Is a social token a new trend?
The crypto industry experiences rapid growth and finds more and more ways to increase its influence in the financial sector. The Covid-19 pandemic has had a significant impact on the crypto market as a whole. As a result, to stay afloat, the crypto economy attempts to integrate into many aspects of human activity. So the concept of social tokens emerged. In this article, you will learn about social tokens, what prospects and practical applications they have.
In terms of definitions, the concept of the social token is rather ambiguous. In general, this notion can be defined as a token associated with a specific person (often celebrity), community, or brand. During the first wave of the Covid-19 pandemic, when celebrities were unable to communicate with their audiences as normal or monetize their art, social tokes were extremely popular. Then, these types of tokens sparked a market revolution, crossing over from the crypto sector to the general public. Speaking about the types of social tokens, we can define personal and community tokens. They, like any other cryptocurrency, are based on blockchain technology. However, there are still some key differences from DeFi tokens. The fundamental aspect is that social tokens are based on the ownership economy. It presupposes that only people decide how valuable the token will be.
How does social token work and why is it needed?
The main goal of social tokens is to reflect community membership to receive some special benefits from purchasing a piece of art or a music record. For instance, you can buy a social token and get access to some courses, media products, or goods. Then, by buying a token, you can trade with it on the cryptocurrency market. As a result, the more people who invest in a social token, the more valuable it becomes. In other words, the traditional model of cryptocurrency trading applies here as well. Nowadays, more than 300 social tokens are circulating on the market. For example, RAC (Andre Allen Anjos), a Grammy-winning American-Portuguese singer, created a social token for creative individuals based on the Zora platform. Everyone could have an opportunity to gain access to various benefits and exclusive content with this token.
Nowadays, $WHALE is regarded as the most successful social token. WhaleShark debuted the $WHALE token in May 2020 and it immediately gained tremendous success. Its total capitalization reached $30 million and formed an entire ecosystem and community of followers. It is worth nothing that a large number of non-fungible tokens (NFTs) kept in the Vault contribute to the token’s $WHALE price rates since the project includes $1.4 million in NFTs and is growing by the day.
Finally, due to the quick pace of technological progress, the facts outlined above give us hope that social tokens will become an important component of the crypto ecosystem. Certainly, we should analyze how creators and developers handle their social tokens and the benefits they provide to the average customer. However, developers must design a user-friendly and useful token model or the token to be sufficiently competitive on the market.
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Valentina BEREZA, Team bit4you