KOL settled in, attracting $160 million, is BitClout a scam?

This article was published on BlockBeats.

After the intangible asset of cryptocurrency reached a new level of popularity through NFTs, a project called "BitClout" emerged at the forefront.

Comments on BitClout from social media are highly polarized, with some well-known accounts, suspected to be like Coinbase, participating, while some KOLs emphasize their disapproval of the project.

On March 18, Larry Cermak, the research director at overseas media The Block, published a suspected payment summary address for BitClout, 1PuXkbwqqwzEYo9SPGyAihAge3e9Lc71b (verified by OKLink that this is indeed a payment address), showing that the address has received over 2,700 Bitcoins, worth approximately $160 million.

What story does this $160 million project tell? Is it worth entering?

The latest data shows that the address has accumulated over 3,000 BTC.

Helping Celebrities Issue Coins

According to the white paper, BitClout claims to be an open-source decentralized social network and marketplace, asserting that it is completely open-source, "without company endorsement," allowing users to "speculate on celebrities and posts with real money."

Currently, the platform has about 15,000 Twitter celebrities (mostly KOLs in the crypto field) who have "passively created" accounts. If players are optimistic about a certain influencer, they can buy the corresponding celebrity coin (users need to use BitClout tokens to purchase, which need to be exchanged for Bitcoin).

If there is a clock icon next to the avatar, it indicates that the account is not verified on Twitter.

The funds invested by users can be shared by the account owner— the ratio is determined by the account owner. The platform defaults to 10%, meaning if fans purchase 100 BitClout, 10 will go into the account owner's wallet. The price calculation for celebrity coins is: 0.003 * (the circulation of the corresponding celebrity token)^2. Since the website is currently closed, we refer to an example from Twitter user "scriptmoney.eth":

The above screenshot shows: the circulation of this celebrity coin is 40.1274, so according to BitClout's pricing, it is 0.003 * 40.1274^2 = 4.83 (BitClout). At that time, the price of BitClout was $122.64, so the price of the celebrity coin was: 4.83 * 122.64 ≈ $592.

In BitClout's vision, Creator Coins are a new asset class linked to an individual's reputation, traded as assets rather than being tied to traditional companies or goods. In the white paper, creators believe that fans are buying not just ephemeral celebrity coins, but that these tokens could even be linked to rights to participate in meetings/discussions, message priority, paid advertisements, and likes in the future.

"What happens when you give people the ability to speculate on someone's reputation?" No one can be sure.

According to the above screenshot, if the account is not a forgery by someone with ulterior motives (there have been many accounts impersonating celebrities by modifying avatars and nicknames), currently, among the Top 10 accounts, there are verified accounts of Naval Ravikant, founder of AngelList, Chamath Palihapitiya, CEO of Social Capital, and Justin Sun, founder of TRON. According to "scriptmoney.eth," Justin Sun was not initially in the top ten; he registered and verified himself and purchased a large amount of BitClout to buy his own celebrity coin, which then pushed his ranking into the Top 10.

The Concept of Social Tokens

The timing of BitClout's emergence coincides with the explosion of NFTs and social tokens.

Many artists, musicians, and sports stars from outside the crypto space have issued a large number of NFTs through various channels, with not only cryptocurrency enthusiasts but also fans footing the bill, which is essentially monetizing their influence. Social tokens work similarly.

A creator can issue their own social tokens to earn more revenue and strengthen their relationship with fans, assigning value to the social tokens, such as requiring tokens to pay for article content, etc. This has also led to the emergence of many social token platforms that help creators issue tokens.

BitClout's cold start was quite aggressive, directly helping KOLs issue coins.

Logically, BitClout is a social token platform, which seems uncontroversial, but the aggressive cold start approach has generated considerable controversy.

The corresponding tokens for well-known KOLs were mostly issued without their authorization and verification, which is also why some KOLs have labeled BitClout as a scam. If users buy unverified celebrity tokens, they are essentially buying air. Even with celebrity verification, these tokens do not come with similar product or service guarantees.

Social tokens can indeed have investment attributes; imagine being able to invest in a singer's tokens before they become famous—this is inherently an exciting prospect. But the premise is that everyone recognizes the project, or rather, reaches a consensus.

On this point, the BitClout project still needs time to validate.

After all, the cryptocurrency industry is not short of experiments, and there are many projects similar to BitClout that leverage social dynamics for growth, such as HumanityDAO and CirclesUBI, but these experiments cannot be considered successful; they have garnered hype for a while and then faded away.

BlockBeats reminds that the platform does not provide a function for token exchange back to Bitcoin, and the BitClout website is currently temporarily closed, with the official statement that all funds are safe. Please invest cautiously and be aware of the risks.