This is part of "Blockchain Decoded," a series looking at the impact of blockchain, bitcoin and cryptocurrency on our lives.
Phil DeFranco has 2.2 billion views on YouTube. If each one were a penny, the stack could loop around the planet once and then some.
Now imagine if every view and every "like" on YouTube deposited a penny in a piggy bank, one that's broken open daily to pay both fans and stars.
That's the basic idea behind Props, a cryptocurrency that aims to reward anyone who contributes to a new social live-video app called Rize. Anytime you stream, you can earn Props. Every time you get a "like," you can earn Props. If a friend of yours joins, you earn Props.
Theoretically, it's a YouTube where the only participant not getting a payday is YouTube itself.
"The biggest part is just removing the middleman as much as possible," DeFranco, an adviser to and investor in Props, said in an interview last month. "The thing that's really exciting about Props is that it's creator-forward first."
Like cryptocurrency-based social network Steemit, Props and Rize are aiming to create a new ecosystem in which blockchains and tokens recompense everyone whose contributions make the network worth visiting. It's one of the many uses of blockchain, a technology best-known for underpinning bitcoin but used in a wide range of applications, such as tracking prescription drugs, tracing organic foodsand ensuring the legitimacy of elections.
Props payouts are based on a formula that evaluates how valuable your contribution is: A stream with thousands of viewers will work out to more Props than you'll earn from a live-video chat with friends in a virtual living room. You can convert Props to dollars, you can use them to send virtual gifts on Rize, or you can hold onto them if you believe they'll rise in value.
Props is one of the latest cryptocurrencies to crop up after the massive attention garnered by the likes of bitcoin and Ethereum, and another example of how their foundational technology -- blockchain -- is poised to change your life.
Blockchain paradox
Blockchain is a technology designed to hard-wire trust and security into transactions. But the irony of blockchain and cryptocurrency is that they're so unfamiliar and confusing to the average person, they've created a breeding ground for scams and mistrust.
DeFranco's advocacy for Props, for example, brings him adjacent to the dubious realm of celebrity cryptocurrency endorsements.
ocialite Paris Hilton and boxer Floyd Mayweather, for instance, have hyped cryptocurrencies to their large followings. "I'm gonna make a $hit t$n of money on August 26th," Mayweather said on his Instagram account in July, four months before the Securities and Exchange Commission issued a warning to token-touting celebs. If stars don't detail how they're benefiting from a token offering, they could be breaking the law, the agency said.
DeFranco isn't exactly tweeting about the $hit ton of l00t he's going to score with Props. "I'm talking about this because it's something that I believe in," he said. "I actually plan on using it. It's not a cash grab for me."
DeFranco, whose news commentary channel on YouTube has 6 million subscribers, is an adviser to the team launching both Props and Rize, which opens to the public Feb. 23 as the first place Props will be earned and paid.
He's staying on the legitimate side of the fence, he said, by being transparent and encouraging people to research Props' white paper. In cryptocurrencies, he said, "you have a lot of situations that people really are just being blinded by hype."
As payment for his role as adviser, DeFranco has been awarded Props during a token distribution event. (Longtime YouTuber Casey Neistat is another Props adviser and was also awarded tokens.) DeFranco is personally investing some of his own money in Props too, but he's keeping the amount private.
"While he is open to discussing what he's invested in, he doesn't disclose actual details of the deals," a representative said in a follow-up email, after DeFranco deferred to his legal team when asked about how much he's investing.
A new model
Ultimately, DeFranco was attracted to Props because of its mission to toss out the current model divvying up the riches of online video and rebuild it based on rewarding creators foremost, rather than enriching a tech giant, he said.
Props and Rize are being launched by the same team behind YouNow, a social live-video app. YouNow has 42 million registered users and has generated $50 million in sales of virtual goods, such as paid "likes" that help the receiving broadcaster trend on the network.
Adi Sideman, the founder and CEO of YouNow, said he wanted to decentralize the current business model of user-generated video, in which big entrenched players rely on creators and users to generate billions of dollars in value. Typically, that value goes back to founders and investors, while some creators get a cut and users get zero.
"In this new business model, we're no longer rent collectors where we take a 40 to 50 percent transaction fee," he said.
Karthik Kannan, a management professor at Purdue University's Krannert School of Management, said Props' pedigree, having descended from the same team behind YouNow, lends the new ecosystem legitimacy. YouNow has already built a virtual market of coins and gold bars, without a cryptocurrency foundation that many of its users take part.
"This isn't any random company," he said. "This YouNow community has some credibility already."
Launching a cryptocurrency can sometimes be a sneaky way to raise a bunch of money and jet, but the way YouNow has devised Props and Rize indicates that the company is creating its cryptocurrency in good faith.
"They could have gone and stolen a golden egg, but they already have an ecosystem that was laying golden eggs," Kannan said. "They will probably generate more value by letting that ecosystem flourish."
Make no mistake, online video creates riches. Google's YouTube, the biggest digital video source in the world, booked an estimated $10.7 billion in revenue last year, according to analyst Michael Nathanson of MoffettNathanson. Like many sites, YouTube gives a cut of that back to people who run ads next to their videos -- but it keeps a large portion of those ad revenues to itself, and it takes a cut of the "tips" that viewers can give to creators, like a Super Chat donation during a live stream.
But some complain that systems like YouTube, which wouldn't exist without users voluntarily posting their creations and ideas, don't return a fair amount of value to those contributors.
"So many creators right now just feel down. They feel like despite what they're doing, they can't make anything from it," DeFranco said.
Still, the wider cryptocurrency universe is too much of a complicated mess even for DeFranco, who built his name on plain-English explanations of complex cultural news.
"It's the reason why I haven't done an 'explaining cryptocurrency' video," he said. "I'd have to do a 30-minute video to make sure I didn't sound like an asshole."
Source: https://www.cnet.com/news/youtube-star-phil-defranco-cryptocurrency-props-wants-a-payday-for-you/
