Tools for MGMT: Episode 204
Tools for MGMT: Episode 204
BitClout for managers.... few understand this š¤
Itās been a rainy Sunday here in New York. I woke up inspired to write, so here I am. Iām a bit nervous to publish my thoughts about something so speculative with a ton of red flags, but I'm going to click the blue button before I talk myself out of it.
Letās chit chat about BitClout, which I sense is slowly taking over my Twitter feed in place of NFTs. I want to share my observations after being on the platform for the past week, and touch on a few relevant ideas for talent managers.
IN SUMMARY: What should you consider doing as a manager?
First, check to see if your clients have a reserved account placeholder created for them by the BitClout team. They did this (without permission) for 15k people, scraping mainly from verified Twitter accounts. If they do have a reserved account, you donāt need to immediately worry about them being impersonated on the platform.
I donāt feel comfortable recommending that anyone āclaimā a reserved account and the allocated coins at this time. This gives an unproven platform too much credence, and is exactly what BitClout wants you to do. Perhaps itās better to wait and see how things unfold in the next few weeks. šæšæšæ
However āĀ if your clients do not have a reserved account, consider creating an account and claiming their username as an insurance policy against impersonation in the future. Impersonation is extremely easy on the platform (see the 24kGoldn and Benny Blanco examples I outline below) with no recourse currently availableā¦
What is BitClout?
Essentially, itās a platform for buying and selling fractional, speculative shares in famous and influential peopleā¦ perhaps your clients. These shares take the form of individual creator coins minted for each account, that can then be bought and sold by anyone.
The price of a given creator coin follows a bonding curve. Although I was sick that day at Wharton, I think that a bonding curve (more or less) means that the price of the coin goes up as supply increasesā¦ one of the many miracles of financial engineering.
Here is their official white paper that explains more.
Whatās the controversy?
Rather than hoping that people would sign up, BitClout scraped 15k Twitter profiles of (mostly) verified accounts and created reserved accounts as placeholders. To simulate economic value, they allocated these 15k pre-launch accounts with majority shares of their own creator coin, and created a mechanism where the account has to tweet out their public key to verify and claim ātheirā coins.
Iām not a lawyer, but this is almost certainly an unauthorized use of name and likeness with regard to the 15k reserved accounts created without authorization. BitClout has already been hit with at least one cease & desist by the founder of another crypto project. And Iām sure there will be more in the weeks ahead.
What else did I miss? Oh yeah āĀ thereās currently no way to withdraw your money from BitClout. You can put money in, you can accumulate a balance through appreciation or clever trading, but you canāt take it out. Thatās rightā¦Ā YOU CANNOT CURRENTLY TAKE OUT ANY MONEY THAT YOU PUT IN.
Is BitClout a scam?
Let me leave you with more questions than answersā¦
Is the timing near perfect as the NFT wave crests? Absolutely. The Clubhouse NFT room crowd need something to move on to next. BitClout is engineered to play heavily on narcissism, self-interest, and crypto FOMO like nothing else Iāve seen so far.
Could BitClout and its rumored investors (Sequoia, a16z, Coinbase Ventures, Winklevoss Capital ) be hit with a bunch of lawsuits over likeness and IP issues that could cripple the platform and take it offline? Definitely.
Is it possible that they never release a withdrawal function and run off with all of the money invested? Yup. I give this a 10-15% chance.
Is it also possible that BitClout becomes a lasting mechanism for creators to monetize their audience and fans, just as theyāve done with Twitch, Patreon, Cameo, Substack, OnlyFans, NFTs, and the rest of the creator economy stack? Possibly. I give this a 5-10% chance, and am invested accordingly in alignment with my risk profile.
Wow, Ethan! this all sounds amazing, and is precisely the sort of thing that I should be spending my time and money on. How do I play?
Please keep in mind that this is definitely not financial advice. The safe assumption is that any money you put into BitClout will be locked up and lost forever. You might end up looking really stupid. And Iāll definitely feel even more stupid for writing this.
Depending on the time of day that you attempt to access BitClout, you might encounter this ominous screen:
If thatās the case, hereās an admittedly suspect looking URL with a password embedded:
From here, youāll be able to create an account. Verifying your cell phone number will give you enough $BitClout to claim a username and setup a profile... but now they have your cell phone number. As an alternative, you can send $57 worth of BTC.
The flow of your hard-earned money within BitClout looks like this:
Fiat (USD) ā Bitcoin (BTC) ā BitClout coin ($BitClout) ā fractional shares of creator coins like manager scooterbraun:
We see that scooterbraun coin is currently trading for $12,258.98 per coin, with $679K invested so far.
Scooter has a clock icon š next to his username. This means that BitClout created his profile for him in the initial batch of 15k reserved profiles āĀ but he hasnāt yet claimed the profile by tweeting out the public key.
BitClout reserved 31.8695 coins for him. So if Scooter verified and claimed his profile today, heād immediately have access to these scooterbraun coins āĀ which are currently worth $390K. But remember ā thereās currently no official way to cash out back into USD. š
Hereās the profile for Steve Aoki:
Steve has a blue checkmark, as he claimed his BitClout profile by tweeting his public key on 3/25:
This means that Steve (or his reps) have access to the 34.822 coins that BitClout initially allocated to him, presently worth $169k.
Hereās a more interesting example āĀ this time for 24kGoldn:
24kGoldn doesnāt have a clock š or blue checkmark next to his username. This indicates that he wasnāt one of the 15k reserved accounts.
The bio claims that they are currently attempting to contact 24kGoldnās team to āsecure his accountā. Why would they go through the trouble?
This feels pretty suspect to me. In theory, anyone could have created a BitClout account, and grabbed the @24kGoldn username because it wasnāt reserved by the BitClout team.
Taking things a step further āĀ look at the Holders of 24kGoldn coin. The biggest holder is an anonymous wallet account without a username:Ā BC1YLgBRDMtMFSn... that is holding nearly 60% of the minted supply.
Could it be that the current owner of the 24kGoldn account and the anonymous holder are the same person, waiting patiently to profit off either flipping the account or the appreciation in value of the coin?
A final example: Benny Blanco
Returning to the extended Scooter Braun universe, letās look at Benny Blanco. His verified Twitter handle is @ItsBennyBlanco. On BitClout, the username is unregistered and unclaimed:
The implication: one could create a new BitClout account anonymously, grab the ItsBennyBlanco username, and change the bio and profile photo to match his Twitter. This would take 30 seconds to do. They could then buy a bunch of the ItsBennyBlanco creator coin at the cheapest possible value, or create another anonymous BitClout account and buy it from there. The account wonāt have a blue checkmark, but in this wild west corner of the internet, thereās plenty of buying and selling going on anywayā¦
Be careful out there.
Further BitClout resources and reading:
BitClout Has Reaped $160M for Tokens Pegged to Celebs. Is It All a Scam? (Decrypt)
The BitClout white paper (what kind of crypto project would this be without one?)
A twitter thread of observations from someone who went through the BitClout Block Explorer (above my pay grade)
Crypto social network BitClout arrives with a bevy of high-profile investors ā and skeptics (TechCrunch)
Iāve found the BitClout Pulse (unaffiliated) Twitter account and Discord to be the most up-to-date sources of info and speculation about the platform. However, you also get the sinking feeling that they are running a massive pump-and-dump scheme at scale with their charts, alerts, and buy recommendations.
Brent Faiyazās manager Ty on BitClout āĀ and possibly Brent?
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