There’s been a lot of buzz on Base — an ethereum L2 built by Coinbase. I wrote about it here. This piece isn’t about Base, but what’s causing the Buzz on Base — Friend.Tech. If you haven’t been on Twitter or have been on Twitter but not Crypto Twitter (CT), I will excuse you and give you a premier on what Friend.Tech is.

Friend.tech is a new social media platform that uses blockchain technology to tokenize social influence. This means that users can own and trade their social media following as a valuable asset.

To understand Friend.tech, it’s helpful to first understand how traditional social media platforms work. On platforms like Facebook and Twitter, users create profiles and share content with their friends and followers. These platforms make money by selling advertising space to businesses.

Friend.tech works differently. On Friend.tech, users are represented by “shares” or “keys”. These shares are tradable tokens that represent the user’s social influence. The more shares a user has, the more influence they have on the platform. Users can buy and sell shares to increase or decrease their influence. They can also use shares to access exclusive content and features, such as gated influencer-specific chat rooms.

The idea behind Friend.tech is to give users more control over their own social media data and monetization. By tokenizing social influence, Friend.tech allows users to own their following and sell it to businesses or other users who want to reach a specific audience. This could be a game-changer for social media influencers. Traditionally, influencers have had to rely on platforms like Facebook and Twitter to make money. These platforms take a cut of the advertising revenue that influencers generate, and they can also censor or deplatform influencers at will. With Friend.tech, influencers can own their following and sell it directly to businesses. This gives them more control over their data and monetization, and it also makes them less reliant on centralized platforms.

Just to drive the point home, here’s an analogy to help you understand Friend.tech:

Imagine that you are a celebrity. You have a large following on social media, and businesses pay you to promote their products. With Friend.tech, you could sell your following to businesses directly. This would give you more control over your data and monetization, and it would also make you less reliant on social media platforms.

Friend.tech is still in its early stages of development, but it has the potential to revolutionize the way we interact with social media. By tokenizing social influence, Friend.tech could give users more control over their data and monetization, and it could also make social media more censorship-resistant.

If you have been in crypto long enough, you have probably heard of BitClout and you are having Deja Vu as you read this. For those who haven’t, Friend.Tech is the same idea as BitClout.

Both platforms use blockchain technology to tokenize social influence.
Both platforms allow users to own and trade their social media following as a valuable asset.
Both platforms have a creator coin system, where each user has a unique coin that represents their social influence.
Both platforms allow users to monetize their social influence.

The key difference is the chain it’s built on. BitClout is built on the DeSo blockchain, while Friend.tech is built on the Base network. I said a key difference because I bet more than half (if not all reading this article) have never heard of or used DeSo, including me. Only hear of them when they run ads on crypto podcasts. I’m not that much of a fan of decentralized social media, guess that’s why. Will come back to this later on, explaining why this is a key difference. Another difference is that BitClout offers more features, such as trading, tipping, and governance, while Friend.tech offers fewer features, but it focuses on exclusive content and community governance. BitClout also has a larger user base compared to Friend.Tech since it was launched in 2021, whereas Friend.Tech is barely a month old.

Influencooor

If you hold my explanation of Friend.Tech to heart, two things stick out as a sore thumb. The first is that this is more of an influencer/creator platform than a social media platform, and it’s prone to speculation. Leaving aside the speculation aspect for now. Let’s look through the influencer/creator lens.

As a normie, you already know nobody’s going to buy your share unless you are popular. The ratio of influencers to non-influencers on social media can vary depending on the platform, the industry, and the definition of an influencer. However, a study by Mediakix found that in 2022, there were an estimated 3.2 billion social media users worldwide and that only 0.07% of them were considered influencers. This means that there are approximately 23 million influencers on social media.

The study also found that the majority of influencers (84%) are micro-influencers, with 1,000 to 100,000 followers. Nano-influencers (with 100 to 1,000 followers) and macro-influencers (with 100,000 to 1 million followers) make up 13% and 3% of the influencer population, respectively. So, the ratio of influencers to non-influencers on social media is approximately 1:14,000. However, it is important to note that this is just an estimate, and the actual ratio may vary depending on the factors mentioned above.

The study by Mediakix did not specifically mention the ratio of influencers to non-influencers on Twitter. However, it is possible to estimate the ratio based on the overall ratio of influencers to non-influencers on social media.

As mentioned earlier, the study found that the ratio of influencers to non-influencers on social media is approximately 1:14,000. This means that for every 1 influencer, there are 14,000 non-influencers. Twitter is one of the most popular social media platforms, with over 350 million active users. If we assume that the same ratio of influencers to non-influencers applies to Twitter, then there would be approximately 2,500 influencers on Twitter.

If you are surprised by these numbers, you are not alone. Deep down I believe there are more than 2,500 influencers on Twitter, but I will leave that argument for people way smarter than I am.

I’m using Twitter here as a case study because that’s how Friend.Tech works for now. You can purchase or sell shares of Twitter influencers. I think sometime in the future, Friend.Tech is going to add support for other social media platforms.

Going by Mediakix numbers and assuming a huge chunk of Twitter users aren’t influencers, this means that the amount of users on Friend.Tech should have a temporary cap, statistically. That analogy ends in math, and the world doesn’t run on math alone. That line of thinking is not something I would hang my hat on.

Speculatooors

Why are people using Friend.Tech? Mostly for speculation. In centralized social media, there’s no direct financial incentive for a noob. You only get paid by Elon Musk on X (formerly Twitter), if you have over 15 million impressions within a month. So you have to be an influencer in a way. On the other side of the pond, in decentralized social media like Lens, Farcaster, Masterdon etcetera, there’s no financial incentive as a user, regardless of whether you are an influencer or not. Although, on Nostr you can get tipped Bitcoin via Lighting Network (LN), if you make enough sense.

Friend.Tech combines the worst of both worlds. It takes the “no incentives for users regardless of who you are” playbook from decentralized social media and the “incentivize influencers” playbook from centralized social media. Only here, the influencers are incentivized by the noobs. The average Joe buys the keys (formerly shares) of his popular influencers. It swings both ways because if Joe can get in early on his favorite influencer has a chance to make a lot of money. That way the average Joe is incentivized to join Friend.Tech. Time and time again, we have seen that such incentives fail to stand the test of time.

In an ideal environment, both parties win. But we live in a chaotic world and not an ideal one. So you can expect somebody to end up holding the bag, and it’s not the influencers. Would give people the pass that argue that this is just a mechanism for transferring money from users to their favorite influencers. Wouldn’t read too much into those who argue about use cases, as Friend.Tech is still in active development — They recently added the feature to send images. I think the privacy concerns and use case issues will sort itself out with time.

What I’m trying to get at here is that anything built around speculation isn’t going to last (NFTs for example). Won’t go into the moral arguments of whether speculation is good or not, if this is the right use case for crypto, or if this is what mass adoption looks like.

Whether speculation is good or not, I don’t know. What I’m certain about is that it brings people on-chain, and that is healthy for crypto as a whole.

Just to reiterate my bearish bias on Friend.Tech;

It’s tailored towards influencers. There are more normal people in this world on social media than there are influencers. This in my opinion puts a limit on how Friend.Tech can scale.
It’s all speculation at the time of writing. And speculation is temporary.

Until something significant changes on the app, might end up being a Fad.

Brand new stack

Let’s Discuss something bullish about Friend.Tech — its technology stack.

PWA (Progressive Web App)
Web2 login
Embedded self-custody wallet
L2 transaction fees
iOS notification

1. PWA (Progressive Web App)

This is one of the features of Friend.Tech that allows users to install the Friend.Tech website on their device as an app. This gives users a more app-like experience, such as the ability to work offline, receive push notifications, and be integrated with the operating system. PWAs can be a way for developers to avoid Apple’s 30% cut on purchases in the App Store. This is because PWAs are not distributed through the App Store, so Apple does not take a cut of the revenue.

For example, as Friend.Tech is developed via a PWA instead of a native app, they don’t have to pay Apple the 30% cut on any in-app purchases that users make. This saves them a significant amount of money, especially if they have a large number of users and trading keys.

2. Web2 login

Despite Friend.Tech being built on crypto rails, it still makes use of web2 login which is a traditional way of logging into a website or app using a username and password. This is the most common way of logging in, and it is supported by most websites and apps. As opposed to web3 login where logging in to a website or app using a decentralized wallet, such as MetaMask or WalletConnect. This means that users do not need to create a username or password, and their identity is not tied to a centralized server.

Other decentralized social media platforms, (like Farcaster or Nostr) in keeping the decentralization faith, make use of web3 login. This is a bottleneck for mass adoption, as most people aren’t familiar with crypto, let alone a wallet like MetaMask. This is in stark contrast to Friend.Tech which uses Twitter, which is a form of web2 login. In terms of user experience and mass adoption, this is a plus.

This is where the privacy concerns arise, because if I link my Twitter account to my wallet address on Friend.Tech I can get doxxed. Or have my data stolen on Friend.Tech, assuming there’s a data breach. You can tweet from Friend.Tech, meaning if your Friend.Tech account gets hacked, it can be used to tweet stuff you wouldn’t agree with. Also, if for any reason, Elon Musk doesn’t see you worthy of his platform, and suspends or blocks your account, you have invariably lost your Friend.Tech. Another way you can lose your Twitter account is if you are a victim of sim-swap, you have also lost access to your Friend.Tech account.

The above are a few of the numerous drawbacks associated with Web2 login.

3. Embedded self custody wallet

You are given a new wallet address you can self-custody. You have to fund this with some ETH, to purchase keys, which in this case is your share. You can get doxxed in this process, so those who wish to remain pseudonymous are advised to deposit and withdraw to a new address.

4. L2 transaction fees

An L2 is a secondary blockchain that is built on top of a primary blockchain, or L1. L2s are designed to improve the scalability, performance, and efficiency of the underlying L1. Fees on Base are cheap because it’s an optimistic rollup. This allows for seamless trading of keys on Friend.Tech.

5. iOS notification

You can enable push notifications on Friend.Tech as you will do on any other app on your iPhone. For example, Friend.Tech could use push notifications to notify users of new messages or events, or they could offer offline content such as articles or photos that users can view even when they don’t have an internet connection.

By no means is this an exhaustive list of the goods associated with Friend.Tech, they are the ones I find most intriguing.

By the numbers

Since BitClout and Friend.Tech offers a similar service, so it would have made sense to analyze BitClout to know the path Friend.Tech is on. But unfortunately, BitClout has folded and there’s no data point to look at. Friend.Tech haters will assume it amounts to nothing, using BitClout as a reference point. I’m not in that camp as you can tell, I just outlined some positive developments about Friend.Tech (something BitClout didn’t have). In the startup world, you just have to do at least one thing different from your competitor to win, and Friend.Tech has done more than one. Look, I’m not ruling out the possibility that Friend.Tech ends up like BitClout, all I am saying is that at the time of writing that seems very unlikely.

Since there’s no data point to look at for BitClout, let’s assess Friend.Tech itself to see how it’s faring. Despite User activity peaking two weeks ago, Friend.Tech has managed to acquire ~130,000 users. This is a measly figure when compared to Twitter’s 350 million users. That’s 0.04% of Twitter’s user base. This indicates that the TAM for Friend.Tech is very large, and it still has room to grow, that’s if it amounts to something. Outside the declining number of users, it has failed to attract new users. Most of its users today are returning users, rather than new. The opposite of what you’d see in a new app, on its path to mass adoption. We need to see an influx of new users for adoption to take place.

Well, it’s users that trade keys (formerly shares), so if we have seen a decline in user activity, the chart showing the keys traded should look the same. A total of ~2 million keys have changed hands since its launch.

So far, it has a cumulative volume of over $88M and has generated over $4.5M in fees.

Active buying and selling on the platform had fallen precipitously in recent weeks, but unique buyers and sellers have been up and to the right, with buyers greatly out-competing sellers.

The subjects have a combined market cap of 10.8k ETH or ~$18M. This is very small and can be easily moved in either direction by a massive buy or sale.

Just to be clear, when I say the number of users I’m referring to the number of wallet addresses. One thing we know so far in crypto is that wallet addresses usually don’t equate to the number of users, as one user could have multiple addresses. Although, Friend.Tech could be given a pass on that one, as you’d have to link your Twitter account to an address. Of course, somebody could have more than one Twitter account, but it’s rare for somebody to have 10 Twitter accounts, while it’s very common for someone to have more than 10 wallet addresses. Bitcoiners will advise you never to use a wallet address twice!

Closing out.

If you are a chart freak (like I am), you know a bubble chart when you see one. There’s an initial spike, things calm down a beat, only to be followed by a much bigger spike, and then it calms down again. Unfortunately, the second time it recedes from its highs marks the end of the bubble. It’s very hard to tell if you are in a bubble, let alone what stage of the bubble you are in, seeing that a bubble chart could have more than one spike atimes. Back in 2021, I was quick to write off NFTs, only for that to be the bottom in terms of adoption — we were going to have a bigger bubble after I published that article. You know the NFT bubble has popped, like I envisioned right from the start, but it still created a higher low compared to when I first wrote about it. Don’t know if to describe that as a win. So I’m careful not to make that same mistake with Friend.Tech and Ordinals. Will give both, the benefit of the doubt and assume they have one last pump, as big as the NFT one, before everything finally goes to shit.

I don’t trade keys (shares) and don’t intend to, as there’s no way to value them for now. It’s all speculation at this point. And if I wanted to degen into anything, there’s a plethora of shitcoins I can 50x on binance or countless NFTs I can purchase on OpenSea — despite knowing I’m going to lose money. I always ask myself why “keys?”. I also consider it more risky to bet on a particular individual. Betting on a particular project in crypto hasn’t worked out that well. I’m more of a fat-protocol guy when it comes to investing. Perhaps, if there was an index tracking the top 50 accounts or if Friend.Tech launched a token, would prefer both avenues to gain exposure to Friend.Tech rather than purchasing keys. The option of a token doesn’t seem that far away as they have started airdropping points to users every Friday. There’s lots of chatter that this would end up being a token, so we’ll just have to wait and see.

It’s very hard to tell what happens in the next 5 years if Friend.Tech amounts to anything useful. As a decentralized social media, I don’t think it becomes an app to reckon with in crypto (a similar fate awaits other decentralized social media apps) and see no long-term viability in it. As a speculation vehicle? Yes! The exuberance of the market can last much longer than you can expect. However, speculation is nothing to build a project around as it doesn’t last forever.

All in all, Friend.Tech token (assuming they was one), is not something I would like to hold for the long term, since I’m bearish on the whole decentralized social media idea and speculation isn’t long-term. But in the short to medium term, owing a Friend.Tech token wouldn’t be a bad idea. Would be on the lookout to own one, if it launches.