Social Money: After The Succession Of ERC-20 Tokens, This Trend Is Now Shaping The Crypto Industry
Bitcoin might be the father of cryptocurrencies and the first truly decentralized functioning model for digital p2p payments, but the truth is that the mainstream crypto adoption and utility we experience nowadays came only with the introduction of Ethereum, smart-contracts, ERC-20 tokens, and now…Social Money!
In grandma terms, a smart-contract is a mutually agreed protocol between two or more parties that is stored and run on the Ethereum blockchain, and basically automated as agreed between the involved parties – nowadays more DLTs offer some sort of smart-contracts, although Ethereum was the first and still the leading player in the scene.
Smart-contracts in their own turn enabled other altcoins and/or tokens to utilize the Ethereum blockchain to develop, issue, and deploy alternative cryptocurrencies under the ERC-20 protocol.
To demonstrate what an ERC-20 token is, you should think of cryptocurrency projects such as Maker (MKR), Basic Attention Token (BAT), Augur (REP), OmiseGO (OMG), Paxos Standart Token (PAX), 0x (ZRX), SAI (the Ethereum stablecoin formerly known as DAI) and more. All the above projects are ERC-20 tokens that run on Ethereum’s blockchain.
How ERC-20 tokens became the standard for crypto crowdfunding
If you’re in the scene for some time, you probably heard of the term ICO or ‘Initial Coin Offering’ which is practically a digital form of IPO, where various projects could raise funds in terms of ETH through the ICO process.
When an ICO crowdfunding project was finalized a new ERC-20 token would be released in the broader market and used as a standalone cryptocurrency with its own pros and cons, total unit supply, and therefore price per token, and in general, it would be a parallel crypto to Ethereum and not directly linked to it, although in some cases as observed in Maker DAO, and SAI that was the focus of the project since the beginning.
ICOs overall had a blast between 2017-18 when literally every third-guy could create his own cryptocurrency run on Ethereum backed by any concept or story he would come up with in order to attract potential investors into parting their ETH in exchange for the newly issued ERC-20 token that might or might not be relevant in the future.
Surely, a lot of ICOs were intentional scams, but that was the same as in any physical business, where the respective investors should analogize all factors before going full in a company that’s not yet truly mature.
‘Social Money’ – An ERC-20 of an ERC-20?
Besides the popular ERC-20 protocol, the Ethereum Foundation has been constantly working on new additions and features for the Ethereum blockchain, making it with difference the most active and largest cryptocurrency development project. You can check some EIPs (Ethereum Improvement Proposals) here.
To prove to you that, I can simply tell you that I am living solely on ETH for the last couple of years without any issues. Sure Bitcoin is widely accepted as well, but I can’t spend $3-4 worth of fees for every transaction I make, whether it’s in the form of payment or signature for a smart-contract, not to mention that Bitcoin’s smart-contracts are very weak compared to Ethereum, and they rely on third-party apps such as the Lightning Network, among others.
Ethereum is real money because you can’t just send it over to vendors that accept ETH, as happens in Bitcoin’s case, but you can use it for thousands of use-cases on the open web, and web3 respectively. From dapps like CryptoKitties, and Gods Unchained, to VR worlds of the likes of Decentraland and Cryptovoxels, Ethereum is the broadest cryptocurrency out there from a utility standpoint.
As a matter of fact, some Ethereum by-products such as Roll, are now enabling the issuance of what they call ‘Social Money’ under the ERC-20 wing. In a nutshell, Social Money is to ERC-20 what ERC-20 is to Ethereum.
How Roll ‘Rolls’
For starters, Roll is an Ethereum-powered dapp (decentralized app) that “mints branded digital tokens unique to your online presence, allowing you to own, control and coordinate the value you create across platforms”.
These tokens, dubbed as Social Money are basically ERC-20 tokens made possible by Roll’s own smart-contract with the Ethereum blockchain.
Unlike first-hand ERC-20 contracts that are slightly more complex to develop properly, issue and evaluate in terms of ETH, Social Money are super easy to generate and they have no intrinsic value, but they are rather used as “coupons”, or “loyalty points” which community members can redeem for services, and/or products the issuer of each token might be offering.
“Social money decouples the value of digital communities from traditional platforms. This value can now be held directly by the people responsible for generating it in the first place: members of the community.” – Bradley Miles, co-founder of Roll told Cryptos.
So, for example, in one of our previous posts, we took an in-depth dive into the booming crypto-art scene focusing on Cryptovoxels’ world where web3 users can buy virtual land, set up stores, and galleries where they can sell digital art pieces through crypto-art brokers such as SuperRare or KnownOrigin.
Read More: Deutsche Bank: Cryptocurrencies Will Eventually Replace Fiat Money
Social money comes to play when crypto artists who run galleries would give away their own tokens to users who visit their respective exhibition points in-game. That way users are incentivized to visit various spots in the digital realm, pay attention to specific crypto-art pieces, or climb a hill in order to find an easter-egg that will lead you to some precious Social Money.
Social Money then could be used to purchase goods affiliated and offered by the issuer of the respective token, in or out of the game.
Practical examples of Social Money in action
If you’re still struggling to get the idea behind Social Money, here are a few practical examples that shall clear things up.
- I visited the Rose Nexus gallery in the Gangnam District of the Cryptovoxels’ virtual city. Besides the fact that the gallery is filled with ERC-721 NFTs (non-fungible tokens) which are unique art pieces, anyone could purchase directly from each artist or through third-party custodians such as the prementioned crypto-art brokers;
- on the top floor of the virtual building, there is an interactive hyperlink on the wall made by a crypto-artist going by the name ‘Connie Digital’ that will give 1000 HUE to anyone that attends the gallery and follows the link.
- HUE is basically Social Money created by Connie Digital, and are distributed via various means online (links, discord, etc.) and offline (stickers, QR codes etc.) to his followers and supporters,
- who in their own turn could redeem their gathered HUE to purchase crypto-art, in Connie Digital’s case, instead of paying with ETH.
This creates an interactive experience between content creators and their customers and incentivizes the later to visit websites, VR locations, or even physical locations in order to acquire some Social Money.
Of course, you can’t use Social Money to buy tomatoes from your local grocery store, as you would with Ethereum but you consider them as coupons that can be redeemed for something specific the issuer of the tokens offers.
While this is a relatively new space in the crypto industry, I can already see numerous ways how this could be utilized not just by digital artists but also from physical retail shops.
“…streamers on Roll that have minted their own social money and stream on platforms like Twitch, Mixer and Dlive, often simultaneously, allowing them to distribute their social money across platforms. We’re seeing these streamers use social money in dozens of ways to engage their viewers on and off stream.” – Miles on alternative use-cases besides the crypto-art relation.
In a similar fashion, your local coffee shop will stamp a card every time you buy a cup of coffee only to give you a free cup when you present with a card with 5 stamps on it, Social Money could replace the paper or plastic cards with QR codes, while at the same time, customers of the coffee shop could be paid in tokens not just for buying coffee but also for interacting with the shop’s online presence, repost media, etc.
Social money…are truly platform-independent. If something were to happen to Roll, all of the social money above will still exist because of the ERC20 standard.”
If that doesn’t make absolute sense to you, you should step a few layers back and learn more about basic crypto and Ethereum as a concept.
Till then, I gotta figure out a decent concept to launch my own Social Money!
Bradley was kind enough to tip our readers with some of the most popular Social Money out there. You can tryroll for yourself, and claim some: