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Social tokens are increasingly being used in online blockchain communities. They offer numerous benefits to users.
The crypto world is going through a transformative chapter that is bound to revolutionize how the internet works and how online communities interact, and social tokens are at the heart of the latest inflective developments.
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.”
He also highlighted that the tokens would be especially impactful for burgeoning companies that are still in their growth phase due to the need to capitalize on a loyal fan base.
How social tokens work
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.
Types of social tokens
There are two main categories of social tokens: personal and community.
Personal tokens are usually created by individuals to monetize some forms of labor and experiences. The ALEX personal token is, for example, based on the life of crypto entrepreneur Al
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