Social Tokens, NFTs Drive Push to Web3

Blockchain tech and crypto are gaining ground in public awareness, and a good portion of that is being driven by NFTs and “social tokens,” Cointelegraph says.

Their rise comes at a time when transactional frameworks, such as Web3, are gaining popularity, especially among crypto enthusiasts.

Social tokens support the democratization of social networks by enabling brands, influencers and businesses to create and monetize their own online communities using blockchain technology.

Daniel Nagy, vice president of Swarm — a decentralized data storage and dispensation firm — spoke to Cointelegraph regarding the new token class, stating that social tokens had significant disruptive potential.

“If done right, they can take communities to the next level, and it’s only a matter of time before we see more innovation in this space, most likely related to DAOs or GameFi, combined with ideas around so-called ‘soulbound’ tokens,” he said.

“Right now, the space is still in its early stages, and experimentation is key, but as adoption grows, social tokens can become the next bridge to non-crypto users and bring blockchain further into the mainstream, similar to what NFTs have done.”

Social tokens are cryptocurrencies that are used as a form of patronage. They are underpinned by blockchain technology and allow community creators, influencers and enterprises to monetize their fan base. Fans who buy social tokens are usually given access to exclusive content and product offerings.

The main advantage of the social token model is that the tokens are redeemable and can be resold.

Social tokens are based on the same concept as nonfungible tokens (NFTs) in that they rely on a blockchain-based ownership model. However, they serve a different purpose. While NFTs can be used to represent actual real-world assets and are nonfungible, social tokens are fungible — i.e., interchangeable and/or divisible. This makes them ideal as a medium of exchange that can be used to monetize online communities and services.

While the crypto normie may not fully understand the broader impact of Web3 for both the economy and the digital world, they do understand and exercise the power of consumerism, as seen by the online reaction to Nike’s latest foray into the NFT world.