Preston Byrne was recently quoted in an online Billboard article in which he shared his thoughts on BitClout, a blockchain-based platform where users buy and sell cryptocurrency coins based on real people, mixing elements of a social network and a stock market.
But while Perry describes BitClout’s impact on his life as "just like a fairy tale," others in the crypto community see the platform’s promises as just that: Fantasy. Among BitClout’s vocal critics is Preston Byrne, a partner at the prominent cryptocurrency law firm Anderson Kill, which sent a cease-and-desist letter to BitClout in March arguing that reserved profiles infringe on the right of individuals to profit from the commercial value of their identity.
Byrne takes issue with the value of creator coins, which he says is entirely speculative: "There’s no logical connection between the value on the BitClout system and what revenues I’m actually generating," he points out. (The values don’t seem to correlate so precisely with social standing, either: Ariana Grande’s value is nearly six times that of The Weeknd’s, for example, but it’s hard to argue that Grande is seven times the bigger star.)
Byrne also argues that BitClout’s ability to remove profiles is itself a sign that it’s not a fully decentralized platform in the first place. "If you go back to the original test, a system isn’t decentralized if a regulator can get their hands on someone and turn the system off," Byrne says. "If there’s a web server, it can be turned off." The inevitable need for content moderation, he adds, may prevent BitClout from ever being truly decentralized. "I think it’s going to run into the same problems that every other social network would as it hits the growth stage, and you cannot moderate without centralization."
There is also a chance that creator coins on BitClout will be designated as securities by the U.S. Securities and Exchange Commission, making them subject to the same regulatory and filing requirements as stocks and bonds. In that case, creator coins are "not really a viable long-term path for individuals to rely on for monetization," Byrne argues.
What we’re really looking at is what crypto enthusiasts would call "decentralization theatre," he says: "Clothing a fundamentally centralized offering in the language of decentralization to leverage people who demand decentralized services because of their dissatisfaction with gatekeepers." And what group of people is more dissatisfied with gatekeeping than musicians?
"There is this universe of people who are all attempting to crack that nut: How do we get a scalable system which ensures that content creators can get paid for what they produce, and can make more money?" Byrne says. "That’s the dream. I think BitClout is one iteration of what that dream represents."
Read the full Billboard article here