the full extent of BitClout’s potential liability.
Richard Levin, Chair of the Financial Technology (FinTech) and Regulation Practice at Nelson Mullins, spoke to us to explain other potential pitfalls.
“When I see someone creating a coin that uses the likeness, or potential intellectual property of a third party, the question is, why are they doing it? And what are they gaining from it? And do they have the proper legal status to do so? I think one of the problems with the model is that if you create a coin of any type… and then you create a mechanism for exchanging that into other virtual currencies, or into traditional fiat currency, you could be acting as a money service business. And if you are a money-service business… and are not registered as a money service business, they may be breaking state and federal law,” Levin said.
Levin explained that blockchain projects selling a likeness they may not own might have one set of problems — but projects that trade unregulated securities have even bigger regulatory issues.
“If the operator of the platform uses a currency they’ve created to raise capital, they conduct an offering, whether public or private, that offering could be deemed a sale of a security. And if you sell a security without a registration or an exemption from registration or Safe Harbor, you could potentially be sued by the Securities Exchange Commission (SEC), and also by anyone who has purchased that coin. So as people are developing platforms and protocols, they have to remember that there’s now a fairly extensive history of people who have done that and have been sued by the SEC or by the Commodity Futures Trading Commission or by the Financial Crimes Enforcement Network (FinCEN),” Levin said.
Levin sees future potential regulatory exposure for projects like BitClout — but sadly the regulators may also be coming after our much-beloved NFTs.
“We’re seeing similar problems now in the Non-Fungible Token (NFT) space, where individual assets that are owned by third parties are being used to create an NFT. For example, covers of comic books, and the owners of the intellectual property rights have said, you don’t have a right to do that. Now, other NFTs have been done with the permission of the owner of the intellectual property. And those NFTs have been able to go forward. Because the asset that is being sold through the NFT mechanism has proper permission. For example, look at NBA Top Shot,” Levin said. “So I think if you’re creating a coin that is going to the public, it is being sold and incorporates the likeness or intellectual property of the third party, you may have a problem. And then you also have a problem if the coin is being offered in a mechanism that makes it look like you’re hosting a money service business, or if you’re selling it in a manner that makes it look like a security.”
This particular issue goes beyond matters of IP and sovereignty of identity for notable people — and it could potentially hurt not only the project but the celebrities that are persuaded to support it.
“If you are putting into the world a digital asset as the SEC refers to them, some digital assets are securities and some are commodities or currencies. And if you put it into the world to produce a return on investment from the efforts of others, the SEC very well likely will deem it a security. And this is very similar to what happened with the initial coin offerings, where you had a number of prominent people in the media or entertainment, or sports choose to associate themselves with one or more digital assets that were offered, they returned to digital assets as compensation. Then they were sued by the SEC and had to settle for acting as an unregistered broker or having been part of an illegal offering of a security. So I think that everyone in this space needs to proceed with a great degree of caution,” Levin said.
YouTuber Mutahar Anas from YouTube channel Some Ordinary Gamers recently profiled BitClout delving into the sleuthing available on Twitter. Twitter user @cryptoshiro has used BitClout’s block explorer to investigate the Genesis Block or origin point of the blockchain and has found that BitClout issued a pre-mine of 8 million BTCLT which are valued at approximately $142 for a total pre-mine value of over $1.15 billion held in reserve for the founders and early investors.
They found that the pre-mine had been in part divided into 482 public keys. BitClout has been assigning currency to these mostly unregistered accounts, then uses the BTCLT to buy the Creator Coins of the Reserved Accounts, effectively pumping the value of their creator coin and making it more attractive to potential endorsing celebrities.
Anas pointed out in his video that you can see the activity on the celebrity accounts — and that the major investors in these coins tend to be familiar user names of accounts presumably run by BitClout with the intention of distributing and driving the value of the Creator Coins on notable accounts.
Without a doubt, the approach to marketing and productization of the BitClout platform is innovative and bold. It has driven a lot of attention which should be the first goal of any new and unknown blockchain project. Creating a market based on perceived clout is a clever idea, and it’s not hard to imagine this being an enjoyable form of investment for retail investors that wish to combine their passion for their favorite stars with their enthusiasm for cryptocurrencies.
The blockchain world is in the midst of achieving the mainstream acceptance we have long anticipated, and irregularities in projects can hurt the community as a whole. We hope that in another 6 weeks, 6 months, or 6 years BitClout will succeed as a blockchain-based social platform with its sites set on providing more than a Twitter imitator with crypto incentives and decentralization.
BitClout is already expanding its scope, with its biggest coin pre-sale to date starting today, April 30th. According to the website, the invite-only pre-sale will be followed by a sale open to the public.
We do not intend to provide any financial advice and do not recommend reading any financial advice in our articles. It is fair to say that it is always worthwhile to know what you are buying — caveat emptor in crypto and in all things.
*Story originally appeared on Benzinga.