Apr 14, 2021

BitClout creates the first ‘social media stock market’

BitClout
Cryptocurrency
Blockchain
Bitcoin
William Girling
3 min
Combining blockchain tech with cryptocurrency, BitClout is the first instance of a unique new concept in finance: a social media stock market
Combining blockchain tech with cryptocurrency, BitClout is the first instance of a unique new concept in finance: a social media stock market...

Started in March 2021, BitClout describes itself as “not a company” but rather an “open-source blockchain” that functions as a social media platform.

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.

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In BitClout’s official white paper 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 exchanging it. 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).

The exact nature of ‘investing’ in BitClout remains unclear. Over US$225m has reportedly been processed, yet buyers do not currently have the option to extract the value they put in.

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 Patreon’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.

Decentralising social

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)

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Jun 20, 2021

Crypto strategies: Timing the market vs time in the market

Dacxi
Cryptocurrency
Blockchain
Investment
Katharine Wooller, MD, Dacxi U...
3 min
Wooller investigates the prevailing market trends in cryptocurrency and analyses the different strategies of big-time and small-time investors

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. 

This article was contributed by Katharine Wooller, Managing Director, Dacxi UK and Ireland

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.

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