A Blockchain-Based Experiment In Content Monetization – Hive

The first major evolution on content monetization was the internet. Before internet, making money on your content was relying on slow and limited routes. If, for instance, your content was writing, you would have to spend months having your book published and wait years for your royalties. Or, at best, you could make some recurring income by writing in a newspaper or magazine. Making a “brand” out of your own name, out of your life experiences, would have take decades. Other types of content, like music or videos, would have take even longer.

With the internet, the “democratization” of content exploded. Now, any individual could monetize his content literally in seconds. The link between content and audience was, technically, instant. Of course, you would still have to build your audience (something that before was done by publishing houses) but, hey, you now had full control over the process. A brand new “species” of content providers appeared: bloggers, instagramers, youtubers, and a few others.

In this new ecosystem, money are flowing in two ways. First, from advertisers, or people willing to associate their products with your content. And second, from people buying your content in various forms (subscriptions, one time payments, etc).

This content monetizing (re)evolution took about 15-20 years. The first major bloggers or individual content providers appeared roughly between 2000-2005.

The Current Revolution – Blockchains

Things are in constant movement, and the way people are monetizing content on the internet is already starting to become obsolete. There is another revolution taking place. I’ve been fortunate enough to witness it during the last 3-4 years.

I will try to give a brief description of the technicals, then I will give my 2 cents about the far reaching implications of this new model.

The Beginning – Bitcoin

10 years ago, a pseudonymous developer, Satoshi Nakamoto, published the first blockchain, an online tool which is both a money exchange medium, and a store of value. The “token” of that blockchain, or the “money” you can generate, use and transfer from that blockchain, was called “Bitcoin” and it became the de facto definition of blockchains out there. When people refer to blockchains, they say most of the time Bitcoin, which isn’t quite accurate. There are many different types of blockchains, both form technical and governance point of views. I won’t go into details.

The key points that you need to know about a blockchain are:

  • they are decentralized (they’re not owned by a central entity)
  • they are both transfer and storage mediums: they “generate” tokens and allow the transfer of these tokens
  • they are distributed – a blockchain is made by a number of “nodes”, which are computers running the same version of a specific software – this software contains the governance (see below), the tokenomics (how tokens are generated) and the ledger (the history of all transactions from the genesis block)
  • the tokens generated by blockchains have a value generate by supply and demand, and, in this respect, they are just as “money” as your 10 dollar bill is
  • they have different “token printing” models (tokenomics), but all these models are transparent and you know from the beginning how many tokens will ever be printed – usually, this number is fixed in time, and it cannot be modified outside the consensus (governance)
  • they have different governance models, meaning the transactions are validated differently, but all these models are attack-resistant and enforcing immutability (the transaction ledger is the same for everybody)

The Start Of Hive

Almost 4 years ago, another blockchain was launched. Its initial name was Steemit, but it’s now known as Hive. The biggest innovation was that on top of tokens and transactions, this blockchain was also storing content. So you can actually start to write something (a blog post, an article, a tutorial), and not only that will be stored immutably in a distributed, decentralized environment (which means it’s uncensorable) but you could also generate revenue.

Here’s how you generate revenue on Hive.

First of all, this blockchain generates tokens (out of “thin air”, just like Bitcoin, or Dollars, or Euros) called Hive tokens. Hive is an inflationary token, meaning every day a very big amount of tokens is generated. This inflationary curve will last for about 18 years.

Second, these tokens are distributed like this:

  • a part is for the actors maintaining the blockchain (called “witnesses” in Hive lingo)
  • a part is put in a development fund (which can be distributed for various new features or bug fixing)
  • the biggest – and most important – part is put in a so called “reward pool”, that is distributed to people creating content on the Hive blockchain)

The Hive governance model is called DPoS (Delegated Proof of Stake), which means everything is voted with the amount of stake you have (the amount of tokens you own). Things are even more complicated than that, but for the purpose of this article, that’s all we need to know for now. So, witnesses are voted, and their reward is based on their rankings (witnesses voted by more stake get higher ranks). Also, proposals for the development fund are voted, and when they reach a certain threshold, funds are automatically disbursed.

And, with that, we get to how the “reward pool” is working. This pool is made of 2 parts: content creators pool and curators pool. Content creators are those who publish content, and curators are those who upvote a content. Every time a vote is cast on a content, a part from the reward pool (proportional with the stake of the voter) is “allocated” to the voted content. A part goes to the content creator, and another part goes to the curator (to incentivize people to rate content, not only to create). After 7 days, the funds are distributed, and both the content creator and the curator are getting their HIVE tokens in their wallets.

Now, the most important part is the “vote by stake” one. That means if you get a vote for a user who has a big stake, that vote will dislocate from the rewards pool a big part. If you get a lot of votes, but from users with a significantly smaller stake, a significantly smaller part from the rewards pool will be dislocated. Consequently, if a voter with a bigger stake votes something, his curation reward will be bigger.

And that’s how, generally speaking, Hive works. If you want to see my activity there (I’m both a witness and a content creator), you can follow this link.

The Far Reaching Implications

First of all, congratulations for making it that far in the article. I know that the technical details can be daunting and there is a steep learning curve, but it’s well worth it.

Second, let’s see a few implications of this new way of monetizing content:

  • revenue generated by content is not linked to a certain “traditional” economy (you’re not getting paid in US Dollars, or in Euros), but to a specific community, with its own token
  • revenue generated is dependent on the financial value of the reader, not on the “intrinsic” value of a post. If someone “rich” upvotes your content, you get “rich” too. This creates situations in which people can acquire vast amounts of tokens and then redistribute them arbitrarily, just to “milk” the rewards pool. It’s one of these processes that have to be self-regulated, in time. Hive / Steem went through quite a few periods of “rewards pool milking” and each time they found some solution to it (again, not going into details)
  • revenue generated by content is not only related to the value received by direct appreciation (upvoting), but also by the general value of the community (if the HIVE token trades higher, the underlying value of the vote is higher)
  • the more revenue you get (and store) in the blockchain, the bigger the reward you can generate in turn, by appreciating other content. This “snowballing” effect has very far reaching implications. It can accelerate the development of communities around content providers way faster than before and it can create very fast niched and rich content generation platforms and ecosystems of platforms
  • uncensorable will become the new standard for content providing, in less than 5 years. The current social problems (from Covid-19 to US anti-racist protests) are relevant proofs that the current social media structures are losing credibility (and overheating)

This blockchain-based revolution of content providing is just about to become mainstream.

I’m both fascinated by how fast it’s starting to explode, and grateful that I get to witness this (pun intended).

Image by mmi9 from Pixabay 

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