Social Finance: A Decentralized Creators Economy

June 11, 2021
Jonah Bolden
Share insight
Facebook icon
Twitter icon
LinkedIn icon

To utterly understand the cultural shift taking place, we must first look to history before we can look to the future.

It’s important to remember that the first commercial corporation (or company) didn’t exist until the 1600s. Essentially, there was a time where having a company with investors seemed counterintuitive and to an extent a non-necessity. Today, we’ve arrived at a point in history where we can speculate and trade on intangibles like innovative ideas, individual intellect, creative potential, and social reputation.

So what is Social finance or ‘SoFi’?

Social Finance is a sector that takes a framework from the old model, absolutely rips it to shreds, and introduces an entirely new, empowering, and innovative way to socialize, invest and engage with communities and creators by using blockchain technology. SoFi encompasses a collective of independent content creators, digital artists, curators, and community builders, such as social media influencers, daily bloggers, musicians, videographers, and the underlying software and financial tools created by developers that assist the creators in growing and monetizing their content.

We as humans are social beings that seek out niche communities of like-minded people. Social desires are inevitable, they are how we have come to evolve and are deeply coded into our DNA. Throughout history, humans have developed tribes for thousands of years. Open-access infrastructure and the creator's economy advances on this to allow for anyone to create tangible or social value. Consider a financial analyst turned SoFi curator who only shows his portfolio positions to his top 10 token holders (investors), these token holders then clone his positions on their own portfolios for a speculative return on investment in order to create some form of tangible worth. Anyone around the world can now dedicate time and effort to becoming a token holder of SoFi creators, apply the insights provided by these creators to their own portfolios, and generate financial returns for their families via the monetization of intellectual capital through social tokens.

As social beings, we tend to idolize and revere individuals who discovered some new trend applied it into the real world, and benefited financially. Angel investors who supply financial capital in seed rounds for the likes of Facebook, Google, Stripe, and other tech firms are revered for their ability to spot talent early (realistically, it could also be a case of ‘right place right time’ as luck tends to play a big role in all financial returns, we just deny it). Every day consumers make similar investments of their time and capital into digital artists, Twitch live-streamers, and other creators. With personal tokens tied to these creators, early fans and fast followers may gain social status for their ability to spot early creators and investment prowess. Ultimately, creating a positive incentive mechanism for both the investor and the creator.

Fellow Athlete, Spencer Dinwiddie, was one of the first to experiment with SoFi and self-securitization by founding a blockchain-based social platfor creators to monetize their value via a social token. Initially, Dinwiddie experimented a little differently, he essentially tokenized his entire NBA contract, which would allocate interest to buyers who bought his tokens. Dinwiddie would accept money for his NBA deal from investors upfront in return for digitized shares of the contract while also confirming that he will offer extra incentives to any of the newfound digital asset holders.

Today’s investment criterias have devolved to define only a particular set of things as financial assets, ultimately limiting the monetization of human creativity. For example, we buy, sell, and invest in things like companies, property, and commodities and have grown accustomed to believing that these assets only hold value because they are physically tangible. SoFi, on the other hand, monetizes a person’s or a project’s reputation and intellectual potential. In other words, it converts intangible assets into tangible assets that can be bought and sold by anyone, anywhere, anytime.

On the surface, this shift toward the financialization of people may appear insignificant or even harmful to society as a whole. To be completely honest, at first, when I saw dollar signs next to a profiles handle, it seemed a little off-putting to me to associate humans with a monetary value, like something entirely against my ethics and morals — then more questions started to arise like, what if I don’t buy my family members coins? Or what if I don’t buy my fiancé's coin? However, as I experimented and created a profile for myself to engage with other creators, I learned more about SoFi as a whole and developed a much clearer vision for what the future holds. In turn, I’ve become increasingly aware of the unlimited potential of emerging possibilities.

Firstly, only a tiny percentage of people own assets in today’s world. SoFi gives fans, followers, and customers the ability to easily own their favorite products, employees can easily own their companies, friends can easily own each other, and everyone can easily own themselves. This newfound ownership creates an entirely new source of wealth and alters how fans, friends, and employees socialize.

Secondly, let’s assume you meet someone really talented and ambitious. Previously, the only way you could only invest in them was if they had a business and offered shares. Today, you can now invest in them directly, in a peer-to-peer fashion, and almost instantaneously. It also creates incentives for people to start incubators that provide free support and capital in exchange for ownership.

And lastly, in Web 2.0, creators earned significantly less than the value they provided to the world. Some even created content purely because they love doing so without worrying about monetary gain (aka for free) and are exploited through oppressive contracts. For instance, let’s talk about the top music streaming platform in the world, Spotify. With 166 million premium subscribers worldwide and revenue of over $9.4 billion in 2020, Spotify continues to proliferate as a leading platform for artists and has the potential to guide cultural change and empower artists; they simply choose not to.

The music industry is overflowing with content, but numerous artists commonly complain about not being compensated adequately, even though Spotify claims to pay rights holders an average of $0.006-$0.0084 per stream. Labels and publishers typically receive 50%-90% of that revenue, this leaves 10% to go towards the artists who created the work. As a result, the top 1% of the 2 million artists now on Spotify earn 77% of total artist revenue — Link. This means although a user could’ve never listened to the most-streamed artists' songs, the fact these artists have the most streams allows for them to receive a dedicated portion of Spotify’s subscription fee revenue.

With their digital fluency, Gen Z is leading this behavioral shift, articulating nothing less than a new paradigm for digital experiences. At the heart of this new paradigm, both in life and in technology, is a set of values—connectivity, social interaction, transparency, authenticity, and a desire to make a positive difference in the world—that will undoubtedly influence behavior, technology, and society in radically new and exciting ways. If our generation of auto-didact's and entrepreneurs discovers that something does not exist, we will not wait for something to happen or others to act on it. We will develop it ourselves, make mistakes, engage with the community, make it better, fail, and repeat.

Ultimately, as power returns to us, the creators, new, decentralized platforms will emerge, where control rests not only with the creator but also with the community they have created and dedicated their time to building. Instead of using Patreon to raise funds, creators will use decentralized social platforms like Bitclout to mint their own social tokens and at last, completely own their content.

next article