a look at the mechanics of money in web3

Social media is undergoing seismic shifts and we are likely to see the emergence of new tech kings and queens to replace the old guard that is FB, Twitter, and others. But why would I want to replace what already works? I mean, sure, we can complain about toxicity and algorithmic polarization providing the last resort for stickiness. It’s not working but it’s somehow chugging along. So what?

Micro transactions changed the game

One of the most consequential changes that web3 brings is micro and nano transactions. When we build software that sits on top of a protocol with its own “currency”, things start happening. Some you’d predict and some come as surprises. But it's not just micro stuff, even brick & mortar old-school retailers are suffering. Just earlier today, I went by the dry cleaner’s to pick up some clothes and saw this posted.

Credit card processing fees vary greatly, depending on the risk assessment of the business and their record. You’re looking at anywhere from 1.5% to 3.5%, so I already have some questions on why my friendly neighborhood cleaner thought it was a good idea to make that surcharge 3.99%, but a lot of times companies charge an additional ‘fixed’ fee of $0.10 to $0.50 to the percentage. For example, Stripe charges 2.9% + $0.30 per transaction.

You can see where this is going, right? It’s impossible to run a business with micro-transactions when you’re paying this much per transaction. Removing only this obstacle alone opens up the doors for a wide array of utilities that we never considered were possible before.

The middle-men will crash the party but it’s ok

I did not forget the removal of the middle-man in this equation, but I suspect that with maturity of web3, we will see new middle men inserting themselves into everything we do. So, instead of romanticizing about the idealism of web3, we pragmatically consider the practical applications.

Diamonds are every user’s best friend

Tipping has been introduced by many social media companies, but tipping is a one-way transaction that in my opinion, feels like the guy jumping in front of your car in traffic to wipe the windshield with a dirty rag, then asking for a tip. It seems to work well for webcam girls, making an average of $58/hour.

Is that where we want to be? I hope not.

DeSo, an L1 blockchain built from the ground up to decentralize social media, offers a new way. Diamonds are likes with monetary value.

Ignoring the fact that the first diamond on the left is $0.001, the idea is simple. I like something and I ‘diamond’ it. I don’t have to think so hard about a $0.001 diamond. Sometimes I’m impressed and tip $0.05. They’re not transactions I agonize over. It could be a post I agree with, or an insight I had not thought of before.. or something that made me laugh. It doesn’t matter what my reasons are, what matters here is how easy it is to do this.

So what? Snapchat has been offering tipping since May of last year. But this is a mono-directional way of engagement. It’s this assumption that creators are coming with loudspeakers addressing an audience in a Colosseum.. and the crowd roars in appreciation, handing tips of $0.99+

Diamonds identify as bi

There’s something to be said for the bi-directionality of diamonds. Creators can diamond comments. Anyone can diamond any piece of content. How is that useful? We have to consider the creator who’s just starting out.

I want you to consider what would happen if you started diamonding comments to your posts, in a more intentional way beyond the $0.001 default. Let’s say you default your diamonds to $0.05 and every now and then you award $0.5 or $5.

The result will be an improvement in the quality of engagements. Follower count goes up. Engagement goes up. It’s a two-way street as it should have been from the beginning.

The chat bot experiment

With the release of ChatGPT, everyone was eager to experiment with it. All @AskAI did was pass back the results of questions being asked. What happened next is that people would share the answers they found.. some for novelty and others for comedy. Users found it engaging and so they would diamond the chatbot’s posts.

This resulted in earnings of $47, purely from diamonding posts. It doesn’t have to be an AI bot, but I hope that you can see how this can open up the doors for all kinds of applications leveraging social networks to communicate and transact.

But wait, there’s more!

It doesn’t have to stop at diamonds now, does it? What if you liked this project and wanted to invest in it? Imagine being able to seamlessly contribute in a raising fund they may have, or invest in them without it being a raising round.

The applications are truly boundless, but if you’re up for a slightly longer reading, you can start here.

Until then, diamond away!