According to Bloomberg
the Russia-based social media company managed to fundraise over $1.7 billion in
token sales between February and March of this year. The company plans to use
the proceeds to develop what it calls the “Telegram Open Network” (TON) powered
by its cryptocurrency known as “GRAM.”
Another mainstream social media platform that is rumored to be
planning an initial coin offering (ICO) is ask.fm. Ask.fm is the world's
biggest quality assurance platform, boasting over 215 million users and an
estimated worth of over $270 million. Rumor has it that the platform is
planning to introduce an incentive-based system where users will be rewarded
for their activity on the site.
Why Social Media Platforms Are Turning to Blockchains
One of the main reasons social media platforms are pivoting to
blockchains appears to be the mounting urgency for privacy and data security,
the threat of which is still fresh in everybody's minds, thus creating an
opportunity for innovation and change. Traditionally, social media platforms
harvest personal data from users for targeted marketing campaigns in exchange
for free services. In many cases, it seems clear to the public that their
data is misused, exposing them to harm.
A good example of this is the recent incident in which Facebook
allowed the political consulting firm, Cambridge Analytica, to harvest private
data and use it for psychological profiling. According to Business Insider, the firm used an
application developed by University of
Cambridge academic Aleksandr Kogan to access Facebook users’ private messages
for sentiment analysis.
To avoid such incidents, forward-thinking social media sites are
shifting from the centralized ad-based models to blockchain-powered ecosystems.
In the blockchain-based social media model, users will have full control of
their data and will be able to choose whether or not to share that data and
Another challenge facing the conventional social media model is
the rapidly changing face of big data regulation. In the past, governments in
the U.K. and the U.S. have shown increased interest in managing how advertisers
utilize personal data. For instance, in the U.K., stringent big data regulation
known as the General Data Protection Regulation (GDPR) is about to come into
effect. The law is expected to not only affect businesses in the U.K. but also
in the U.S. and other regions as well.
While the immutability of blockchain technology makes it somehow
at odds with the GDPR, its contribution to data privacy and security makes it
the best tool for users. Also, the few challenges between distributed ledger
technology and the GDPR can easily
be resolved, and
blockchain-based solutions can meet regulators in a satisfactory compromise for
Finally, the blockchain-based social media platforms are also
introducing other value-adding services for users. Social media platforms such
as Indorse and Synereo, for example, allow users to share their skills and get
rewarded in the process. Others are offering platforms where gaming communities
can interact, compete against each other and receive and share information
without fear of data scraping. All of this is being made possible by the
advancement of blockchains and smart contract technology.
With the steady decline of users on social platforms such as Facebook and Twitter, and
with most people opting for secure and innovative social media solutions,
blockchain-powered platforms are bound for exponential growth.