The Leader of the Web3 Revolution … I s TikTok?

Dear Subscriber,

I am not part of the TikTok generation. My screen time isn't dominated by endless scrolling through dance challenges and 15-second cooking hacks.

What I am is a digital trend observer. And I've recently noticed something fascinating brewing beneath the surface of the world's most addictive app.

And that is the potential marriage between TikTok and web3 technology.

As a reminder, web3 is the next evolutionary step for the internet. The current version, web2, still has ownership of content and platforms centralized in the hands of a few major titans like TikTok … despite most of the content being generated by users.

Web3 aims to move past that to a truly decentralized internet, where users create and own the content.

Which leads me to one key question: Could the platform that turned regular teens into overnight sensations soon turn centralized social media on its head with blockchain integration?

Let's be honest: TikTok remains firmly in the centralized camp, with algorithms that decide what content goes viral and user data firmly in the grasp of corporate hands.

In short, it's the antithesis of the web3 ethos. But that doesn't mean things can't change.

TikTok’s Lackluster Web3 Welcome So Far

Reddit co-founder Alexis Ohanian has joined a bid to acquire TikTok's U.S. operations. He has the ambitious plan to "bring TikTok on-chain." This initiative — dubbed the “People's Bid” — would integrate a Polkadot (DOT, “C”)-based blockchain called Frequency into TikTok to decentralize the platform's infrastructure.

Ohanian's vision is clear: "Users should own their data [and] creators should own their audience."

It's a bold merger of web2's viral appeal with web3's user empowerment principles.

It also stands in stark contrast to TikTok's previously cautious approach to web3. Until now, TikTok's relationship with web3 has been more of a casual fling than a committed relationship.

In 2021, it launched "TikTok Top Moments," an NFT collection featuring viral videos from creators like Lil Nas X and Bella Poarch. But like many first dates, it was awkward and didn't lead anywhere.

The platform also partnered with blockchain-powered music platforms like Audius, allowing users to share music via decentralized streaming.

But these experiments feel more like ByteDance dipping a toe in the crypto waters rather than diving in headfirst.

Ohanian's proposal isn't emerging in a vacuum. While established giants like TikTok remain wary of change, an entire ecosystem of web3 social platforms have embraced it and developed in parallel.

Platforms like Lens Protocol — by Aave (AAVE, “C”) — and Farcaster are building social networks where users actually own their profiles and can transfer their followers across platforms.

Imagine that — your audience actually belonging to you, not the platform!

Similarly, Decentralized Social offers a blockchain designed specifically for social media dApps that allow users to tip and invest in creators … without middlemen taking a cut.

These platforms embody the very principles Ohanian hopes to bring to TikTok … and represent what we could see in the future from social media.

Not only that, the adoption of web3 could address two main concerns web2 social media platforms currently face: data privacy and the threat of platform bans and censorship.

However, that is expected to take a while. Despite these exciting alternatives and proposals, none of these web3 platforms have come close to TikTok's billion-plus users or its eerily effective algorithm.

In short, the engagement just isn't there ... yet.

Which is what makes Ohanian’s proposal so interesting. It could speed up the adoption process and bring web3 to one of the largest social media platforms.

TikTok's Elephant in the Room: Privacy

Let's address the privacy concerns that have politicians around the world clutching their pearls: TikTok's data collection practices.

As I said, web3 could actually solve many of these problems.

Decentralized identity systems would let users control their personal data instead of handing it over to ByteDance. Zero-Knowledge proofs could verify users without exposing private information.

Blockchain technology can also make things like content moderation decisions and algorithmic biases transparent and auditable. Right now, this code is hidden behind corporate walls and causes ongoing regulatory challenges.

But here's the catch: TikTok's business model is built on harvesting user data to enhance engagement. A privacy-first approach would require ByteDance to fundamentally rethink its revenue streams.

This challenge isn't unique to TikTok.

But again, web3 could provide the answers.

How Web3 Can Transform TikTok

Here's where things get interesting. If TikTok embraces web3 principles, we could see a revolution in how creators monetize their content.

Instead of relying on the pennies per viewer TikTok's Creator Fund pays, creators could mint viral videos as NFTs and sell them directly to fans.

Just think — the next dance or trend that takes over the internet could actually put serious money in the original creator's pocket.

Thanks to smart contracts, royalties could be automatically distributed to everyone involved — the dancer, the musician even the editor who added those perfect effects.

And in return for hosting the video, major platforms can ask for a cut — like a gas fee.

Consider also the implications blockchain technology can have on how the platform functions for users. Instead of a mysterious algorithm deciding what goes viral, users could stake tokens to promote content they believe in. No more shadowbanning or algorithmic bias, which some consider to be censorship.

Instead, we’d see content gaining popularity on its actual merit.

And here's my personal favorite possibility: Crypto-based tipping. It’s a low hanging fruit item which could easily replace (or complement) TikTok's centralized coin system. It would allow viewers to send Ethereum (ETH, “B+”), Solana (SOL, “B”) or stablecoins directly to creators they love and bypass TikTok's hefty fees.

Will TikTok Actually Go to Web3 Soon?

Looking at ByteDance's history, there's a fundamental tension at play that muddy the waters.

Web3 integration would mean relinquishing some control — something the company isn't exactly known for. The challenge for TikTok lies in balancing decentralization with the control advertisers expect and the data harvesting that powers their algorithm.

But, faced with mounting regulatory scrutiny in Western markets, an embrace of decentralization could offer TikTok a strategic advantage.

A blockchain-based infrastructure distributed across thousands of independent nodes would make the platform significantly more resistant to regional bans or shutdowns than its current centralized architecture.

And, if it alone offers a more competitive payment structure for creators, that could give TikTok a distinct edge over other social media platforms.

However, even if we see Ohanian's vision materialize, TikTok won’t transform overnight.

More likely we would see a phased approach which would roll out user-friendly features — like crypto tipping systems and tokenized engagement rewards that benefit both creators and the platform itself — first.

These incremental steps would then pave the way for more fundamental blockchain integration.

Still, just the fact that the proposal has been made is as insightful as it is ambitious.

The People's Bid to bring TikTok on-chain shows a growing recognition that web3 principles could solve many of the problems plaguing social media giants today.

And it reveals the demand for them.

The stakes couldn't be higher … even if we’ll have to watch this “will they, won’t they” dynamic play out for a while.

If successful, this TikTok experiment could create a blueprint for how established platforms can evolve toward user ownership and creator empowerment … all without sacrificing the network effects that make them valuable.

But if it fails, it could reinforce the notion that truly decentralized social media remains an idealistic dream rather than a practical reality.

Either way, the intersection of TikTok's viral mechanics with blockchain's revolutionary potential represents one of the most fascinating convergences in modern tech. And one that could fundamentally reshape how we connect, create and consume content online.

Personally, I’ll be watching the People’s Bid closely. And I’ll be keeping an eye on the blockchains that are actively working to bring about the web3 revolution.

If web3 can get a foothold in the social media landscape, those projects will be key players in making those promises a reality.

And that’s where investors like you and I can benefit from this trend.

Best,

Jurica Dujmovic