The Conversation
This past week a private conversation between Elon Musk and Jack Dorsey was released to the public. You probably already know that earlier this year, Jack Dorsey left Twitter. Also around that time, Musk decided to buy Twitter. Because this is a Bitcoin blog, it should also be mentioned that at the beginning of the year, Twitter implimented a tipping payment system using Bitcoin. Users have the ability to tip content creators.
But, let's get back to the conversation. Elon affectionately refers to Jack Dorsey as Jack Jack.
Let's focus on the comment in circled red. Here Dorsey is admiting to Twitter's failure. The centralized company is controlled by an advertising business model being exploited by other companies and the government. Thus losing control of it's own platform.
Advertising is Dying
Jack Dorsey denounces the advertising business model and centralized platform, but Twitter's issues run much deeper. Over this past summer, Elon Musk identified it and called it out. Bots...fake accounts. Twitter is rittled with them. Of course, if you are buying a company based on the number of users, you want them to be real. Advertisers want them to be real.
Here is Jimmy Song talking about fake accounts, spam, and how Artificial Intelligence (AI) will destroy the economics of the internet.
Fake profiles are proliferating everywhere. The internet is built on free services and obviously they are very cheap to create for the user. Unfortunately, that also means they're very cheap to create for spammers.Spam is a huge problem. We saw in the Musk/Twitter fight how this was a point of dispute. You can also see how much of Twitter is getting ruined because of the fake profiles posting spam. These aren't particularly sophisticated, posting the same text or image over and over.Platforms have mixed feelings about this. They run on ads and the "users" see ads, the more money they make. Fake or real, an ad view or ad click still generates revenue. On the other hand, spam and fake profiles degrade the user experience driving real users away.Hence, they tolerate spam until it degrades the service beyond a certain level and then ban them to get the service back on track. But what happens when AI comes into the picture?AI makes fake profiles more and more difficult to detect. Any pattern used to ban spam bots will be used to create a smarter AI to create better spam bots. We're in for a real life Turing test between platforms and spam AI.Spam bots don't buy anything, so ultimately hurt the advertisers that fund all these platforms. Ad rates are going to plummet, which puts pressure on platforms to allow more spam bots.How do platforms get out of this mess? AI gets better to avoid banning, ad conversion rates plummet and that ultimately means the sole source of revenue for most free internet services has a long term down trend.AI will force the internet to change its economics. Free services will have to start charging money to keep out bots. This will destroy a lot of companies.
So all these free social platforms that sell your personal information to advertisers are on the road to ruin which will be accelerated by AI and machine learning. Hence, why this article is on Locals. Did you notice that there is no advertisements? That's because we charge a measly $2 per month to come train with us. I get zero dollars from advertisers.
The Other Attack Vector
But enough about that, there is another attack vector.
Patreon, for those unfamiliar, was founded in 2013. The site bills itself as an online membership platform that provides a business model and tools for creators to run a subscription content service to subscribers, or “patrons,” hence the name. All manner of people and content exist on Patreon, from singer-songwriters and comic illustrators to novelists and folks who show off pictures of their animal friends (no, really).
Patreon is different from social media sites likes Twitter and Facebook because of the explicit business angle which is also why content creators love it. It allows them to create tiered access to monetize subscribers. (Just like Locals...)
As a free speech site, the rules, terms, and conditions of Patreon are pretty wide open. Basically, no pornography and no hate speech. However, in 2018 things changed. In August, controvertial writer Robert Spencer was banned from Patreon. Not for violating the terms and conditions, mind you. No, he was banned because of Mastercard. While he was not controvertial for Patreon, he was for Mastercard. Mastercard threatened Patreon that they would prohibit transactions on the site if Spencer was on it.
It didn't stop there. Carl Benjamin was banned from Patreon and then SubscribeStar. Paypal threatened SubscribeStar the same way Mastercard did.
These platforms lost control due to the centralization of the businesses behind them. They had a "surface area", or better stated, an attack vector that was easily exploited.
I Want My Two Dollars!
Locals.com was started by Dave Rubin as a competitor to Patreon in 2019. His mission was to advance free speech for content creators and limit the attack vector from advertisers, payments processors, and government. While Dave is very charitable, Locals is not a charity. They have expenses that need to be covered. Things like hosting servers and developers need to be compensated. Without advertisers, fees need to be collected from content providers and subscribers. Thus, you are paying with your hard earned money, not your hard earned personal information.
At this point in the article, I could add some code that would prevent you from continuing and give access only to BitcoinFit subscribers. I'm not going to do that, but if you're curious to see that functionality in action, here is an example: https://bitcoinfit.locals.com/post/2685125/how-i-compounded-cash-back
It's worth the $2, but don't trust me...verify for yourself. Did you know that I only get $1.43 of that? Locals obviously takes a cut. But a chunk of that goes to credit card company and payment processor fees. When Locals first started they wanted the minimum subscription fee to be $1. They were shot down because the amount was too small. Moving small amounts of money is expensive.
Until...
Lightning
The Lightning Network is a 2nd layer network that runs on top of the Bitcoin base layer. It's purpose is to speed up transactions times and allow for micro-payments. (Additionally, it adds a level of privacy to your Bitcoin transactions.) Lightning requires the Segwit code adoption on the Bitcoin base layer to function. Segwit hit an 80% adoption rate in October of 2021. Thus allowing the Lightning network to grow exponentially.
The Lightning Network is super fast and super cheap. Without going too deep on how it all works, what you need to know is that the nodes set their own fees. The code is designed to find the cheapest route through the network.
To give you some perspective, the average fee is $0.000000005 per Satoshi sent. $2 ~= 10,000 Satoshis. To send $2 across the Lightning network would cost 0.005¢. To send $20,000 would cost 50¢ paid to the node operators.
Confession
I've been running BitcoinFit for 6 months now. From a personal stand-point, it has been awesome and I am loving it. From a financial one, not so much. Getting subscribers is hard work. I've got to provide value. I have to convince you that the content I'm putting out is worth your $2 per month.
My marketing is mainly on Facebook and Twitter. I share links to my posts there, but try to limit the conversation in an attempt to get people to subscribe. But here is what I find interesting. People value thier personal information at less than $2.
Back to Jack Jack
How much would you pay to be on Twitter? Now this version of Twitter is ad free and no fake accounts. Bots are eliminated because it's too expensive. It's a town square where you can reward people creating great content through tips. By paying a nominal fee, you prove you are real, but you can still be anonymous.
What if you only had to pay when you used the system? Let's say you log on and the clock starts. But this isn't a service where you get billed when you log off. No, you pay by the minute. You're charged every minute you serf. This is where Lightning come in. Scroll for 10 minutes, you are charged 10 transactions.
But at what price? The average Twitter user spends 30 minutes per day. That's a little over 15 hours per month. Is it worth $2 per month? 😉
Using the Lightning network, Twitter could charge 0.2¢ per minute. (NOT 2 cents...one fifth of a cent per minute) Visa, Mastercard, Paypal, etc...can't do this. Bitcoin will only ever have 21 Million coins. But that 21 Million can be infinitely divisible. Currently, 1 Bitcoin is 100,000,000 Satoshis. With a minor code change to Layer 1 or Layer 2, 1 Satoshi could = 100,000,000 Micro-Satoshis (Hay-Penny?).
Onto Elon
Elon is in a tough spot. He's bought a social media company overrun with fake accounts and bots. A company beholden to the whims of advertisers and curtailed by the popular narrative. The man who thinks patents are for the weak has alot to clean up.
“I don’t care about patents,” Musk told Jay Leno. “Patents are for the weak.” In Musk’s opinion, patents are “generally used as a blocking technique” that are designed to prevent others from innovating. “They’re used like landmines in warfare,” he says. “They don’t actually help advance things; they just stop others from following you.”
Can the Tesla icon advance social media to get users to pay? There are 400 million users on the system. Let's assume 50% are bots. 200 million real users. If they pay $2 per month via Lightning, Twitter will effectively match its current monthly revenue.
So it's feasible, but the last attack vector is the centralized company. Now everyone knows Elon Musk is a master of manipulating government regulations and rules. However, adversaries will look to shut down free speech. How does Twitter decentralize to stop them?
Conclusion
This is an exciting time. We are witnessing the transition of our monetary system and the impact on our culture. There is so much that is possible now. Let's keep working together to push the envelope.
