Decentralized 'Facebook killer' attracts $200M in funding

Nader Al-Naji, DeSo Creator and BitClout Founder, explains his new blockchain designed to decentralize social media.

Video transcript

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- Welcome back to Yahoo Finance Live. In today's Crypto Corner we are digging into a company out there that is taking on the issue of centralization in social media. We've heard a lot of claims about monopolistic power from the likes of some of these big tech companies at Facebook, Twitter, and the like, and of course, interesting to see a push in applying blockchain technology to maybe decentralize some of those entities. And that had been one of the examples set up by a company called BitClout or a project called BitClout out there that had attracted a lot of attention in the crypto space that essentially allowed users there to earn money through a platform in social media.

And now, the man behind it has unveiled who he was. The founder of BitClout here joins us now, Nader. Nader, I apologize. Nader Al-Naji joins us here. Nader, like ladder, as he explained in the break.

And Nader, when we talk about it, the reason why I'm saying your name for the first time is because you went by Diamond Hands for a long time. So people didn't actually know who was behind BitClout, but a lot of people look to that project and said, you know, I could see why we could use decentralization in social media as we see kind of regulations around taking some content down. And now DeSo, as you've dubbed it, the project, the blockchain powering BitClout, an future innovation here attracting $200 million from some big names, Sequoia, A16z, the Winklevoss Capital Arm of the famed Twins here. Talk about why you're seeing so much money chase kind of what you've built.

NADER AL-NAJI: Yeah, well Zach, thank you so much. And to your point, this is actually the first face to face interview I'm doing since the 2 and 1/2 years that I've been working on this project. So obviously, very exciting for me and I really appreciate the opportunity.

Yeah, with DeSo, you know, there's obviously a lot of excitement around it. But, you know, really what DeSo is, DeSo is a blockchain that powers apps like BitClout, that you mentioned, and what it is, it's a blockchain that's custom built from the ground up to power social applications. And so, you know, we've seen blockchains like Bitcoin and Ethereum power financial applications, really bring innovation there.

They're disrupting everybody from banks to exchanges, but the blockchains that are around today, even the most advanced ones, are really not equipped to handle the storage and indexing requirements required to build social applications. And so DeSo is really the first blockchain that's capable of scaling social media applications on a blockchain. And that's really, really exciting and I think everybody's excited about it because it really opens up a whole new category for disruption by blockchain technology, namely the social media category. And I think that's why so many people are excited.

- Yeah, it was interesting to see. And I mean, when you talk about DeSo the blockchain here, BitClout was set up in a way that, I guess, would be familiar with Twitter, if people understand how Twitter works. And you know, that may have maybe made some people there who were on Twitter confused.

They were like, why is my stuff over here on BitClout now? I believe you got some cease and desist around that, but it proved the concept of where it could go, right? And so is the idea that the $200 million here would be to improve BitClout or would it be to build other platforms to maybe create not just similar to Twitter, but similar to Facebook and other things like that?

NADER AL-NAJI: That's a great question. So you're referencing $200 million in capital from Sequoia, Social Capital, [INAUDIBLE] Horowitz and others, and that's actually going to be managed by a foundation called the DeSo Foundation, and that's an entity that we set up to work on the DeSo blockchain that powers apps like BitClout, like you're mentioning. BitClout is a social app that has money enabled features, thanks to DeSo.

And that money is also going to be used to build the ecosystem around the DeSo blockchain and that involves everything from motivating developers to build DeSo, as well as NFT artists. So NFT is a money enabled feature that you can build off of DeSo. And Additionally, social tokens is a really big category for DeSo so as well and that capital is going to be used to build that ecosystem as well. And we're very excited about that.

- Nader, what does this mean for people who aren't celebrities? I mean, when you talk about allowing creators to control monetize the content that they post, sure, we've seen names like Elon Musk as well as Katie Perry attached, but for those who are watching to say, well, I don't necessarily have that clout, how should we be thinking about this?

NADER AL-NAJI: Absolutely. And so you're kind of hinting at what really motivated us to build DeSo in the first place, what the vision is for the ordinary person, not just the mainstream celebrity, obviously. And so that's really the reason why we set out to build DeSo, there's really two reasons. The first is that we have an opportunity to decentralize social media in much the same way that Bitcoin, Ethereum and other blockchains are decentralizing the financial system.

So as you know today, social media is largely controlled by a handful of private companies that have a monopoly on content. And so with DeSo, you control your content and that content is on a public blockchain, which means that content can shift from being a monopoly to an open utility that anybody can build off of. And that really opens up just a whole new world of innovation and competition for social products that we haven't seen before.

So that's the first really big part of the vision that affects everybody, not just celebrities, obviously. The second really big part of the vision is when you build a blockchain that can power social media applications, you actually open up a whole new type of business model for social media that can move us away from ads, which is what powers social media today, to what we call money native features. And so essentially, these features like social tokens, like social NFTs and social tipping, that DeSo so enables for the first time by virtue of being a blockchain, are actually allowing creators, everybody from celebrities to the ordinary person, to monetize 10 to 100 times better while also creating a tighter relationship with everybody that they interact with. And even people who are not mainstream celebrities are making hundreds to thousands a week just on, like for example, the social tipping features, and it's for everybody, not just celebrities, of course.

- Yeah and for me, I mean, just watching this all play out, you know, we've seen attempts at that. Steam was a project kind of levered to that too, but this is different in the way that I think it's setting it up for kind of a web three, fully decentralized project, which has its good and bad here, right? We want to talk about it and we'll be honest about kind of regulations around social media companies and kind of policing the content on that.

You saw that with Parler and kind of the threat to take things down, but you move into web three, you can talk about this being hosted across a number of entities. We've seen a lot of projects come up with decentralized hosting. It sounds like that's what this would kind of be embracing. But then that opens the question of whether there's any ability to control maybe the content on the platform, and that could be a good thing, it could be a very bad thing, particularly with what we've learned in the pandemic here. So talk to me about what that opens, the can of worms, as you see it.

NADER AL-NAJI: Of course, of course. And so we see kind of the decentralization of content, as we call it, as a spectrum. So today, content and curation is very centralized. We basically rely on three private companies to curate content.

But obviously, the other end of the spectrum that you're talking about, which is total anarchy, is no good either. You clearly need some kind of moderation in place and that's probably something we've thought more about than any other topic, other than the technology. And so what DeSo tries to enable is something that's more in the middle, right? So it's not three companies moderating the content, but it's also not total anarchy.

And the way that we achieve that is it really comes back to everything that's enabled by all of the content being open. So when all of the content is open, you can have the best machine learning researchers in the world labeling the content and building lists of what's harmful and what's not. You can even go further and have the tracking of misinformation be not just managed by private companies that aren't really aligned with catching it and policing it, but actually have more involvement from, again, the best researchers in the world but also potentially the Federal government and actually understanding how misinformation spreads and things like that, that you just can't do when the contents are monopolized by a company.

And it all comes back to just being in the middle. So anyone who exposes the content apps like BitClout obviously are liable to civil and federal litigation if they are exposing harmful content. And so the same checks that kept the original internet from exposing vast amounts of harmful content to people govern DeSo, and so that's more in the middle than the very centralized situation that we have today, where it's just basically three companies.

- Nader Al-Naji, the man behind the myth, although not anymore, right? DeSo Creator, it's good to talk to you today. Good to have you on face to face. Appreciate the time.