Social tokens are an emerging category of cryptocurrency that are based around a community or even an individual. This article will take a look at some social tokens, discuss the future of social tokens, and explain how social tokens work and their specific purpose.
What are Social Tokens
As mentioned previously, social tokens are a type of cryptocurrency based around a community or individual. But that does not tell the whole story about this interesting class of cryptocurrency, so here are some examples of how social tokens work.
Community Social Tokens
Community social tokens are what you probably think of when you think of a social token. These tokens are created around a community of some sort.
They are typically used to pay for a membership, newsletter, or other perks within a particular community. The benefit with social tokens used for a community is that the larger the community gets, then the more valuable the underlying social token becomes due to increased demand.
It’s a win-win situation for the founders of the community and the members of the community. Additionally, it provides financial incentive for those in the community to help grow the community.
Individual Social Tokens
Individual social tokens operate on the same concept as community social tokens with one main difference:
The community revolves around a single individual rather than a community.
For instance, an individual could launch a social token that allows holders of the token to receive a cut of their paycheck, vote on life decisions, meet 1-on-1, and any other perk that someone might want that can be incentivized by holding more tokens.
It’s an interesting concept that has been used by different individuals from celebrities to people crowdfunding projects. We will discuss some examples in the following section.
Examples of Social Tokens
Here are some of the more well-known examples of social tokens available. This list obviously isn’t comprehensive, but it does offer a good overview of the different social tokens.
Community Social Tokens
$SWAGG is a social token created for the SWAGG community, which is a sort of fraternal organization.
Anyway, SWAGG launched their social token in June that allows those that hold 400 SWAGG the ability to access the SWAGG Telegram channel. It also offers those that hold over 10,000 SWAGG the ability to vote on governance of the SWAGG community.
In simple terms, $SWAGG is a fairly standard governance token. The difference is that SWAGG is not primarily a cryptocurrency – it’s a fraternal organization that utilizes a social token rather than fiat currency for membership.
This is a new use for social tokens and one that we expect to only become more popular in the future as cryptocurrency becomes more mainstream.
$JAMM is a social token created by Brian Flynn to access his “Jamm Session” newsletter. Accessing the newsletter requires holding 1,000 JAMM tokens.
Personally, we find this an ingenious way to market and sell a newsletter for a few reasons.
First, it’s a little quirky and unusual, which adds an extra layer of publicity to the newsletter.
How many newsletters do you know that require purchasing a cryptocurrency created by the newsletter?
Next, it allows early adopters the opportunity to sign up for the newsletter at a good price. But it gets more interesting than that. Those early adopters may have more than 1,000 JAMM tokens, which means they can sell the additional tokens for a profit if the popularity (read: demand) for the newsletter increases.
That point leads us to the biggest advantage of using a social token for access to a newsletter. Subscribers have an incentive to tell others and advertise the newsletter. Why?
If demand for the newsletter increases, then the value of the social token increases. And those users must hold JAMM to access the newsletter, so they profit from the success of the newsletter.
It’s a win-win situation for everyone involved with the newsletter from Flynn to his readers. It’s an excellent way to sell a newsletter.
Individual Social Tokens
$ALEX is an individual social token founded by Alex Masmej. This was the individual social token that more or less created the space.
The premise goes like this, Alex Masmej was a developer that wanted to move to San Francisco to begin a career in cryptocurrency development, but needed money. He decided to create $ALEX as a way to crowdfund $20,000 to cover moving expenses.
So, what motivation would people have to invest in his social token?
Alex offered a 15% income sharing per year for three years after he moved to San Francisco. The cap is $100,000, so $15,000 total income shared amongst all the owners of $ALEX.
Not a bad return on investment if Alex can make $100,000 per year.
Even better, Alex offered holders of $ALEX the ability to govern the token, 1-on-1 meetings with him, and even the ability to decide on some of his life decisions.
It’s essentially a standard governance token, but with the ability to govern his life rather than the life of a corporation.
$ALEX is a very interesting concept and has seen some level of success drawing people into the concept of individual social tokens for those that are not celebrities.
Will Social Tokens Grow in Popularity?
Yes, the writing is on the wall for social tokens – they will only increase in popularity. The main reason they will increase in popularity is that companies will see that they can earn a little more profit with social tokens and they align benefits between customer and business much better.
You can view social tokens as a sort of stock investment in a community or individual. Holding a social token allows you access to governance decisions and the value of the social token increases as the community grows in popularity.
The biggest roadblock to mass adoption of social tokens, in our opinion, is that people still do not have a very good understanding of cryptocurrency. This has a big impact because people will feel a little uneasy purchasing a token rather than just paying with their credit card.
However, this uneasiness will disappear if (when) social tokens are adopted by a major community or business. Additionally, social tokens will become more popular as the younger generation grows up.
Remember, younger people have grown up with technology in their hand from birth – they have far less reservations about technology than previous generations.
This is especially true for when social tokens are launched for video games. In fact, video games serve as a great way to warm people up to the idea of social tokens in other aspects of life.
We offered a brief overview of social tokens with some notable examples and an explanation of how they work.
Again, the best way to view social tokens is by viewing them as purchasing stock in a community. Your tokens can increase in value only if the community thrives, just like a stock. The difference is that you can directly impact the value of the social token by helping ensure the growth of the community.
With all that in mind, social tokens will only become more popular in the future. We expect them to be the norm for communities within the next decade.