16. What are Social Tokens?
Social tokens are the next milestone in the cryptocurrency industry. They are often confused with NFTs, whereas they have nothing to do with them. So, what is their definition? What is the trend for social tokens, and why are they so valuable lately? Let’s find out the details!
Social tokens are a form of digital ownership, secured by the blockchain. Using them, creators/influencers/fashion houses/famous brands can monetise their services or experiences.
We know-the definition is a bit complicated, so it will be simpler for us to explain it with an example. Barack Obama wants to run for president again. He builds a group of his supporters and creates social tokens. Then those who come into possession of such tokens are entitled to Q&A sessions with the future president, his photos, handouts or many other accesses. In addition, Barack Obama can resell such a token as an asset. He then enters into a digital contract with the buyer and can even profit from a percentage of the sale, if he includes such a provision in the contract. Can you see the pyramid effect? If Barack Obama’s personal brand grows, the benefits his token is able to provide will also grow in value.
Social tokens are fully decentralised. They are created using the same model as the popular and familiar cryptocurrencies. At the same time, the blockchain effectively secures them.
There are two types of social tokens:
Personal/creative tokens. These are created by individuals. They are usually popular artists, public figures, singers, painters, actors, or entrepreneurs.
Community tokens – something like membership cards. They are created to gain greater access to a particular community.
For an even better understanding of the topic, we will give you some examples: Sting creates a social token so that his fans will invest in his career.
Doda, sells a social token that will give you access to daily, private conversations with her.
Lewandowski is creating his token to help him monetise his personal brand and will benefit his fans.
The Shiba Inu community is selling a social token that allows access to a private Telegram.
This can be resold when a community member decides to leave.
Community tokens vs. NFTs
Tokens and NFTs are based on the same concept. However, the difference between the two is child’s play. NFTs monetise the digital work, while community tokens monetise the creator/service or artist experience itself. Of course, the two aspects can be combined. An up-and-coming modern painter can create an NFT of his painting and monetise his art in this way. At the same time, he or she can make money by releasing a social token that gives its holder access to, for example, art lessons with the artist.
∙ Given that tokens are created on the blockchain, the possibility of fraud and fraudulent transactions is virtually impossible.
∙ Creators have the opportunity to multiply their income.
∙ Fans of a particular artist can buy social tokens, treating it as an investment. Admittedly – a bit risky.
∙ Social tokens will be an essential part of Web3.
∙ They bring artists and their fans closer together, making the community of a given artist more engaged.
∙ They build new financial opportunities for companies.
∙ They offer the possibility of long-term profits.
How are they created?
Social tokens are created on the Ethereum network, in the most popular ERC20 standard. They are easily tradable, which is why they can be found on exchanges such as Uniswap or Sushiswap. They are characterised by a rather volatile market price, as they have a predetermined value.
You have already seen what social tokens are and how they work. They still have a long way to go before they are popularised. They are often criticised as a ‘weapon’ by which someone buys into the favour of belonging to a particular group. Is this really the case? It is worth following this trend and keeping up to date with it.
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