During the EthGlobal 2023 crypto conference in Waterloo, Canada, Ethereum creator Vitalik Buterin delivered a speech, expressing his concerns about the current state of the SocialFi space. He shared that existing Web3 social dapps may not be sufficient to replace their Web2 counterparts, calling for further iterations in creating a social dapp using Web3’s unique features.
At DWF Ventures, one of our main crypto investment focuses for 2023 is non-financial consumer dapps (so-called consumer crypto). This led us to explore the SocialFi sector, particularly decentralised social media. Previously, our team echoed Buterin’s concerns, encouraging the use of blockchain and its unique features to create a potent new dapp.
In this article, we examine the features of blockchain technology in detail, uncovering its potential to revolutionise social media and transform the user experience.
Brief Overview of Web2 Social Media Platforms
Here is one of the most cited definitions of social media, proposed by Kaplan and Haenlein in their 2010 paper: “Social media is a group of Internet-based applications that builds on the ideological and technological foundations of Web 2.0, and that allows the creation and exchange of user-generated content.”
The definition encapsulates social media platforms like Facebook, Instagram, Twitter, YouTube, Snapchat, and TikTok. These platforms provide users with multiple feeds that constantly deliver information and keep them engaged throughout the day. Further, social media applications can be divided into eight main types:
- Content communities: Pinterest, Flickr, YouTube, TikTok, SoundCloud, Jamendo.
- Collaborative projects: Wikipedia, GitHub.
- Blogs: WordPress, Blogspot, Substack.
- Microblogs: Twitter.
- Social news websites: Reddit, Digg.
- Virtual worlds: World of Warcraft, Second Life, Bondee, Clubhouse.
- Social networking sites: LinkedIn, Facebook, MySpace.
- Commerce communities: Amazon, eBay, iStockPhoto, Shopify.
In Web2 social media, users typically interact with platforms through this bundle:
Currently, Web2 users willingly give away a significant amount of their information and social influence to social media platforms. However, this data remains isolated within each application, requiring users to start from scratch when using new apps. The lack of transparency in algorithms and the absence of public code sharing also contribute to these challenges. These issues were proven real with the publication of the Twitter Files., which exposed the lack of neutrality and transparency on Web2 social media platforms.
Why SocialFi is the Next Step for Social Media
Compared to Web2, Web3 reinvents user interaction with social media.
In Web3 social media, or SocialFi, user accounts become the primary means of interaction with the blockchain. A social media application takes on a different role, acting as an interface for account identity and algorithms. Rather than relying on a centralised trusted third party (TTP) database, Web3 social media platforms utilise the blockchain as a public database. This enables open verification and facilitates the seamless transfer of data between various social media applications.
The Web3 social media bundle completely flips the current relationship dynamics between applications and users in the Web2 social media landscape. Users are no longer confined to specific applications as they gain access to codes, algorithms, their own content, and social capital.
Win-Win Scenario for Stakeholders in Web3 Social Media
Apart from users, content creators and builders can now participate more dynamically in the social media landscape. Blockchain technology allows smart contracts to automatically pay out royalties via NFTs without splitting fees with a TTP. Since Web3 projects are often open-sourced, builders can easily access codes in the relevant space to compose a new application if required. In addition, builders do not need to fret about growing user bases, as they can easily port over to a new application with their social capital.
Potential Evolution Scenarios for Web3 Social Media
Social media has come a long way from its early days as “Usenet” in 1979, a basic network for computer discussions. From non-interactive articles and an image upload size limit of 6144 KB on 4chan, the definition of social media has evolved and adapted with three main driving forces:
- Technological advancement.
- Economic growth.
- Social and cultural influence.
The limitations encountered by Web2 social media during their evolution path share similarities with the current limitations of Web3. The absence of on-chain data storage is reminiscent of the past file size limits for uploads. The inability to handle large-scale transactions brings to mind the limitations of servers and gateways on forums. The expensive gas fees echo the high costs associated with internet usage in the early days.
By recognising these parallels, we can identify the driving forces behind Web3 and outline potential factors that could contribute to the development of an ideal platform for Web3 social media.
Web3 Alternatives to Popular Social Media Services
Potential factors necessary to catalyse the first wave of 1 billion Web3 social media users are already in motion. Given the recent view limitations on Twitter and the Reddit API moderators’ fiasco, the demand for Web3 social media is at its peak, presenting an opportune moment.
Above, we have mapped some popular Web3 alternatives in the current social media landscape for reference. At DWF Ventures, we are enthusiastic about supporting and investing in the next SocialFi super app. Furthermore, we are dedicated to investing in teams that push the boundaries of blockchain technology to bring the vision of Web3 social media to life. If you are seeking a crypto venture capital partner aligned with creating value for the space, feel free to contact DWF Ventures.
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