The crypto market has experienced tremendous growth over the past decade. While Bitcoin has captured most of the attention, it’s just one of many innovations occurring with blockchain technology across industries. The widespread adoption of cryptocurrencies and their maturing ecosystems have paved the way for Web 3.0 technologies.
Social tokens, also known as social media tokens, are a prime example of these breakthroughs. While initial coin offerings (ICOs) have faded, social tokens have leveraged a lot of the same underlying technology to power online communities. The combination of social tokens and non-fungible tokens, or NFTs, could be transformative for the creator economy over the coming years.
Let’s take a closer look at social and community tokens crypto, examples in the wild, and how to create social tokens for your own groups.
What Are Social Tokens?
Social tokens derive their value from the growth of shared creators and their communities. While most current projects are at a proof-of-concept stage, the long-term goal is to create an entirely new way to power the content creator economy. Tokenization can create unique ecosystems that are far more user-friendly and rewarding than current advertising and subscription models.
What Are The Types Of Social Tokens?
There are several different types of social tokens:
- Personal Tokens are created by individuals to exchange forms of labor. For example, $ALEX is a bet on the potential of crypto entrepreneur Alex Masmej through an experiment that’s often called a “human IPO”.
- Participation Tokens are created to participate in the potential upside of a group. For example, $SWAGG is a social token backing SWAGG Network creations, including Forefront and upcoming community-initiated products.
- Community Tokens are created for memberships or communities. For example, $JAMM is a social token that’s required to gain access to the organization's discord, newsletter, and other platforms in the Jamm Session ecosystem.
Modern tools have made it easier than ever to tokenize communities. While Collab.Land is a popular platform, MintGate and Coinvise have both built streamlined platforms to create tokens and monetize content on a wide range of platforms. As social tokens crypto go mainstream, more and more content creators could embrace these platforms to build their communities.
As for the present, the social tokens digital assets are all set to play an important role in the ecosystem of creators with widespread adoption among crypto artists and musicians. As the technology evolves, social tokens could start to attract more mainstream artists before moving onto larger communities, such as large publishers or online communities built around products or brands.
Social Media & Social Token: How Can Content Creators Tokenize Their Brands?
Each time a content producer on the web transmits their creative output anywhere on the internet, they can leverage the opportunities offered by social tokens to re-align the interests of creators and their communities. Having said that, creators also need to keep an open eye for the projects of crypto for offering pump-and-dump mechanisms which yield short-term gains and often also cause a dent in their followers' numbers.
For example, back in 0217, influencers hyped the dubious token projects and traders invested their money into the ICOs (as their initial coin offerings) with no solid information on the roadmaps and intrinsic value. The result? The hike of crypto didn’t last. The aim of the influencers, hence, should only be to build solid solutions to gap community management and monetization.
Social Tokens: The Vision for a Web 3.0
The Web 3.0 movement envisions a decentralized internet powered by blockchain technologies. While Web 2.0 transferred control from browsers to platforms, the modern internet has made it painfully clear that large platforms are more interested in maximizing revenue than rewarding content creators and their communities and protecting users’ privacy.
Web 3.0 leverages cryptography to eliminate the need for trusted intermediaries. While Bitcoin has famously avoided financial intermediaries, the same principles apply to the centralized web where peer-to-peer networks could eliminate data centers. Artificial intelligence and machine learning could further improve the performance of decentralized networks over time.
Web 3.0 could also provide benefits to content creators and consumers. For example, users could sell their data or barter with advertisers without giving up ownership or privacy while content creators could receive compensation without the enormous cuts taken by platforms and other intermediaries throughout current distribution systems.
The Role of Regulators In Web 3.0
Social tokens and Web 3.0 technologies could prove transformative to the modern internet over time, but the government will still play a critical role in regulation.
The Internal Revenue Service (IRS) treats cryptocurrency as property rather than a currency, which means that taxpayers are responsible for paying taxes on any gain in value. While the legal landscape is quickly evolving, the current regulations require taxpayers to calculate the cost basis and capital gain or loss of each transaction and report them on their tax returns.
Fortunately, crypto tax software, such as ZenLedger, can help automate the process by connecting with wallets and exchanges, aggregating transactions, computing the gain or loss and pre-filling popular IRS forms. Taxpayers can even integrate with TurboTax to automatically fill out the proper paperwork with an audit-proof record of transactions.
Aside from the IRS, the FCC and other regulatory bodies will likely want a way to control decentralized content to some extent in order to prevent crime. These controls will likely include insights into financial transactions that take place through these networks—as crypto oversight has demonstrated—and the ownership of content shared online.
Areas of Opportunity With Social Tokens
There are some practical use cases in the social token landscape. The method from which social coins are originated and acquired isn’t very intuitive. There’s no widely adopted technical standard as to where content creators can integrate these assets into their offerings.
For instance, Spotify’s Discover Weekly is a central place that offers a personalized list of new music to its users each week. With this, discovering new artists is really easy and without these types of services, the user journey becomes severely fragmented and stumbling across something that you’ve never experienced before becomes tough. In Web3, this kind of intuitive framework lacks, especially in the world of social tokens.
Currently, if you come across your favorite content creator’s social token, you will go out of your way to acquire it. What’s more, the content creators of their team have to reinforce the different types of experiences unlocked by acquiring these tokens. For instance, if you get to FaceTime with your favorite content creator, it would be a different experience for the viewer.
Social Tokens vs. NFTs
Social tokens are fungible in nature. For instance, if a celebrity issues a limited edition token, it would be indistinguishable in function from each other. The first and the last token would be the same and their value would directly correlate to the value of the celebrity themselves.
On the contrary, each NFT is unique and it incentivizes the collectors who hold them. NFTs are an incredible monetization tool in the Web3 content creator economy. If coupled with social tokens, NFTs can give content creators sole ownership of the platform, intellectual property, and image.
Even though personal monetization is bound to evolve our current understanding, social tokens will serve as a key pillar of how content creators extract and transfer value from the communities they have cultivated.
An artist's music can increase in value or the value of a stock can decrease due to a bad decision taken by the board, but the value of the asset related to a brand is not attached to the personal circumstances of the celebrity or the content creator.
Social Tokens on the Rise to Prominence
Social tokens avoid the hold central authorities have over the entertainment landscape. They emphasize the fact that intermediaries are not necessary for value transfer. Social tokens are the bedrock for creative and financial independence for both content creators and fans. However, social tokens aren’t as prominent in the market as they should be since there aren’t any social token platforms.
The Bottom Line
Cryptocurrencies and blockchain technologies are being applied to an ever-growing number of industries and use cases, ranging from finance to logistics to even social media. By decentralizing data and placing it on an immutable ledger, these technologies could fundamentally transform the way that these industries operate, align incentives, improve security and increase efficiency.
Social tokens or media tokens allow creators to build communities and then also monetize their content. As a key enabler for Web 3.0, a number of platforms have popped up to make it easier to tokenize communities. Participants should be alert, however, all types of crypto tokens are prone to have regulatory implications, this also includes taxation.
If you use, trade, or invest in crypto, ZenLedger can help you ensure that your taxes are accurate and help you save money over the long run. Try it today for free!