Decentralized social media.
Is it the next big thing?
I mean, this guy seems to think so, but does this
mean that we should invest in one of these new platforms?
I mean, he does know a thing or two about making money.
A bet on this is a bet on
how humanity will communicate with one another.
It's a bet on the battle between
the average person and massive corporations.
And this all needs to be
figured out before it's too late.
Elon is an expert at getting the
masses to do his bidding for him.
Want to start a whole boring company?
Fund it with flamethrowers.
Want to sell a chunk of your stock?
Get the public to make the decision for you.
So when Twitter went on a censorship streak in March,
Elon naturally had to get in on the action.
He created a poll asking if people believe that
Twitter adheres to free speech, then proceeded to ask
if the algorithm should be open source.
The overwhelming majority indicated
that change is needed.
Musk's business senses were tingling, so he tweeted
asking if a new platform is needed.
But this led to a surprising response.
His comments began to fill with requests that
he buy Twitter instead of building something new.
And just a few days later, an SEC
filing revealed Musk purchased a stake of Twitter.
This is big.
He's now the largest shareholder.
To put this in perspective, the founder of
Twitter, Jack Dorsey, owns 2%, Elon 9.2%.
So what's next from here?
Some people think Elon is dangerous.
He's this loose Cannon who will
tweet whatever's on his mind.
They're worried about the danger of free speech
and think that Elon will exploit his power
as the top shareholder to spread misinformation.
Others think Elon is a genius.
Sure, a controversial genius, but one who
seems to be able to build businesses
better than anyone else on the planet.
Or maybe he's just bored.
Either way, this has spurred discussions
about making social media platforms decentralized.
That phrase "Decentralized".
It gets tossed around a lot.
But what does it actually mean?
Decentralized social media.
The idea is you get a Facebook or a
Twitter with more user control and less central authority.
Right now, social media Giants own their servers.
They host everything you see
when scrolling on your timeline.
And this is for a reason.
It's the most efficient way to operate.
They make more money as a result.
But this has a curious side effect.
It also means they have a lot
of power over what's said online.
And what's said online
is basically humanity's conversation.
Do we really want a few companies controlling this?
The decentralized Web is a system of independently
and privately owned computers that work together to
provide private, secure, and censorship resistant information.
Let's look at one of the top
performing decentralized social media apps, Minds.
Minds is a Facebook alternative where
you can quote, speak your mind.
It's like Facebook, except you
can say whatever you want.
Minds utilizes blockchain technology, and they even have
their own crypto token, the Minds Token.
This means users can help host the platform and
own a piece if they so choose to.
In 2020, Minds launched an initial
experiment called the Minds Permaweb.
This was interesting, a community owned web that anyone
can contribute to or get paid to maintain.
It's a solution that incentivizes users to
store and host their own content.
So now you have an idea of how data
is stored and hosted on a decentralized app.
But what's it like to actually use one of these apps?
I decided to try out Mastodon.
Mastodon is the decentralized version of Twitter.
However, instead of Tweeting, you make Toots.
The basic functionality seems pretty good, but for a
new user, it gets a little bit confusing.
If you come across the toot that you particularly like,
you can star it, or you can boost the toot.
The terminology needs some work, but boosting a toot
is the same thing as retweeting on Twitter.
However, while it looks very Twitter-like
on the surface, it works quite differently.
Mastodon is made up of
individual servers called instances.
This has some interesting consequences.
Each instance is almost like
a separate social media site.
They have their own rules, moderation, and community.
However, different instances can still
communicate with each other.
Think of it like cell phone networks.
You have Verizon, I have T-Mobile.
Even though they're different companies with
different plans and rules, you can
still text me over the network.
What this means for Mastodon is the social media
experience can be whatever you want it to be.
Macedon has no control over instances because they're
hosted separately, so you don't have to worry
about the political affiliation of Mastodon or worry
that you may be censored. Hold on a second.
You're probably thinking it can't just
be a free for all.
People are just too messy for that
to work, and you'd be right.
There's a dark side to all
this that we're going to discuss.
But first, how was my experience on
decentralized social media out the gate?
It was a little confusing. For something like Twitter,
you can pretty much open an account
and understand how it works immediately.
For Mastodon, I had to read a ten page
guide to understand the fundamentals of how it works.
They have the regular feed, they have tooting.
They also have those instances which are separate
servers, but also there's the Fediverse or Federation,
which is basically a link between different instances.
It's a lot to get into at first glance,
and this is an issue that I frequently run
into with decentralized services and blockchain based applications.
They're often overly complex for the average user.
In order to use Google Chrome, you don't
have to understand how HTML works, and that's
exactly how most people want it.
So likewise, the average user doesn't want
to read a guide on the Fediverse.
Now, the issues with large scale decentralized
services aren't exactly a new problem.
The Internet, when it first started, was arguably decentralized,
hosted by tons of entities across the world, but
it was also extremely unfriendly to use.
The pre-web internet was mostly text on screen, and
in order to see something as simple as a picture,
it needs to be downloaded onto your device.
And of course it was much, much slower,
but it was a whole lot freer. We didn't have a few
companies controlling everything.
On this, Jack Dorsey tweeted,
[on screen]
The point is that there are many parallels
between the early web and current decentralized services.
They're both the Wild West : new, but
not yet built for the average user.
Dorsey is talking about the fact that
many early web systems protected privacy and
were, in a sense, decentralized.
Usenet, for instance, doesn't run
on a centralized server.
Since then, and especially in the last
ten years, the Internet has been moving
in a rapidly centralized direction.
But why is this?
It seems to be the opposite of what most people want.
Well, centralization does have a few key advantages.
See, there's a problem with moving massive
amounts of data between millions of devices.
It's not easy.
When things are complex, specialization sets in.
People and businesses become experts at one
small slice of the problem at hand.
To obtain a competitive advantage, providers
of these services will often merge.
Larger organizations with specialized engineers can then jump
on new opportunities easier than smaller ones.
This then cranks the wheel even
further to promote more centralization.
Centralized services can scale dramatically,
but it's not all good.
Centralized services rely on storing data in
their own servers, servers that they control.
This can be dangerous for a few reasons.
One major con is it's easier to hack.
What do Bill Gates, Joe Biden,
and Kim Kardashian have in common
besides all having questionable video recordings? They're all
enemies of 18 year old Graham Ivan Clark.
He pulled off one of the biggest social media hacks of
all time and is now serving a few years in prison.
Can you imagine?
He could have literally set the world on fire through
these accounts, and instead he just packed a few high
profile accounts and set up a simple scam telling people
to send money to his Bitcoin address.
Then we have the issue of content moderation.
Centralized servers have a problem, if they allow anything
to be said on their platforms, they can be
blamed for promoting illegal or immoral content, causing them
to lose advertisers and lose money.
Because of the centralized services tend
to be a bit censorship happy.
If something is on the fence of
political correctness, they find themselves better off
just being strict and banning the content.
This of course is at the expense of total free
speech and a huge complaint many have with these services.
The problem is everyone has a different opinion.
Let's try an experiment.
Do you think internet trolls should be
banned from social media? Comment down below
whatever your opinion is.
And this isn't just a problem in the
centralized space, decentralized applications run into the
same issue, but actually compounded. If certain groups
of people were being blacklisted on traditional social
media sites where they're going to flock decentralized
social media where they are allowed.
And this can drive out normal users who
would just like a little bit more freedom.
So what do they do? On Mastodon,
they take a bit of a creative approach of
letting different servers come up with their own rules
and enforcement as well as personal filters.
Sick of seeing Will Smith memes or
something overly political? Filter it out.
But what if something blatantly illegal or
harmful is being done on their platform?
There has to be some kind of recourse, right?
Well, there's only so much that they can
do when they don't own the servers.
One method is by banning questionable groups from showing
up in directories, so they're harder to find.
But of course, this is far from perfect,
and content moderation is still a massive issue
on Macedon and other decentralized services.
So decentralized social media is generally more difficult
to use and still has many of the
same issues classic social media has.
So why use it? Why care?
Well, there are a few advantages.
First, it's open source.
This means people with a bit of
technical know how can actually see what's
happening under the hood in the code.
This kills services like Twitter and generally means that
you can be totally sure that you're not being
spied on or having your data collected.
Second, there's no single owner, so you don't
have to worry about some kind of built
in bias or agenda being filled.
Third, there's no advertisements or tracking.
Now, this is a bit of a double edged sword.
In a perfect world, there would be no
ads on anything, but people don't love paying
for content, and ads fill that gap.
For example, I couldn't afford to make
these videos without ads. On Mastodon,
servers are primarily run through
donations and Patreon memberships.
And as you can guess, this kind of business
model is going to have a hard time competing
with a Twitter or a Facebook who profits millions
of dollars daily in ad revenue.
And this brings up a good question.
Given all the pros and cons how is
adoption looking for decentralized social media? Like Mastodon,
facebook started out as a nobody.
It was just a networking app for Harvard students but
just five years later the entire world was using them.
Mastodon is now six years old and if you
went down the street asking people about it they'd
have no idea what you're talking about.
The problem really comes down to
friction and the network effects.
Our current social media is engineered to be
so insanely easy that billions of people can
use it and everyone is on it.
This is a weird paradox.
Just about everyone you talk to has issues
with social media yet we still use it.
Why is that?
It's because despite obvious issues it's
still the best we got.
If you're going to leave Twitter for
something else it's got to be leaps
and bounds better to make that transition.
That nut just hasn't quite been
cracked yet in decentralized social media.
Now there are promising projects coming out in the
space like DeSo and the Lens protocol and there
are even projects like Theta and Audius that integrate
with current social media in a decentralized manner.
The way I see it is we might see a surge
of short term hype and price appreciation for these projects given
the interest from people like Elon or Dorsey but the tech
has a long ways to go. From here,
if you'd like even more insights like this, my
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That's going to do it for today.
I'm Max Maher and I hope you have a profitable day!