Why Reddit Co-Founder Alexis Ohanian Will Invest $100 Million in Solana Social Media

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Decentralized social media is a trend to watch.


Key points

  • Together with the Solana Foundation, Alexis Ohanian's venture capital fund, Seven Seven Six, will invest $100 million in decentralized social media.
  • Decentralized social media would allow users to earn rewards for participating and community building.

Remember that day last month where WhatsApp, Facebook, and Instagram were down for hours? Not only did individuals suddenly find it hard to talk to one another, but many small businesses suffered as they couldn't contact their customers.

Cryptocurrency enthusiasts were quick to point out this type of outage wouldn't happen on decentralized social media platforms. They may be right, but decentralized social media is still very much in its infancy.

This is what makes Reddit co-founder Alexis Ohanian's recent announcement so interesting.

Ohanian's venture capital fund, Seven Seven Six, and the Solana Foundation will invest $100 million in developing decentralized social media on Solana (SOL). Ohanian describes it as "the next wave of social."

Ohanian made the announcement on stage with Solana co-founder, Raj Gokal at the popular cryptocurrency's recent Breakpoint conference. Both men talked about the tremendous potential of decentralized social media and the speed at which it might develop.

What is decentralized social media?

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Some people refer to decentralized social media as Web3. If Web2 is the internet we know now, Web3 is the internet of the future. It's essentially a blockchain-based internet, which Ohanian calls "compelling."

Decentralization means taking out the middleman and becoming less reliant on intermediaries. One aspect of decentralized social media is that it would be easy to switch to another provider if one service wasn't working. In theory, there'd be fewer outages too, because there wouldn't be a single point of failure. And it gives users much more control over their digital identities.

There'd also be less potential for data hacks and less censorship -- though there are questions about how a decentralized system would screen for offensive or incendiary content. The idea is the community would step up and play a greater role in governance, which may be a little idealistic. This is just one hurdle decentralized social media projects will have to overcome.

In terms of social media, it could mean we'd move away from having big entities like Facebook in the middle of our communication. Though it's worth noting that big social media networks are also investing in decentralized models.

Gokal thinks new players will play a role alongside the existing platforms. "There's opportunity to build from all directions," he said. "It doesn't have to be the old social platforms converting, we can build new ones, and it doesn't have to be competition, and it doesn't have to be winner take all."

Rewarding users for community building

One thing that's got Ohanian charged up about Web3 is the way we'd start to be rewarded for our online activities. It's something he understands firsthand -- he described the importance of upvotes and the karma score in the evolution of Reddit. "Internet points were the way we got people to come together and produce high-quality content," he said.

Web3 takes this idea even further. In the new era of the internet, people would be able to own the content they create. And Ohanian explained users could get rewarded for playing video games and participating in social media. He said one day his daughter would be shocked that he'd put so much time into things online without earning rewards.

What we're looking at with Web3 is a shift in how we behave online and how we engage with social media. But what isn't yet clear is exactly what shape that new era will take and whether it can attract ordinary users.

What does it mean for crypto investors?

Cryptocurrency would play a key role in Web3, in a number of ways -- not least that those online rewards Ohanian's excited about would likely be paid in crypto. But there are two big takeaways investors can take from this announcement.

First, Solana continues to be at the center of major developments in the cryptocurrency world. The fast-growing crypto, which recently overtook Cardano (ADA) in the crypto charts, continues to hit all-time highs. Several things could slow its momentum, from regulation to technical troubles, but right now it is a force to be reckoned with.

Second, decentralized social media is a trend that's worth paying attention to. As a crypto investor, it's important to pay attention to industry trends as they can help to identify what might be the next big thing. That doesn't mean rushing to your crypto app and buying any token that's connected with decentralized social media. But it is an area to keep an eye on -- and it might be worth adding social-media-focused cryptos to your watchlist.

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