Inflationary cryptocurrency and domain based identity: A recipe for a decentralized social network

Every day we set a new world record for the Internet adoption worldwide. This year there will be more than 4.5 billion active internet users. This constitutes roughly 60% of the world population. The Internet is bigger than ever but it is also the least free and the most centralized than it has ever been. The web is being dominated by megacorps that have one main goal in mind: to lock in as many people as possible into their walled gardens and to make the fastest buck by selling data about their identity, habits and desires.

People are becoming more aware of the real price that they are paying for the so-called free services. There have been several antitrust lawsuits, GDPR regulations, but these legal efforts feel somewhat heavy-handed and impotent. If there is hope for the future of internet it will not come from new laws but from the wave of new decentralized technologies that will have an antidote for centralization built in their architecture.

The internet is decentralized by design. The key components for the web layer of the net are decentralized servers with unique IP addresses and decentralized domain name system. The biggest flaw of the original web architecture is that it does not define how information on the web should be aggregated, published and discovered. This need for the missing protocol was quickly filled in by private search engines and social networks.

The appeal of centralized systems is that they are fast, efficient and beautiful. But the dark side is that they deprive users of essential freedoms to own their content and identity. Most of the world population are not very tech-savvy and would join the social network where their friends participate without giving it too much of a thought. So what could be the tectonic shift that would motivate an average social network user to migrate from a beautiful dopamine filled feeds to a slightly less efficient and less fancy decentralized product?

The answer is money.

Every day we spend time on social networks creating content. Everyone in the social network is a publisher, but the content is claimed by social networks. This in turn creates a perverse influencer economy where people have to sell-out because they can only get money from promotions but not from their own original content. A decentralized social network with built-in currency would be a game changer. A person could convert likes and retweets to actual money and make a living without selling out.

BitClout is a social network that aims to achieve similar goals, however it suffers from the bane of cryptocurrency-driven platforms: scams and speculation. BitClout is built with deflationary, pre-mined crypto currency. Every user has a token, with certain value that can go up or down depending on interest in it. So ultimately this boils down to a social network where nobody cares what you got to say. Everybody is only interested how much your token will be worth the next day.

In order to have a sane decentralized social network it has to be built with an inflationary cryptocurrency in mind. Every new user of a decentralized social network should have new coins minted and deposited to his own wallet. A member of the network could spend these tokens to upvote, like, repost content from other creators. A user would earn tokens from other people when they upvote his content. This would create a more healthy ecosystem, where early adopters do not have some sort of massive upper hand in the platform and every new member is equally appreciated. Inflation would incentivize people to participate in the network and spend their tokens instead of hoarding them.

Since account creation generates minted tokens this creates a problem. Somebody could spam new accounts, cause hyper-inflation and render the social network currency worthless. In order to overcome this problem account creation should not be free. This can be implemented by enforcing account identity to be linked to a domain name. The owner of a new account would have to prove that he owns a certain domain and this domain would be linked to his account on the blockchain. No other user would be able to claim the same domain. Since domain names are not free this prevents hyper-inflation of the cryptocurrency and creates a sustainable pattern where the value of the coin would be loosely pegged to an average price of a domain name.

If these measures are implemented then we will have created an ecosystem where everyone has an equal opportunity to participate in the network and earn real money for the content that they create. Using domain names to prove decentralized identity for the social network encourages everyone to own a domain name. This is well aligned with the original vision of the decentralized internet where every user is in control of their own identity and data. It could encourage more platforms to embrace domain identity as a standard authentication method and make your personal domain and website to become your user profile page of a global decentralized social network.