BitClout creates the first ‘social media stock market’
People are given the opportunity to ‘invest’ money in the social standing of famous individuals such as Elon Musk, Ariana Grande, Kim Kardashian, and others. The value of these individuals (contextualised as a ‘coin’) can be directly affected by their actions, wherein positive actions lead to an increase and vice versa.
In BitClout’s official it claims that there is “no company behind it - it’s just coins and code.” Those who wish to purchase a ‘creator coin’ asset can do so by first purchasing Bitcoin and then . Furthermore, the value of BitClout doubles per every million sold, which the document claims creates a ‘natural scarcity’ greater than Bitcoin’s.
Crypto that commoditises people
It should be noted that the individuals commoditised under the BitClout model have no direct affiliation with the platform and receive no direct benefit from their coin’s value. However, they can ‘claim’ their coin and link it to official social media accounts (NOTE: this also does not provide any form of monetary remuneration).
BitClout states that it hopes to integrate future benefits such as:
- “Stakeholder meetings” where the asset individual interacts with their investors
- Levels of access dependant on the amount one chooses to invest
- Premium content available only to investors
These proposed features bear a resemblance to ’s business model, with the caveat that certain individuals on BitClout may not necessarily be entertainers and therefore might not want to generate content for an audience.
The white paper describes the BitClout concept as an “emerging phenomena”; indeed, the website compares Bitcoin’s recent impact of “decentralising money” with its own efforts to “decentralis[e] social.”
“[W]ith BitClout you can buy someone’s coin and then retweet them, which makes it so that you’re not only along for the ride financially if they blow up, but you also get bragging rights.
“Imagine the difference between being able to say ‘I retweeted her early on’ vs being able to say ‘I bought her coin when it was $0.50 and now it’s $500’.”
Whether BitClout becomes a template for the future or merely a phase in finance’s development, the willingness of investors to pour millions of dollars into the speculative new market indicates that interest clearly exists.
The future of investment could conceivably include some form of ‘social media stock market’ - a concept that could one day include everyone, not just the rich and famous. The socio-economic implications of doing so, however, would need to be carefully considered.
Image source: BitClout white paper (page two)
Crypto strategies: Timing the market vs time in the market
There is a lot of surface noise in the cryptocurrency space and most of it is the psychobabble of investor sentiment. One week it is the sound of everybody rushing towards a feeding frenzy. The next the wailing and gnashing of teeth as those near the surface (the ones most exposed) get spooked and rush the other way, falling over each other in the race to escape.
Watching crypto markets in the last few weeks has been brutal viewing; best done on a strong stomach and ideally through your fingers! It’s impossible to know what drives lemmings off a cliff, when they run, they all run the same way at once.
The speculative crypto investor is not always a logical beast, and there seems to be a lot of sentiment where the money is either ‘all in’ or ‘all out’. Crypto is exquisitely volatile, and annoyingly can sometimes defy logic – no-one really knows what is going on. Thankfully the blockchain data has some answers on what the smart money is doing.
Essentially scared sheep are trying to ‘time the market’, traders who are buying and selling short term on a hunch the market is running in their direction, going with the flow in a world where cash is king. Recently the sheep got spooked, their time was up. Unsurprisingly, when the market run is to sell ‘coin’, it turns the asset back into what it sees as the comparative safety of fiat.
Pictured: Katharine Wooller
There is another investment philosophy, one aimed not at spinning-off short term cash but on the principles of accumulating long-term wealth. A far less noisy space where deeper strategic thinkers are quietly building crypto portfolios of significant size, this is where the ‘whales’ (a crypto industry term for those who hold at least 1,000 BTC) hang-out.
Whales have no interest in timing the market, rather their focus is ‘time in the market’. Not driven by market sentiment, their focus is buy-and-hold.
So where does this leave the minnows, the small investor who might be wondering if now is the time to think about cryptocurrency as an asset class to add to a pension or an ISA. Somebody looking to diversify out of equities. A prudent saver who thinks structured saving in a digital wallet is something that would add value to a retirement strategy. Where does the minnow look?
Currently if the minnow looks below the surface, at what the whales are doing, he or she would see something very interesting. Since 19 May's price crash, the bottom feeding whales have been hoovering up BTC. Quite simply, they are ‘buying the dip’ – as the sardines rushed to sell, the whales were happy to hunt in the bargain basement. They have been accumulating wealth.
To my mind, the smart, forward thinking retail investor, with a buy-and-hold mentality, might consider this a buying signal. In which case the question becomes how to dip a toe in the water.
Dacxi has established one of the UK’s leading cryptocurrency wealth platforms, where small to medium investors can buy individual coins or ‘bundles’ of Blue Chip or selected altcoins to build a diversified cryptocurrency wallet.