Why Now?

Blockchain technology and cryptocurrency

2021 has been blockchain’s record funding year, reaching over $14.6B by year end — shattering the previous record ($4.5B) set in 2018. This is being driven by the rising consumer and institutional demand for cryptocurrencies. Both groups are slowly starting to move the needle to help crypto and, therefore, blockchain become more mainstream.

There has been a Cambrian-like explosion of blockchain applications outside of crypto and financial services. These include gaming platforms and token-based economies, data management and storage for media and entertainment, and marketplaces for digital collectibles and non-fungible tokens (NFTs).

There is certainly an opportunity for a social platform which utilises this technology to tip the scales in favour of the consumer. With the scale-up of many new Layer 1 blockchain protocols (Solana, Cardano, Stellar, Algorand etc.), there is a huge new ecosystem of apps launching on blockchain.

The most emerging job of 2020 according to the LinkedIn Job Report 2020 is a blockchain developer with an increase of 33x. The change to Web 3.0 is moving at a furious pace with current development and it's clear that wholescale adoption and acceptance of this new technology is not far away.

Crypto market cap

Although the cryptocurrency market cap is extremely volatile, as displayed by the dramatic dip between May and June 2021, and again from December, it is continuing to reach all time high levels in each bull market. From November 2020 to November 2021, the total global cryptocurrency market cap went from 500 billion to 2.7 trillion before its fall in recent months.

With increased investment and adoption of cryptocurrency, this trend is set to continue to snowball as blockchain projects and Web 3.0 technology continues to advance and become more widespread. While there is uncertainty around pending regulation of cryptocurrencies, the continued development of blockchain ecosystems suggest the future is extremely bright for this industry.

Web 3 projects

2021 marked a huge breakthrough year for the Web 3 and crypto space. Start-ups in this industry were funded by a record $33 billion in venture capitalist funding, highlighting the huge potential that business and technical thought-leaders see in this space. It also marked an increase in active Web 3 developers of 56% vs 2020. This is a sure sign that many projects are currently in development and will be set to launch in the near future.

"Social media on the blockchain — I continue to think this could be absolutely huge. I think it solves a lot of existing pain points, which are really coming to the forefront of society right now."

FTX CEO - Sam Bankman-Fried

Existing mainstream socials trying to pivot

There have been advances in tech and key learning points to take from the past 10 years of social media companies. Platforms being designed and constructed back then simply had no concept of what difficulties may arise. Once in existence, it can often be impossible to go back and change. We’re left with scaled networks that are outdated and impossible to change.

Facebook

Facebook has suffered quite a devastating loss of reputation in recent years to its social platform. It has lost the trust and affection of its former audience and it has not been able to capture the younger audience. It is in danger of becoming outdated like Bebo and MySpace. Facebook's stock fell by $241 billion in February 2022, the largest single-day wipeout in tech stock history. At the heart of this is the privacy changes that put a stop to their surveillance capitalism business model. Its recent rebrand to Meta, depicting them as a metaverse-first company is a clear attempt to reinvent itself to capture a new audience again.

The metaverse concept is one which has proliferated thanks to blockchain technology. The main attraction is a decentralised landscape where digital property and identity can be portably moved across networks. The use of cryptocurrencies is considered to be a major boon to these environments. That’s because metaverses allow users to buy and sell virtual lands, avatars and even buildings directly. Facebook has tried its hand with Libra and more recently Novi crypto, but these are stablecoins. It remains to be seen whether its centralised metaverse project will allow true ownership of digital assets or find fairer use in empowering the user. Several blockchain projects are attempting to champion the transition to the metaverse, including Axie Infinity, Decentraland, and Enjin Coin.

Metaverse has now become a catch-all phrase for businesses looking to bridge virtual and physical worlds. Facebook’s centralised profit-led model makes it difficult to see how their product can offer better value to the user than other leading projects. It is certain that they’ve brought the attention of the world closer to blockchain technology and cryptocurrencies within social landscapes.

Twitter

In 2019, Twitter CEO Jack Dorsey began his BlueSky team to work on decentralised social media standards. Dorsey has not only spoken in favour of decentralized protocols but (as shown by his work at Square - now Block) has committed resources trying to get there. Advocates and thought leaders of Web 3.0 such as Vitalik Buterin, Fred Wilson and Brian Armstrong have applauded this decision as a signal of open protocol acceptance.

Dorsey has highlighted the flaws of centralised social media but surrendering centralised control of Twitter to a decentralised protocol would mean the end of its current monetisation strategy. Of course, this would not be allowed to happen. Unlike a decentralised protocol, Twitter’s shareholders are not its contributors. They are simply investors in a company that monetises user data via targeted ads. Twitter took their capital and has an obligation to deliver.

While well positioned to launch a successful decentralised social media protocol, it would certainly significantly hamper Twitter financially to do so. The key to Bluesky’s success will be in hijacking the network effects and marketing of its parent company Twitter. You can’t have your cake and eat it though!

As of December 2021, Dorsey has stepped down from his role at Twitter and rebranded his company Square to Block to align with its future vision of blockchain and crypto. He recently announced Block are officially building an open bitcoin mining system and shows commitment to his future endeavors in the blockchain industry.

Anti-Big Tech Sentiment

Facebook continues to fight an anti-trust lawsuit in the US. The Federal Trade Commission (FTC) and 46 states sued Facebook, accusing the firm of buying up competitors—chiefly WhatsApp and Instagram—to liquidate competition in the social media industry. On 11th January 2022, the anti-trust lawsuit was allowed to move forward in court, suggesting regulation here could be closer than we might expect.

The concern here, shared by Facebook co-founder Chris Hughes, is that Facebook commands more than 80% of the world’s social networking revenue. It is a powerful monopoly, eclipsing all of its rivals and erasing competition from the social networking category.

The call is for the government to enforce antitrust laws to regulate tech companies, protect privacy and promote competition and innovation in the tech sector. US senator Elizabeth Warren is someone who has embraced this vision and has made the break-up of big tech central to her presidential campaign. This is a growing consensus and the past example of the break-up of AT&T's telephone monopoly suggests the potential benefits of this.