More than half of the world spends an average of two hours each day on social media platforms, whether for entertainment, leisure, business, or other personal reasons. The immense impact of this massive industry cannot be ignored, as it has become a part of our daily lives and, for some, a second life.

Social media is the core foundation of web 2.0. However, the social media space as it exists today is fundamentally flawed. Most powerful platforms sell the user data they collect during registration to track their search and history and provide them with increasingly unwanted advertisements.

However, an innovation based on blockchain technology has the potential to revolutionize user data privacy, ineffective algorithm sequencing, unnecessary content censorship, and the monopoly that afflicted the web 2.0 social media network. Hence, the emergence of SocialFi.

What is SocialFi?

SocialFi integrates and combines decentralized finance (DeFi) and social networking on blockchain technology. SocialFi platforms provide a decentralized method for developing, operating, and owning social media platforms and the content provided by their users. The decentralized system, which emphasizes that a middleman does not manage the network, is a critical element of SocialFi. This has the effect of improving SocialFi's ability to safeguard users' personal information and privacy.

Unlike traditional Web 2.0 social platforms, which are managed by a centralized authority and store all the data on a single server, SocialFi platforms distribute the data throughout a network of nodes and offer greater privacy and security for users' data. Thus, everyone who helps maintain the platform's functionality is monetarily rewarded and equitably shares advertising profits. As a result, overall security improves because data breaches are reduced, and single points of failure are eliminated, thereby offering a more beneficial user experience.

Furthermore, with the help of SocialFi, content creators can efficiently harness the strength of the brand they've established for significant financial gains. With the combination of social tokens and NFTs, content creators would have the option to profit directly from their social influence.

What Makes SocialFi Necessary?

Big corporations dominate traditional social media, and in the past, there have been reports of security breaches and privacy violations. Aside from data control on a single server, users are the primary data producers for these large organizations. Many sell data without the average user's knowledge while profiting off the underlying social data with little benefit to users.

For example, a popular Twitter user, or Twitter influencer, sends out a tweet and obtains many interactions in the form of likes and retweets, which can number in the thousands, if not tens of thousands. But the only compensation he receives is the tweet "blowing up" and acquiring extra attention and popularity. Nevertheless, Twitter will earn from user traffic and advertising. Twitter is the only party to benefit from the influencer and his supporters' effort to build engagement.

However, advertising profits on SocialFi are equitably distributed, implying that a content creator such as a Twitter influencer might earn more money from their content through advertising on SocialFi networks. SocialFi has created a networking approach that protects users' privacy and security while also providing them with greater control over the content they post. SocialFi allows users to earn money from their content and decentralized activities such as minting NFTs, converting crypto, and gaming.

The ecosystem network token, Social Token, is given as compensation to SocialFi participants, including content creators, celebrities, supporters, and followers. This token serves as a community token that enables participants to vote on proposals and determine the project's progress, much like decentralized autonomous organizations (DAOs).

What are Social Tokens?

Social tokens are digital ownership protected by blockchain, enabling the ecosystem participants to monetize their content, experiences, or services. This ownership becomes an asset that may appreciate in value or be sold. As a result, social tokens are an innovative way to recognize and reward creators whose work entertains or educates the public.

Like cryptocurrencies, social tokens are decentralized and created on top of a blockchain, usually the Ethereum blockchain.

The three main categories of social tokens are personal tokens, community tokens, and social platform tokens.

Personal tokens: Personal tokens are tokens given by a personal influencer brand to establish a more direct and close relationship between creators and their audience. Influencers and public figures create these digital assets in exchange for labor and services.

Community tokens: These tokens are intended to attract community members by providing access to premium content and benefits, such as early access to new resources and participation in private events. The communities formed by social tokens are also active in the investment field. They can pool funds through voting processes and smart contracts to find and discover investment options.

Social platform tokens: These platforms aim to challenge the dominance of sizable, established traditional social media platforms. As a result, the token system enables content creators to be compensated more fairly for their work. In addition, the social network application will increase social networking and expand possibilities for creators of social media platforms to monetize their work.

Final Takeaway

One common objective across almost all blockchain projects is to hasten the widespread adoption of blockchain and cryptocurrencies. SocialFi could be the project that makes it so, as it involves the daily use of an engaging tool.

Users and content creators now have the freedom to post whatever they want without worrying about being banned or censored. Moreover, the shift to Web3.0 is a game-changer in which content creators will officially use the "influencer" term to identify as a career job, and brands will be able to redefine themselves as decentralization fully evolves.

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