My thoughts about BitClout


I've been told a lot in the past I should check out BitClout. I have looked at it multiple times, but never really got into it. I did setup account, but I haven't done anything with it yet.

Recently I've noticed a lot of Hive users joining like @raymondspeaks, @neoxian, @stickupboys, @chronocrypto, as well as others.

What is BitClout?

On the surface, BitClout is a social media site most closely similar to Twitter in terms of engagement and interaction. That's where the similarities end though, as BitClout is more focused on creator coins and building your own value through them.

What are creator coins?

Every user who signs up for BitClout gets their own creator coin. These coins have no initial value and increase in value as people buy the coin. The value increases predictable (although exponentially) through a bonding curve. Typically an owner will buy their own coin to kick off the initial supply, increasing the initial price of the coin and creating their own initial holdings. After this initial purchase, creators change their founders reward percentage from 100% to some value typically around 10%. This percentage determines the kick back the creator gets when others purchase their coin. At 10%, the creator will get 10% of all purchases of their own coin.

Creators initially buy their own coin, but they typically will buy coins from other users they feel will be successful on the platform.

Creator coins can be valued as much as $31,000 for a user like Elon Musk. But here is where things get sketchy. Elon Musk doesn't actually use BitClout, but he has a profile, he has a Creator coin, and owns his creator coin.

In fact, many people own some of the coins that represent a $10M market cap.

I'll go over this in more detail later.

Typically users of BitClout will purchase a few of their own creator coins which can be purchased super cheap and raise the initial price of their coin, and then purchase other coins from creators they believe will do well on the platform ultimately creating a portfolio of creator coins. For a while you could only purchase coins with no way to withdraw, recently developments have created a few ways to exchange tokens to BTC and ETH.

Users have an incentive to offer value and engage with others to increase the value of their coin while discovering other potentially hidden gems on the network.

One thing unique with BitClout is the peer pressure to not sell your own creator coin, if you do, everyone who owns your coin gets notified and many will immediately sell if they feel you are no longer invested in the platform. This creates a hold forever mindset until you are absolutely done with the platform. Unlike Hive, you cannot easily sell off a little bit on a regular basis without risking a drastic reduction in price. You have to understand how BitClout prices creator coins.

BitClout creator coin pricing

Creator coins are not priced on by market demand. They are priced by how many coins are in circulation and use a predictable yet exponential pricing model.

For example, the first creator coin can be purchased for around 30 cents. The second will cost around $2.10. While the third is $6, with the fourth costing $11. By the time 50 coins are in circulation you are looking at a token price of $750 and around $3,000 at only 100 coins.

This is why it is in your best interest to invest in your own coin to initially raise the price but also get as many as you can before the price goes up. This is also why selling your own token will encourage others to do the same as the price goes down just as fast as it goes up. If you start selling, it is in everyone's best interest to sell before the price goes down too much. This creates a really interesting dynamic between creator and consumer.

It's not all sunshine and rainbows

While I've been familiar with BitClout for a while and been nudged to sign up quite a few times, there are some concerns I have that have made me question investing in the platform.

First off, for a long time you were unable to sell your tokens, so you could only buy into the platform but couldn't get out. This has changed in the last month or so and multiple options have sprung up to allow an exit. Although I have concerns how trust worthy they are.

Another concern is how you are locked into the platform unless you are willing to greatly sacrifice the price of your own coin.

There was a ninja mine, and it was pretty shady. BitClout has a max supply of 19M tokens, with 2M promised to the team as the initial supply. What really happened was 8M tokens (roughly 42% of the max supply) were minted in the initial pre-mine. This is a very unfavorable initial distribution for investors especially when shrouded with mystery.

Many users received a huge distribution of this initial supply with some accounts valued as high as $17 million dollars of free BitClout. BitCloud does have a lot of big name investors and these are likely a good portion of these accounts. Some examples are PolyChain, Huobi, Winklevoss Capital, Sequoia, Reddit Founder, BlockChange, and more.

BitClout created profiles for very well known celebrities and distributed part of this initial supply to these users. They also had these accounts purchase their own coins to raise the price of these high profile accounts to at least $15,000 each. Other users in this pre-mine also purchased these coins at early prices to have an unfair advantage if any of these celebrities actually joined (most didn't).

A bulk of the top rated accounts are either unclaimed celebrity accounts or pre-mined whale accounts.

The network is really small, the last 1 hour of all global "tweets" on the network consists of 15 posts.

There are some other questionable practices in the early days of BitClout (and it is still really early for the platform). The owners have stood behind their decisions, but these events raise a lot of concerns.

A lot of the conversation on BitClout is about BitClout. This is a similar problem Leo had in the early days that I spoke up about a lot. For Leo, this has changed a lot and I have seen a lot more mainstream crypto news on the front page. This may change for BitClout, but right now it can feel like an echo chamber.

Is it worth it?

I really don't know. I have been hesitant in participating but I do have an account. I have considered investing a small amount to kick start my creator coin and start using it as I would use Twitter and promote Hive in the process. I am highly skeptical and very reserved about how I feel about it. It potentially could be a great tool to attract like minded individuals to projects that interest me, or it could be a complete wash.

I do love the unique concept of every user having their own coin that it is up to them to create value for and maintain. This creates a unique incentive to offer value as your own worth is directly affected by how others feel about you. It is greatly influenced by popularity and may be difficult to break through the noise. Everyone who does buy into your token not only raises the price of your token, but also increases your own holdings of your token.

You are welcome to follow me as I may start posting soon and purchase a few coins to get my own net worth started and invest in a few other users.

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