Bitclout: Is it a SCAM?

I’m Andrew Levine, the CEO of Koinos Group where we’re building a blockchain with no fees, so developers can build all kinds of decentralized applications that are free to use, yes, including social applications like BitClout. We’re building Koinos based on the experience we gained working at a company called Steemit, as the core development behind the Steem blockchain which was the original “social media app on a blockchain.” 

In the following episode of the Koinos Group podcast, I talk about Bitclout with the founder of gFam, how it relates to our previous project the Steem blockchain, and how we're doing things different in Koinos to integrate the lessons learned working for years on the most used decentralized social media application in the world.

In this article I'll be exploring this topic a bit more because the amount of overlap between Steem and BitClout is actually astounding. Not just on the technology side, but also on the decision-making side of things.

Koinos + Bitclout?

If the people behind BitClout are genuinely interested in promoting decentralized, giving people more ownership of their data, and empowering people by eliminating unnecessary middlemen, then I wish them all the success in the world, in fact, we’d love to help them leverage Koinos to make their product even better. 

I don’t know anything more than anyone else out there, my goal is just to share perspective we gained from our experience at Steemit, the parallels I see between these two projects, which are many, and any potential red flags. 

Blockchains and Content

The first thing you need to understand is that blockchains are a really inefficient way of storing content. Blockchains are really good at keeping track of which digital tokens are in which accounts and ensuring that only one account can hold a given digital token at a time. This is basically the magical property that converts these digital tokens into a kind of money that can be traded on markets, thereby acquiring a PRICE.

In short blockchains have the ability to track the ownership of data. Because you have total control over those digital tokens, and no one can take that away from you, you OWN that data, which wasn’t something that was possible before Bitcoin introduced the blockchain database to the world. That’s the exciting potential of blockchain, but it’s still far too difficult and expensive for you to use this technology, which is why we’re building Koinos. 

The Focus on MONEY

In other words, the ability to create money is almost a side effect of the real value proposition of this technology, but it’s no surprise that once money is part of the equation, that seems to become all anyone can think about and I think THAT, more than anything on the technology side, has more to do with why people try to build social networks on blockchains. 

I think the founders of Steemit (and perhaps BitClout) genuinely wanted to spread blockchain adoption, but in order to do that they needed an application that people would actually use, and they needed money to fund all of the extremely challenging technical work that would be needed to scale a social application built on an extremely new technology. 

The Pre-Mine Strategy

So they picked a social media application and they built a blockchain that could store usernames, posts, comments, and that used people’s voting behaviors to distribute cryptocurrency rewards. They gave themselves a bunch of the tokens at the beginning which they would use to fund operations and the blockchain quickly became one of the most valuable in the world, eventually worth over a billion dollars!

This inspired countless clones, copies, competitors, and finally a takeover which resulted in yet another clone named Hive, that was created by the community members and is the real spiritual successor to the blockchain that we improved over the course of our tenure at that company.

Two of the improvements we were working on when we all resigned were features that would enable people to launch their own communities, and create their own cryptocurrencies that could be the kind of “currencies” of those communities. Sound familiar?

Nothing New

As you can see, BitClout is not doing anything new at all, which unfortunately means making many of the same mistakes as those who came before.  What we saw at Steemit was that how you launch matters. Do it wrong and you can create a cloud over the project that follows it forever. 

That’s precisely why there was no ICO or pre-mine of KOIN. That’s also why Koinos is not a social media blockchain, it is a blockchain that developers can use to build any kind of application they like, including a social media application with no fees. Koinos even contains innovative features that were developed based on our unrivaled experience building heavily used social applications. One of those features is called “passive data.” 

Keeping Data OFF the Blockchain

Applications can leverage passive data to enable users to share information with one another without adding that information to the blockchain. Since this information isn’t being added to the blockchain, users don’t have to worry about it being preserved for all eternity on a public ledger. It also decreases the size of the blockchain making it easier and less expensive to run.

Most importantly, because the action is much less expensive to the network, it will cost users much less which, when combined with the fee-less mana system in Koinos, will finally enable people to have delightful experiences on a blockchain. 

Does Bitclout have passive data? Do they have a plan for delivering a freemium experience which is required for mainstream adoption? I don’t know because I haven’t been able to figure out how to actually run their blockchain, or if it’s even possible. On the other hand you can run a developer preview of Koinos today and see our blockchain for yourself by going here.