Why Social Media Companies Should Embrace Blockchain

Blockchain makes it possible to securely store and transfer digital information without the need for centralized servers. Its first application was in cryptocurrencies, such every bit Bitcoin and Ethereum, which enabled the exchange of money without the need for brokers and gatekeepers such as PayPal and banks. But blockchain isn't limited to monetary transactions, and many companies are employing it to create all kinds of decentralized applications in various domains.

Facebook CEO Mark Zuckerberg mentioned "cryptocurrency" and "decentralization" in his New year's Resolution post, but without giving away details. To me, it seemed similar a ploy to take reward of the current hype (and money-making opportunities) surrounding blockchain. Similarly, messaging startup Telegram's well-documented plan to transition to blockchain looks more like a scheme to get its founders richer than they already are.

In the past twelvemonth, many blockchain startups fabricated fortunes past launching Initial Coin Offerings (ICOs), in which companies sell their proprietary crypto-tokens to raise funds for their projects. But many of these companies failed to deliver annihilation of value. Co-ordinate to a Deloitte study, of the 27,000 projects launched on the open-source code-sharing platform Github in 2022 lone, just 8 percent have survived.

In all fairness, blockchain is a very interesting engineering, and it can surely solve many of the issues with which social media platforms are struggling. But are those the bug that social media companies want to prepare?

Transforming Social Media With Blockchain

To understand how blockchain tin can transform social media, consider how a centralized service like Facebook works. Under its current compages, Facebook is the sole proprietor of all its users' data, including profile data, connections, posts, interactions, preferences, chat logs, device data, and geolocations.

The sheer amount of information Facebook has about its users enables it to run a very profitable ad service—its master source of income. Facebook is also in sectional control of the software that runs on its platform.

Facebook users, on the other hand, have practically no ownership of their data or control over the content they swallow. They go none of the money that'southward fabricated from their data. If Facebook closes their account, they tin can't retrieve their data. If they determine to register with another service, they tin can't port over their Facebook data, unless Facebook allows information technology. The situation is more or less the same with other centralized platforms.

This imbalance of ability could become dangerous by enabling social media companies to influence users by manipulating the content of their feeds without obtaining their consent or even letting them know.

Instead of centralized servers, blockchain-based social media networks store users' information on decentralized storage networks and encrypt it so that only users tin access it. A few blockchain startups such as ONG and Nexus accept deployed decentralized social media networks that put users in full control of their digital profiles, giving them the power to decide when and with whom to share information technology.

In this model, advertisers pay users (and not the visitor that owns the platform) in cryptocurrency to gain admission to their data and display relevant ads to them. Users' ownership of data would also let them port their information and digital profiles to other applications and networks, without seeking permission from anyone. This gives users more than choice and prevents social media companies from locking users into their platforms.

Another plus for users: Blockchain applications run on smart contracts, which are transparent, meaning yous can examine their functionality. Social media companies wouldn't be able to secretly change how the application works without getting approval from the communities that support them.

Social media companies could as well benefit from transitioning to the blockchain, though. For one thing, they could cutting the huge cost of maintaining platforms. Some blockchain applications function on shared economies, where users can share their storage and compute resources with the network in exchange for cryptocurrency rewards. This could exist a boon to companies such as Snapchat, which pay hundreds of millions of dollars in deject server costs every year.

Companies could also relieve themselves of the responsibilities that come with handling user data, especially considering looming regulations such as Europe's General Data Regulation Protection (GDPR) and abiding requests from governments to shut downwardly the accounts of dissidents or to manus over user data for surveillance and espionage purposes.

Social Media Giants and Blockchain

Despite the clear benefits of decentralizing social media networks, I don't call back Facebook would be willing to give up the immensely profitable empire information technology has built on user data to requite ability dorsum to users. But only the idea of endorsing cryptocurrencies and blockchain might make Facebook even richer than it already is. Large brands and established companies take reaped huge benefits just by using blockchain terminology.

One example: In December 2022, an iced tea company managed to triple the price of its shares after it changed its name from "Long Island Iced Tea Corporation" to "Long Blockchain Corporation." And Kodak, which has been struggling since the advent of digital photography, doubled its stock cost afterwards announcing a plan to launch its own cryptocurrency, called "KodakCoin."

To be fair, Zuckerberg hinted only at cryptocurrencies and not at a total-blown blockchain platform for Facebook. Merely a "FacebookCoin" used but to pay for services in Facebook would be a minimal comeback—not the radical "decentralization" vision Zuckerberg also referred to.

Telegram, the other social media company that has been touting its upcoming blockchain upgrade, relies on a considerably different business model. The company doesn't brandish ads or sell users' information to other companies, so it has a lower barrier to entry when it comes to blockchain. The company will hold an ICO in late January for its decentralized platform, which information technology calls the Telegram Open Network (TON), and volition launch its product in multiple phases.

Telegram'south programme and white paper has everything y'all'd expect from a blockchain application. But I'm perplexed at why it aims to raise $1.2 billion to develop a service that won't pay for cloud servers. Moreover, it volition be distributing half its tokens in a subsidized presale to large investors. This volition effectively give those investors—undoubtedly including its ain super-rich founders—likewise much sway over the awarding and the revenue resulting from the rise in value of its token. Then while TON will technically exist a decentralized social media network, it volition likely end up being dominated past a powerful few.

In examining the landscape, when a startup professes to decentralize some aspect of the internet with blockchain and cryptocurrencies, I take it with a grain of table salt. When an established company makes the same merits, I accept information technology with a whole bucket.

Source: https://sea.pcmag.com/opinion/19218/why-social-media-companies-should-embrace-blockchain

Posted by: granttolly1993.blogspot.com

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