Thanks @anon22019695, I didn’t know about Minds, though I had heard of Steemit which is also mentioned.
The business model is indeed interesting, and these kinds of models could be the way forward for next-gen social media, if implemented well.
What I always find amusing is that alternative social networks are described as tiny - and thereby implying they are somewhat less interesting or viable - if they do not have multi-million active users, or can’t scale up to these amounts. This reflects our current way of thinking where success is measure against your potential future market value and revenue. This while a million user social network with 110,000 active monthly users will be able to sustain a small company, like… forever.
As I glean from the article, the core team is paid from the Patreon-like payment system Wire, while other contributors of both content and open-source code are ‘paid’ in points (and soon in Minds tokens). You currently can’t exchange the points back to money, but you can use it get benefits on the network, like reading quality content that is behind a paywall. Additionally the team earns money from subscriptions by users paying $5 per months to get rid of ads, called Boosts.
This can amount to good incomes for employees of Minds, which only needs a small team, according to the article.
This reputation system is nice. It stimulates valuable contributions, and for people that do not contribute much, to pay donations that sustain the network. For users there are little monetary incentives to ‘game the system’, to abuse it. Contributors with high reputation (points) will become valued/trusted members of the community.
Where I have my reservations as I have explained in the Brave browser discussion is the move to Minds tokens based on the Ethereum blockchain. Now you’ll get a different situation, and it is interesting to see how this turns out in the long run.
With Ethereum, unlike Bitcoin, the transactions that you put on the blockchain are called Smart Contracts. These are small pieces of code (using a simple scripting language) with which you can model all kinds of transaction types, not just payments from A to B. For this you pay a transaction fee, based on the calculation cost of the contract (expressed in
gas) and the
gas price (which is set by the miners that execute the transaction and is based on demand) which is expressed in Ether (the Ethereum token).
Because Minds tokens initially cannot be exchanged to other cryptocurrencies or dollars the core team can keep using the Wire payment system, do the Ethereum transactions themselves, and deal out appropriate amount of Minds tokens (note: I don’t know their exact mechanism, could be different). So far, so good. The only issue is rising transaction fees (Ether price may fluctuate wildly) which may need to be passed on to the Minds userbase.
A whole can of worms open, however, if the Minds team intends to open their token to the wider cryptocurrency world in the future, allowing 2-way exchange between other currencies. This will open up the ecosystem to all the kinds of speculative trading we see in the crypto market, with greedy traders speculating on fluctuating exchange rates to make their profit. For anyone in the know of this move there is now an incentive to hoard Minds tokens, and benefit from the likely price rise when this occurs.
Also there is the risk of the core team setting aside a large amount of tokens for themselves, as you see in Initial Coin Offerings, or ICO’s, and then become millionaires overnight. Not saying this is the case, just that it could be. If they decide to cash in, exchange for dollars, and there is a large crypto crash, they may lose the incentive to further maintain the social network.
One final thing on Ethereum: The smart contract are interesting in another way, in that ‘code is law’. The code of the contract determines the legality of the transaction, what you can do with it. If there is a bug in this code, then that bug is also law, and may allow hackers to ‘steal’ large amounts of tokens (this has happened before). Even though the scripting language is simple, a bug is easily created. There is much effort to alleviate the risk, but it is a risk nonetheless.
I have written a follow-up on the business model here: Business model innovation