Most social networks make it as easy as possible to sign up. Just create a user name with a valid email address and you’re in. But becoming a part of Houston-based SocialChains has a higher bar.
Yep, there’s email verification, as with other networks. And then there’s phone number verification. Then, you submit your driver’s license or government photo ID. Oh, and don’t forget the facial recognition that matches a selfie to your ID’s picture.
Then, and only then, are you granted access to a network that rewards you with tokens tied to a cryptocurrency.
SocialChains is in its infancy, with only about 5,000 users right now, but each is a real person who has full control over his or her data posted to the community. In fact, some parts of a user’s profile can even be hidden from Social Chains’ administrator, said founder and Chief Executive Srini Katta.
“On social networks, anyone can set up an account and say they are the real one,” Katta said. “But sometimes they are not who they say they are.”
Social Chains is still in beta mode, Katta said, but it’s drawing between 20 and 30 new signups a day. Most signups come by word-of-mouth and referrals from current members, who receive tokens for recruiting newcomers.
The budding social network is built on blockchain technology, the distributed, secure electronic ledger, and is among a group of nascent social networks that have done the same. Katta’s offering is based on the same flavor of blockchain as Ethereum, a popular cryptocurrency platform. Using blockchain allows the platform’s members to better control their data, granting access to it only when they choose, he said.
It also allows for Social Chains to have its own cryptocurrency. Users receive 10,000 “S tokens” just for signing up. Recruiting a new member earns another 1,000 tokens, and those who recruit 500 get another 100,000 tokens on top of those.
Then, 1,000 S-tokens will eventually be redeemable for a single cryptocurrency token called an SOCT, and that will be equal to $1, Katta said. The S-tokens can be used to among members who wish to conduct commerce among themselves.
“Sixty percent of the S-tokens are reserved for members,” Katta said. Sixty percent of the SOCT tokens also are dedicated to members.
Only some of this functionality is built out, said Katta, who prefers to call Social Chains a “social economy platform” rather than a social network. For the moment, the SOCT tokens aren’t being distributed, and they won’t initially be convertible into traditional currency.
“Let’s say I am looking for a travel package from Houston to Hawaii,” Katta explained. “I indicate what my budget is, when I want to go, and with enough people on the platform, there may be a thousand people wanting to go to Hawaii in that period.”
A travel service granted access to the community can then market to those who have given permission, and the final transaction takes place off the platform, Katta said.
This component will kick in when Social Chains hits at 50,000 members, or 10 times bigger than it is now. Katta said initial marketing plans call for Social Chains to be promoted at Houston-area universities, then at schools around Texas. When membership reaches 100,000, Katta said the doors will be thrown open wide.
The company will make money by brokering ads that users give permission to be shown. Katta said the Social Chains will give 50 percent of the profits from these ads back to users.
Katta, who founded Mogo Labs, a mobile customer relations management platform, and iServiceGlobe, a CRM and SAP cloud platform, said he put $3.5 million of his own money into Social Chains, and has raised $200,000 from investors. He’s seeking another $1.5 million.
The company currently has 15 full-time employees, mostly working in Houston and Katta’s native India.
Dan Wallach, professor of computer science at Rice University, said Social Chains faces a real challenge trying to gain traction against giants like Facebook and LinkedIn, even with its verified identity policy and blockchain underpinnings.
“The thing that draws people (to a social network) is your friends — you go where your friends are,” Wallach said. He cited the failure of Google+, the social network launched by Google in 2011 that’s now in the process of shutting down, as an example of how tough that business can be.
“Google has a scale that people only dream of, but they’re turning off Google+, saying, ‘Sorry, bye,’” Wallach said. “You wouldn’t do that if you could be making a profit off it.”
Admitting he’s a cryptocurrency skeptic, Wallach also said that “sprinkling blockchain fairy dust” on a social network isn’t enough to make a difference.
“Saying you can make a killing in crypto by joining early is something of a yawner these days,” he said.
But that’s exactly why Kevin Kempf, 41, a former insurance investigator who’s now in sales, became one of the 5,000 early adopters on Social Chains. After meeting Katta at an event at the startup incubator Station Houston, Kempf went through the process to become a member.
He was initially attracted to the cryptocurrency aspect of it.
“Right now, (Social Chains) is not built out where it needs to be,” Kempf said. “I think there is an opportunity for me to be at the ground floor of something that I think is going to be the future.”
At the moment, Social Chains and LinkedIn are the only two social networks Kempf uses regularly.
“I got an Instagram account so I could be educated before I let my daughter use it, but I’m not active on it,” he said. “I had a Facebook account but deleted it two or three years ago. Facebook is at the top of the trend of disinformation, and I really understood where privacy is going. I just didn’t want to play on that playground anymore.”
Some users balk at turning over their drivers license information to a startup few have ever heard of, but Katta said it is deleted once verification is complete. And once people are on it, they feel more comfortable posting because they have more trust in the platform and the people on it.
“When someone posts a picture, you know these are real names, and real pictures,” he said.
Avivah Litan, an analyst at market research firm Gartner who specializes in blockchain technologies, said Social Chains’ approach may solve the problem of spreading disinformation on social networks.
“You control your data, and when someone posts something, you can track the provenance of the post,” she said. “You can’t get all these Russian bots on the network.”
But, like Wallach, she is not convinced that Social Chains faces a tough road in reaching a critical mass of users.
“Facebook has billions of users,” she said. “How do you compete against that?”
Interested in joining Social Chains? Enter the code SOCH38 when signing up at SocialChains.io.
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