How Ethereum solves the social media problem

Updated: Apr 20

I’ve always hated ads.


But at the same time, I’ve always been fascinated by them. I’m fascinated by the idea of people selling me shit I don’t need. I’m fascinated by how there’s a team of marketers trying to lower my self esteem just enough for me to think that buying a new crop top or miniskirt will make me feel whole again.


I’m fascinated that I’m not immune to any of it.

There are some other things I’m fascinated by that I remember.

I remember when I first signed up at Gmail, I got a notification asking me if it was ok to collect my data so they could offer “personalised ads” as opposed to unpersonalised ads, and I felt like I was gently offered a choice between arsenic and strychnine.

I remember logging into YouTube and legit getting a 30 minute Scientology ad before on a 30-second meme video, the presence of which elicited a looong audible “wtf” from me.


I remember seeing all these Today I learned! posts on reddit about Pepsi and wondering if the big corporate advertisers have just discovered how powerful native advertising can be, or if they’ve already used it for decades.

And no I don’t want my almonds activated. Please deactivate them immediately.


Ok before I remind you of grandpa Simpson yelling at a cloud, just know that beyond my various Adblock plugins, I’ve come to accept that ads are just part of the furniture of the internet. Most of the time they are pretty easy to ignore.


But of course there’s something more sinister behind ads. Otherwise… this blog post would end right here.


SOCIAL MEDIA IS ADDICTIVE


If you’re like, “DUH kari I know this already,", please skip ahead to the second part of this blog: HOW TO SOLVE THE SOCIAL MEDIA PROBLEM WITH BLOCKCHAIN


But if you’re like, “please kari, may I have some more [highly entertaining and brilliant insights]”, then continue reading.


How do social media platforms make money? They depend heavily on ad revenue.

And how do they increase ad revenue? They increase engagement and time spent on app. In other words, they get you addicted as hell.


How do they make you addicted? They’ll:

  1. Optimise your feed/dashboard to only include highly stimulating and personalised content

  2. They provide personalised ads, which, based on analytics, is most likely to elicit a click from you. (The act of getting a consumer to click on an ad and buy the product is called conversion. They have converted you into a buyer.)


They do this by tracking your data to feed into algorithms which simultaneously predict your behaviour. Algorithms use machine learning and data science to look at your every move. They track what clothing links you click on. They track what cat videos you watch and how long you watch them. They they track how you furiously click on your crush’s story every time they post.


Using this algorithm, they can generate a feed based on your behaviour. Their goal is to keep you scrolling, to keep you coming back, to manipulate you to buy shit from ads.


Ladies and gentlemen, this is what AI is used for today.


The algorithm is used for dating apps, too. When I first signed onto Hinge, I was given a constant feed of basic white guys in my area with the same smile, same stubble, same shirtless pictures. Throw in a guitar here and there and sprinkle in some dog pics. After interacting with the app for while, it learned my taste in guys, which is not basic white guys with the same smile, same stubble, and same state of shirtless-ness.


TV ADS vs INSTAGRAM ADS


Take a traditional advertising manipulation technique vs social media algorithm technique.

You turn on the TV. There’s an ad for a brand of soda we shall not name (let’s call it Roca Cola). It features an attractive girl wearing a thin bikini. She is enjoying herself with friends, frolicking on the beach or whatever attractive people tend to do. The ad is not overtly sexual but the advertisers know that your animal brain vision is all boobs and legs at this point. She’s smiling, then grinning, then laughing. Then at the climax of her happiness, it shows her opening a bottle of Roke and excitedly drinking it. Show Brand Logo. Show Slogan. Roll drums. End scene.

What this ad has effectively done is condition your brain to associate the state of Happiness with drinking soda. This is called Pavlovian Conditioning in psychology. It rendered a previously neutral stimulus (drinking Roke) to elicit a positive response by pairing it with a positive stimulus (attractive people being happy). It is very important in Pavlovian Conditioning that this stimulus pair coincides at the same time.

Social Media advertising does this EXACT thing with personalised feeds. Imagine this: You’re scrolling through the social media network Binstagram. The Binstagram algorithm knows what content makes you excited. It knows that you get super excited whenever your crush posts a selfie of himself. Right after you view that hot selfie, right when your heart rate is up and pumping, when you’re energetic and motivated, it will inject an advertisement immediately after. Pavlov would be proud.

Now, what makes the algorithm more powerful than the traditional TV ad, is that algorithms are highly adaptive. TV ads are static. What this means is that algorithms learn YOUR responses in real time, and adapts accordingly. Maybe your brain doesn’t really care about bikini-clad girls - then the Roke ad will have no great impact on you. Maybe you don’t have a crush you lust over.


Maybe what really gives you that big dopamine hit is seeing baby otters holding hands. The algorithm will notice this and show you cute baby otter content from all the animal tags and profiles you follow. Then, they’ll show you a personalised ad right after - perhaps selling mugs with cute baby otters printed on them.

Three weeks later, you find yourself scrolling through Instagram, hot cuppa tea brewing in your otter mug nestled in your hand.


Sound unlikely? Well, maybe not exactly for this content and product, but it happens. I admit I’ve bought products from instagram ads… I’m not even a big consumer but it managed to get me.


WE LIVE IN AN ATTENTION ECONOMY


Attention is the most important resource to the advertiser. The job of social media companies is to hook your attention to their respective apps as long as possible.


I can recall a million instances where I’ve opened Instagram just to reply to a friend’s message, only to end up looking at memes for hours and hours. And then when I snap out of the trance, I realise it’s midnight and I haven’t even replied to the damn message. Maybe you can relate. No, you can definitely relate. The system is designed against you.


“But kari!” You exclaim, “I enjoy spending hours watching memes and reels. It’s a legit hobby for me, just like you have a hobby of being weird on the internet."


All right, no need to get personal. I love watching memes for hours too. It provides a kind of mental sedation for me that cancels out the stresses for the day. But it’s not fulfilling. It’s mental junk food. I feel fulfilled when I’m painting, I feel fulfilled reading Naval Ravikant, I feel fulfilled when I watch anime with my boyfriend, I feel fulfilled when I’m writing this very blog post.

Social media fries our attention span.


On top of this algorithm, many social media platforms use the exact same mechanisms as casinos use to addict gamblers.


YOU ARE GAMBLING YOUR TIME AWAY


Yep. Just like a gambler sits in front of a slot machine wiling away his time and money, you lie in bed scrolling through instagram’s infinite feed.


This sounds like a conspiracy but it’s not. Big social media companies like Facebook, TikTok, Instagram, and Twitter spend big money to make the user experience as addictive as possible.

This is how they do it.

Why is gambling so fun? It’s not because of the reward. It’s the anticipation of the reward. It’s the uncertainty before the win/loss. That’s when we get the big pleasurable dopamine hit in the brain - the moment right before we pull the slot machine lever.


Dopamine is not the neurotransmitter of pleasure. It’s the neurotransmitter of surprise.


Do a favour for me - open up Instagram for me. Look at the little heart icon on the top right corner. Now look at the little bubble notification showing you how many new likes or followers:

Tell me - does that bubble pop up straight away?


No, it takes a second. It takes a second because the app is designed to kindle anticipation. That slight delay in notification is psychologically arousing. You are eagerly waiting to see if people have socially validated your post or account. If the bubble was already there as you opened the app, there would be no exciting anticipation of reward.

It’s not just this. Social media apps have fine-tuned their design so that every little feature increases your psychological craving for it. Here are some other tricks they use to addict you:

  • Snapchat streaks - to establish habitual app usage, rewire/strenghten neurological circuits

  • Facebook’s “People You May Know"

  • Endless scolling - every time you wait for new content to load, your brain is anticipating reward

  • Enticing symbols of jewels/gems/food

  • Random push notifications of likes/follows - trigger for addiction cycle

All of these features play on your psychological need for connection, significance, social validation, and surprise.


Companies MUST deploy these addictive techniques to feed their advertising engine in the highly competitive market of social networking.


This is the social media problem.


THE ALGORITHM MANIPULATES THE ARTIST.


Social media makes us anxious as fuck.


That’s because social media is a status game.


Status games are zero-sum systems. In a zero-sum system, someone has to lose in order for someone else to win.

We are constantly comparing ourselves to other people. Who has more followers than me? Does my post have enough likes?

Yes, I feel like shit if I lose 1k followers. I hate to admit it affects me but it does. Not that much tbh, but it does.


I feel like I have the instagram algorithm pinned down. I know how to get more genuine followers and likes. It’s a game, all you have to do is figure out the rules and parameters. Of course, you have to make quality and interesting content, but that alone won’t grow your instagram account.

(Sidenote: everything in your life is a game, a little matrix in its own way. That’s another post for another day)

Basically, because instagram algorithm rewards certain behaviours over others, she will modify her behaviour in subtle ways to conform.


This has heavy consequences for the artist. The artist is compromising her art. Worst of all, she might not even realise this is happening. The algorithm is manipulating her behaviour on such a fine level, post by post, that it might be imperceptible.

The more accurate the artist is in identifying causal links, the better she will be at modifying her behaviour to garner more likes. Thus, the greater she will be influenced by the algorithm.


By now you see what this means right? Social media algorithms are taking away our free will. The line between genuine and contrived is blurred.

PRIVACY IS DEAD


Last point, but definitely not least.

The advertising model kills privacy.


When you use the internet, it is free. That is because companies are buying YOU. They are buying your data. Your location data. Your shopping data. Your search engine data. Your social media data.


In other words, the various sites you visit, not just social media sites, meticulously track your data to sell to questionable third parties.

There’s a company that’s notorious for this. I won’t tell you what that company is, in case I get in trouble with the powers that be. But it rhymes with HikTok.

Redditor u/bangerlol weighs in on this:

(Source)


"TikTok is essentially malware that is targeting children."


Ya, ok, TikTok is fun. I was addicted to it for 3 weeks even though I was well aware of the insane privacy invasion going on behind the scenes. But who cares? It’s fun. It’s fun to not care. I get that. But you know what else is fun? METH. Ask your local meth addict how they’re going. I rest my case

So then what’s the solution?

“QUIT SOCIAL MEDIA!"


We hear this from self-proclaimed neo-luddites who seem to have it figured out. We admire their will and persistence in quitting the toxic addiction cycle. But we are not surprised find them on social media again a year later writing their little blogs on veganism and neoliberalism.


You can quit the system. Or you can revolutionise the system.


But how?


Jaron Lanier, tech genius and cool-looking dude (not his official title, just my title for him) suggested that social networks should implement a subscription model rather than an advertising model.


In an advertising model, the social media company is funded by ads.

In a subscription model, advertisements aren’t needed because the users pay a monthly subscription for content. For example, Netflix runs on a subscription model.


Lanier argues: when the digital revolution first began, and the internet gained wide mainstream adoption, there was this “lefty, socialist mission" of keeping the internet free. However, the only way that companies can provide free online services is to rely on advertising revenue. That’s why free game apps are riddled with ads.


I also don’t judge any small companies that decide to use the advertising model. If that’s what you need for your business to survive, go for it. Ads themselves are not the problem - algorithm-ad model is the problem. That’s just the system that’s currently set up. But we can change it.

Of course, switching from an advertising model to a subscription model is bound to cause an uproar. I wouldn’t pay for instagram, twitter, and I’d pay not to use Facebook.


So no, I don’t think quitting social media completely is a viable option for most people.


Surely there’s a way you can have a free internet without advertising?


Yes, there is.


It’s called decentralisation.


HOW TO SOLVE THE SOCIAL MEDIA PROBLEM WITH BLOCKCHAIN


Sooo. I hear a lot of people talk about why social media is a problem. But I’ve never heard a proper good solution to it. Everyone says, “quit social media!”, but just how viable is this solution? In order to escape all the problems I’ve listed above, like privacy invasion, validation addiction, etc you’d wouldn’t have to just quit social media, you'd have to quit the whole damn internet. You have to understand that these practices exist everywhere.


In today’s day and age, quitting the internet is like trying to get a fish to quit water.


What do I propose instead?


Ok, let’s start.

We’ve all heard of Bitcoin.

And we all know at least one friend who won’t shut the fuck up about Bitcoin. (In my friend circles, that one friend is me)

I believe in the technology enough that I am willing to risk being a social gadfly to promote it. People will come around soon enough :p

To be absolutely honest, I am not that fascinated by digital currencies. I am fascinated by blockchain-based digital currencies (cryptocurrencies). But more accurately, I am fascinated by blockchain in general.

Blockchain is the best technological advancement in our lifetime and, oh man, people are sleeping on it.

What is blockchain?

Blockchain is a way to record digital information.

Think of a literal chain of blocks. A “block” is a collection of digital information. When a new block is created, it is added on to previous blocks in a chronological chain.


These blocks can be used to record ANYTHING of value. This includes monetary transactions, health and identification records, supply chain tracing, legal and financial documentation, etc.


Bitcoin’s blockchain specifically records monetary transactions.

Let me explain how Bitcoin works in the context of blockchain so you can get a clearer picture. If I send Michelle, say, 5 bitcoin, a new block is created which includes information about this transaction, including 1) the time, date, and dollar of the transaction, 2) information about parties involved in transaction (i.e. kari and Michelle), & 3) a unique code called a “hash” that distinguishes one block from another. One Bitcoin block can house thousands of transaction information!

That’s it. But blockchain is very different from other forms of information-keeping. It is special because the information is distributed and encrypted.


But kari, why does this make blockchain so special? Well! In traditional digital record-keeping, it is very easy to falsify data.


A currency based on easily falsifiable data is a disaster. Here’s why. Let’s say there’s this guy, Mike. He wants to create his own digital currency called MikeCoin. Great going Mike. He wants to send his friend Tyson 5 MikeCoins. MikeCoins do not use blockchain technology; instead transactions are just encoded on a financial ledger on his computer. Tyson, being the asshole he is, hacks into Mike’s computer one day and deletes the transaction record. The record ends up displaying that Mike still has the original 5 MikeCoins, while Tyson also still has the new 5 MikeCoins. The value of MikeCoins has been duplicated.


This problem of duplicated value is called the double-spend problem. It’s a big problem that faces digital currencies. Cryptocurrencies solve this problem by implementing something called a consensus algorithm, which makes it really hard for someone like Tyson to falsify the record. The most popular consensus algorithms are Proof-of-Work (PoW) and Proof-of-Stake (PoS). I don’t want to get too deep into this because we could be here all day and you probably got shit to do, but I want to briefly touch on it because this is important for understanding my blockchain is important.


Let’s look at Proof-of-Work. In a PoW system like Bitcoin, a new block is “mined” and the record of information is distributed amongst a large network of computers (called nodes) all over the world. To give you a sense of how big it can be, as of now April 2021, Bitcoin has ~80,000 nodes. Each node is incentivised to maintain correct records due to block rewards - basically they get paid Bitcoin to maintain the network. If a hacker wanted to falsify records to say that she didn’t spend 5 bitcoins when she did (i.e. the double spend problem), then she needs to hack at least 51% of the network, because the protocol runs on majority consensus. This hack, called a 51% attack, is not impossible, but it is extremely, extremely, EXTREMELY HARD in large networks such as bitcoin.


Because of this distributed technology, blockchains are decentralised - there is no central authority - all the nodes work together to run the system. (This is the lassaiz-faire libertarian socialist utopia we dreamed about as kids huh, before we became all jaded and cynical adults? Or just me?) This is why you hear people praise Bitcoin as “trustless” and “permissionless” - you do not need to trust or get permission from any third party! I will argue decentralisation is the single most exciting thing about blockchain! The potential of what we could do with decentralised technology can be massive… I will talk about this more later.


Okay, I’m kind of going on a tangent. But I felt like I needed to explain the basics of cryptocurrency before I start getting into the meat of the matter.

Enter Ethereum


Bitcoin was a great revolution, but then came along something called Ethereum. Ethereum appeared normal, just another cute little coin in the vast sea of cryptocurrencies. But Ethereum is the second great revolution.

Just like Bitcoin, Ethereum too runs on blockchain technology.


But while Bitcoin is a currency, Ethereum is a programmable platform that runs on its native currency, called Ether or Eth. Please please remember this - Ethereum is a platform and not merely just a currency. This has crazy cool implications. You can build apps on the ethereum blockchain, apps that are like Uber or Facebook or AirBnB, except completely decentralised and autonomous. These are called DApps - decentralised apps (surprise surprise). Because of this, people say that Ethereum has the potential to become a decentralised world internet.


Basically, if Bitcoin is peer-to-peer money, then Ethereum is peer-to-peer everything.


In the Ethereum ecosystem, we have:

  • DApps (Decentralised Apps)

  • DeFi (Decentralised Finance)

  • DAOs (Decentralised Autonomous Organisations)

  • Fungible asset tokens (standardised ERC-20 tokens)

  • NFTs (Non-fungible tokens or ERC-721 tokens)

There’s another super exciting thing about Ethereum. It has the ability to run smart contracts. Smart contracts power DApps, DeFi, etc. Surely by now you’ve heard about smart contracts but maybe you’re a little confused by what it is. I’ll explain it all here so by the end you’ll know exactly what it is, and trust me you’ll want to know because it’s super fascinating :^)


Smart contracts are simply contracts that are programmed to self-execute on the blockchain. They operate on a conditional if-then premise: if x, then y. For instance, let’s say I want to buy a house from Michelle using a smart contract on Ethereum. The smart contract is this: IF I deposit 600 Ether to Michelle’s escrow account, THEN I will receive a digital key to the house. If x, then y. And remember, because everything is executed on the blockchain, that means it’s very hard to falsify information as long as it was inputted correctly.


All right let’s look at another example. Let’s mention Uber again. Uber is a popular rideshare company that connects insomniac drivers with teenagers at 3 am who are too intoxicated to figure out how public transportation works. Here, Uber is a third party intermediary. Theoretically we could get rid of Uber and instead use a smart contract-based DApp that is programmed to connect drivers to passengers via an instant peer-to-peer (P2P) protocol. What’s more, since there is no third party intermediary, as a passenger you can pay the driver directly, thus leading to cheaper rides for the passenger and higher profits for the driver. Did you know that Uber takes 30% of the cut from driver earnings? Instead you can pay the driver directly using a smart contract that calculates the fee based on external real-world inputs like geolocation API, mileage, and the of car engine, etc.


By now I hope you know where I’m going with this.


If we can have an Uber app without the Uber company, can we have a Facebook app without the Facebook company??

Imagine, a social media platform that isn’t owned by big tech and suits, but by the very members using it?


Cue:


DECENTRALISED SOCIAL MEDIA


Now what if we had decentralised social media?

Well, this already exists! It’s called Minds and was created in 2015. If you want to add me, my handle is @0xkari.


But I’m not here to ironically advertise my account (at the time of writing there is no content on there). But in the future I would ideally want to move onto a blockchain-based platform. I want to share my art with you all, uncompromised. Will it be Minds? I don’t know, maybe a better one will be created. But I will discuss Minds in this blog post for now because it is a great example.


Some features of Minds:

  • Open source code

  • User data is not monetised

  • Network structure is decided democratically through DAOs

Not only that, but the AI algorithms that determine feed content is completely transparent.


THIS DOES NOT SUBSCRIBE TO AN ADVERTISING MODEL YET IT IS FREE!


When there is no centralised organisation to pay, it’s easy for a platform to be free.


I haven’t used it much yet since my desire to post online has dwindled these past months (not too sure why).

SEMI-CENTRALISED SOCIAL MEDIA

Alternative working title: Using yield farming DeFi to replace the advertising model in centralised blockchain-based social media companies


So now I have introduced you to these:


The advertising model.

The subscription model.

The decentralisation model.


However, there is one other model left to discuss that I really think will change the way people use the internet. I propose:

The Staking Model.


This model is for the rest of you that aren’t satisfied with anything I’ve said hitherto. Maybe this is your thought process right now:


“Look, kari. I don’t want to use a fully decentralised social media network. I WANT a third party to regulate how the platform runs. But, because I am a normal human being with a soul, I hate ads too. Is there a way for a semi-centralised internet platform to operate profitably without ads?”


Ok, devil’s-advocate-I-created-for-this-blog-post-so-I-can-propose-this-idea-literally-no-one-asked-for,

Maybe there is!

And before you say anything, yes blockchain-based platforms can be centralised too. If a set company is making the financial and governance decisions of the network, or if their blockchain is permissioned or private, then the platform is centralised, even if it operates on smart contract protocols. Google: Binance smart chain DApps


As I was exploring more and more of the Ethereum ecosystem, I learned a lot about Decentralised Finance (DeFi). Like A LOT, I am kind of obsessed. Now I will explain to you how to earn passive income in DeFi, and how you could stake that passive income to potentially finance a company enough so that it does not need to rely on advertising revenue.


In traditional finance,

  • Basically centralised financial entities - banks - fuck shit up and no one can do shit about it (I will write a blog post about this one day)

In decentralised finance,

  • Decentralised Exchanges (DEXs) rely on the Automated Market Makers (AMM) protocol. AMMs use smart contracts to execute algorithms that automatically trade between Eth ERC-20 tokens, rather than relying on an order book as traditional CEXs do.

  • I.e., you can swap ETH for another token like ENJ in a p2p marketplace.

  • Crypto buyers and sellers are directly connected rather than transacting through a centralised entity.

  • Now in order to trade, there must be a liquidity pool of funds to draw from.

  • DeFi users can lock in funds in a liquidity pool a smart contract. Users that do this are called Liquidity Providers (LPs). In return, LPs receive an Annual Percentage Yield (APY) (basically a ROI). The APY comes from the transfer fees incurred from DEX trading.


Anyway, all you need to know is this:


In DeFi, you can stake your coins in a liquid pool, and get rewards in return. This is called Yield Farming.


To illustrate this, I’ve staked around $800 on PancakeSwap and received ~$12 USD in CAKE in a few days at ~100% APY

(Please note that PancakeSwap is on the Binance Smart Chain blockchain, not the Ethereum blockchain)

So basically what I want to propose is very simple -

What if we had a semi-centralised social media platform where users could stake a portion of their funds to the platform, where a third party of well-reputed devs could be paid to regulate how the platform was run, and optimise backend operations, instead of relying on the traditional advertising model? This might be useful for permissioned blockchains. And if the app was useful and secure enough, users would happily stake a portion of the funds to support the upkeep of the app.

A quick glance at the DeFi space reveals that staking is used similarly to innovate new services and apps.


There, that’s it. That’s the point I wanted to make. For some reason it ended up as a long-ass blog post.

This blog post could be more accurately titled, “How A Blockchain-based Internet Fuelled by Decentralised Finance Solves The Social Media Problem Perpetuated by the Advertising Model”. That’s not really catchy, is it...


I DON’T CARE! I HAVE NO SOUL ANYWAY! PAY ME TO WATCH ADS!


By now, some of you (most likely none of you) are probably saying:


"I don’t want to use the internet under the subscription model.


I don’t want to use the internet under the decentralisation model.


You know what, I don’t really mind advertising. I just don’t like being tracked. Is there some way I can live in an advertising model, without companies tracking my data and selling it to questionable third parties?”


The Brave browser does this. (This isn’t an ad for the browser, I swear, I couldn’t care less if you downloaded it)


The browser pays you to watch ads, is fully transparent.

Ok, this is the end of the blog. I’m tired from typing this all out. But I just wanted to say all this because I can’t contain my excitement with what will happen in the DApp space over the next few years.


Ethereum's lofty goal is the establishment of Web3. Web2 is the internet we use today - the internet of user-generated content, streaming services, optimised for mobile devices. Web3 is the next generation of the internet, powered by artificial intelligence, machine learning, and - funnily enough - algorithms. The very same algorithms that I've been talking about in this entire blog post - the algorithm that determines what meme you would like you see next on instagram, or what video you would like to watch next on youtube, or what product to be recommended to you on amazon. The algorithms that are destroying your attention span, making you insecure, getting you addicted, stealing your data. That's Web3. Now, these algorithms are programmed to serve companies and conglomerates - what if we programmed them to serve the users in p2p interactions instead?


That's the dream of a fully decentralised internet.

No Gods, no masters. Except for software developers. They will be the new Gods in a world determined by code.

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