What is a social token?

As the life of digital currencies passes, the applications and complexities of this industry also increase. In recent years, we have seen the emergence of Non-Federal Tokens (NFT), Play to Earn, DeFi and Web 3.0 projects. These discussions have shown completely new dimensions of the capacity of digital assets.

Increasing the scope of digital currency functionality can slowly attract the uninitiated to this valuable industry and increase the general acceptance of assets based on blockchain networks. Social Token is one of the new and attractive achievements in the world of digital assets.

This emerging asset can create a completely new level of relationship between content producers and audiences in the social networking space. We can consider these tokens as a ticket to enter different groups and communities and benefit from the special benefits of these communities; Tickets that are not disposable and users can earn money by buying and selling them.

Read more: What is a non-fungible token or NFT?

Considering the importance and value that this new innovation has added to the field of digital currencies, in this article, we intend to explain the concept of social token and its uses and features. If you are also eager to know more about these digital assets, stay with us by continuing this article.

What is a social token?

A social token can be considered a type of digital property whose security is dependent on blockchain technology and allows creators, influencers, and brands to turn their services and experiences into a money-making business. This type of ownership can be seen as an asset that can be bought and sold many times and the passage of time increases its value.

If an influencer has a large number of followers on social networks and wants to consider some kind of membership fee for his followers, he can sell a special social token to offer special rights to members in return. These rights can include access to special gatherings with the presence of this influencer, live question and answer sessions, etc.

In this process, the influencer sells his personalized token and the buyer can access the benefits of this token. The advantage of social tokens is that the buyer can sell it again in the future with its benefits. In addition, the influencer can stipulate to receive a percentage of the token resale profit by creating a digital contract. This means that if an influencer’s brand or popularity grows, so does the value of their social token.

Read more: Play and earn; The best blockchain games

Social tokens allow content creators to kill two birds with one stone: on the one hand, to reward their community of fans, and on the other, to monetize the creative work they do. In general, the main buyers of social tokens are fans of influencers; But sometimes, artists may give these tokens to their fans for free.

Holders of these tokens are actually members of the community who have access to benefits such as video content or group chats or exclusive goods. Of course, it should not be forgotten that different levels of ownership can create different benefits. Since social tokens are usually in limited supply, increased demand also increases the value of these assets. By increasing the benefits, manufacturers can attract more fans.

It is interesting to know that the nature of social tokens and their mechanism has an old history. In 1997, David Bowie, a British singer, released a type of bond called Bowie Bonds. The support and value of these papers was the sale of this singer’s albums. Until 2007, the buyers of these bonds received an annual interest of 7.9% from holding these bonds. This property was so popular that Prudential Financial also invested $55 million in bonds.

In the middle of 2020, some companies and influencers went to initial coin offering (ICO) to collect the necessary funds. Although the reception of some of these IPOs seemed promising, the uncertainty surrounding these events tarnished the credibility of some of these companies and celebrities.

Read more: What is an Initial Coin Offering (ICO)?

We can consider social tokens as a transition from Web 2 to Web 3. In Web 1, we dealt with providing information from centralized platforms. In Web 2, users got the possibility to create content; But the management of this data was at the disposal of various centralized platforms, and now in Web 3 we see content management by users and decentralized platforms.

Social tokens can be seen as the brilliant result of the emergence of Web 3, which made content producers connect directly with consumers. It should be noted that these tokens are different from the bonds issued by David Bowie; Because there is no intermediary in between. At the same time, their offering is also different in terms of nature and community building for content producers with initial coin offerings in the world of digital currencies.

What is the use of social token?

The attractiveness of digital currencies is not hidden from anyone. Using this attraction can help content producers to attract more audience. For example, if you give your audience 5 or 10 social tokens for subscribing to a newsletter you publish, you can probably get more people interested in the token you’ve offered in a short period of time, in addition to increasing your newsletter subscribers.

One of the attractive uses of social tokens is to create communities and fan bases by selling access to specific content or joining a specific community. For example, a user may receive the equivalent of $5 from the project’s social coin by registering in a particular project or collection. Then, if this person refers another user to this pool, they will receive another $5 in coins. In the meantime, it is possible that other benefits such as access to the Discord channel or upgrading the user level will also be available to the token holder.

Creating and selling social tokens and offering reward programs using these tokens can become strong incentives for users of any collection to invest and raise more funds. Sometimes, people can become sponsors of specific content such as podcasts or newsletters by purchasing social tokens.

All social tokens regulate and implement certain rules by using smart contracts. For example, the token smart contract may be set up to create more tokens only when demand increases, thereby balancing the value of the token with supply and demand. For example, the Tilt social token (TILT) has a supply ceiling of 210,000 units; But only 90,000 units of this token have been released and another 120,000 coins will be released only if there are applicants.

Types of social tokens

There are different types of social tokens:

• Personal Token: These tokens are created by various people such as entrepreneurs or artists, and the purpose of these types of social tokens is to earn money from the created value. For example, one of the first personal tokens launched in early 2019 was the Boi Token (BOI), which was released by Matthew Vernon, a digital product designer, to monetize the time he spends designing.
• Participation Token: It is created to encourage people to participate in the events of a community. For example, the BitClout token encourages users to participate and increase activity in social networks.
• community token (Community Token): This token also encourages people to join and access different communities. For example, users who use Jam social token (JAMM), they can access the newsletter and the Discord group and other platforms related to the Jam Session ecosystem.

We should also point out that sometimes participation tokens and community tokens are considered synonymous; Because both focus on communities instead of individuals and invite users to have a stronger presence in a particular community. All in all, we can say that modern tools have made it easier than ever to tokenize communities. As social tokens become more widely accepted, more content creators can use these platforms to build their communities of fans.

Currently, social tokens are playing an important role in the ecosystem of content creators with widespread adoption among musicians and artists. As technology advances, social tokens can also attract more artists before making their way into the larger and wider communities of prominent publishers or online communities associated with brands.

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We can consider the next generation of social networks to be equivalent to the emergence of social money; A flow that is being formed with the help of blockchain technology. 2021 saw the release of some successful social tokens that have created a dynamic relationship between different communities and increased the adoption and acceptance of digital assets.

It seems that social tokens are slowly gaining ground among content creators and digital artists and becoming the online identity of social groups. These tokens can be a powerful tool for the strength of various societies due to the decentralized distribution of capital and power; Because community members are allowed to create their content and see the fruits of their efforts for the prosperity of the community by earning money.

While there is a lot of potential in social tokens and creating targeted business opportunities, we must not forget that these tokens still have a long way to go. Social tokens have a path full of trial and error ahead of them so that they can achieve a stable and solid position. Maybe this year is the right time to more seriously examine the capabilities of these tokens in order to evolve and win the trust of users.