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Bitclout Finds Success By Taking Liberties With Its Creator Coins
08/10/21

Bitclout Finds Success By Taking Liberties With Its Creator Coins

Designed to let users bet on the popularity of public figures by buying tokens associated with their profiles, influencer marketplace Bitclout uses its blockchain-based technology to tie digital value directly to actual people and their actions and reputations in the real world.

The social site and crypto marketplace launched somewhat controversially in early 2021 with 15,000 creator accounts and tokens scraped and preloaded from the most popular Twitter profiles, with luminaries such as President Biden, Snoop Dogg, Joe Rogan, Ariana Grande, both Clintons, and a variety of YouTube stars and Venture Capitalist finding their way onto the site as creator tokens. The majority of these 15,000 creator accounts were opened without the permission of the individual and are not controlled by them, yet their tokens are still able to be bought, sold, and traded on the Bitclout marketplace. Elon Musk, whose creator coin is, perhaps not surprisingly, currently the most highly valued at around $31,000, has not authorized or claimed his token. In order to claim a “reserved” account, the user has to tweet about it, serving as a built-in marketing tool for Bitclout. Once claimed, the individual is entitled to a share of their coin’s market capitalization. However, many people with “reserved” creator tokens justifiably want nothing to do with them. Bitclout has received numerous cease-and-desist letters, and Scooter Braun, whose TQ Ventures is an investor in the company, has had his own profile scrubbed from the marketplace. 

The Bitclout marketplace serves as a value-backed ledger for the social and societal reputations of influencers, creators, and known figures. For example, if an influencer goes viral on Instagram or TikTok, their token will appreciate in value. But, if that same influencer, or politician, for example, makes a faux-pas on Twitter, it should theoretically result in a decrease in their token’s value. The wide variability of fluctuation Bitclout tokens are subject to is what makes their trading on the marketplace so appealing. Prices go up when users buy, and down when they sell.  If a user believes a coin is going to rise because the individual it is staked to will become more popular in time, then the earlier they buy the coin, the greater they can profit later. 

Bitclout accepts bitcoin to join and use its services. The amount of bitcoin the company has received so far would give it a valuation exceeding $1 billion, and Bitclout’s backers have already invested over $100 million into the platform. These backers include prominent names in venture and crypto such as Andreessen Horowitz, Sequoia, Social Capital, and the Winklevoss twins.

Yet, despite all this funding and recent growth, Bitclout does not have a mechanism for taking money out of its platform. Users are stuck either holding on to their assets, trading them on Bitclout and hoping to keep their balance positive until a solution is put into place, or they have the option to sell their tokens on the secondary market at a steep discount, often 40-50%. The company has received criticism and a fair share of doubt for its inability to provide users a native mechanism to cash out safety. Still, with a growing user and asset base, and its attractive value proposition of giving communities a real stake in the overall success of the creators they follow, Bitclout does not appear to be going anywhere soon.

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This article originally appeared in PSFK’s research paper, Unlocking the Power of Creator-Led Brands