Behind Satoshi Nakamoto’s creation of Bitcoin lies a simple, core belief: that financial transactions in a digital world can be peer-to-peer. To that end, certain projects have looked to extend blockchain technology to a variety of services including content curation, digital advertising/marketing, and social media/content platforms. Gifto is tackling all three of these areas with its digital gift service. Using Gifto, consumers will be able to pay creators for their content with virtual gifts, which can be bought and exchanged for Gifto tokens on the service’s platform. Though all this may sound silly, it actually offers a peer-driven solution to the inequitable revenue sharing model that digital advertising creates. If you’re still not convinced, keep reading – we go over the specifics in detail below.
Say Hello to Gifto
Simply put, Gifto is a decentralized protocol built on Ethereum that allows users to exchange virtual gifts through digital/social media platforms.
It’s the brainchild of CEO Andy Tian and his company, Asia Innovation Group. A former employee of Google, Andy ran Google’s mobile development in China, introducing Android to Chinese markets. Afterward, he went on to found a number of startups, the latest of which is AIG.
In essence, Tian positions Gifto as an improvement on the virtual gift-giving mechanism of Uplive, AIG’s flagship product. Launched in 2016, Uplive is a live streaming service that allows users to broadcast or watch real-time videos on their smartphones. In China alone, live streaming was a roughly US$5 billion industry in 2017.
And Uplive has played its part in this budding virtual sector. It’s currently available in over 100 countries, with an active user base of more than 20 million individuals. According to the South China Morning Post, Uplive was recording US$5-10 million in revenue per month going into 2017. Users don’t have to pay for the service, so where does this revenue come from, you might ask?
Virtual gifts. No, I’m not kidding. With Uplive, viewers can reward content creators with virtual gifts that they purchase on the streaming service’s marketplace. The platform processes upwards of 25 million virtual gifts a month, and these gifts’ values range anywhere from US$0.30 to US$148. Some broadcasters even report monthly earnings of US$50,000 for their live video streams.
That’s some serious dosh, and Tian wants to take this concept and put it on Ethereum’s blockchain with Gifto.
You might be asking yourself why anyone would pay money for a virtual gift, or how this could drive a US$5 billion industry. Well, people are willing to pay US$100,000 for a virtual kitten, so clearly the internet is full of niches that people can (and will) fill.
But on a more serious note, virtual gifts actually solve a problem in the digital advertising space. Consumers have grown used to sponsored ads on YouTube and Facebook that generate revenue per views, and they likely don’t think twice about these nuisances (especially if they have ad blockers enabled). Well, YouTubers don’t actually see much of that profit at all, as the majority of revenue goes straight to YouTube or the digital advertising firms that publish the ads.
Virtual gifts eschew this model entirely and place purchasing power back into the hands of individuals. Consumers can reward content they like with virtual gifts, and broadcasters can profit from these gifts by selling them back through Uplive. Disregard the fact that these virtual gifts are glorified emojis with a price tag – that’s beside the point. They’re the vehicle by which consumers and producers can drive and fund their own entertainment economy, without sacrificing the lion’s share of their revenue to a third party entity.
But Why Gifto?
Gifto takes Uplive’s virtual gift model to the blockchain, making the process more secure, transparent, and adaptable. Tian wants to use Ethereum-powered smart contracts to streamline the virtual gifting process.
“By integrating these contracts into the virtual gift itself, a transaction could automatically be executed, allowing for the instant delivery of revenue share to gift creators and producers,” Tian believes.
This will allow broadcasters to accumulate profits directly from viewers, rather than having to go through Uplive, a process that can take up to 30 days according to Tian. Moreover, by using Gifto tokens (GTO), there won’t be any need to process the dozens of fiat currencies that Uplive currently accepts to support the virtual gift marketplace. By using only GTO for purchases, users won’t have to juggle a handful of international currencies, and blockchain-based smart contracts will nullify the risks of fraud and canceled transactions that Uplive has experienced with credit card payments in the past.
Finally, Tian envisions a future where Gifto can be integrated with multiple social media/entertainment applications.
“The Gifto protocol will be available to any content creator on virtually any platform, including YouTube, Facebook and Instagram,” he said. “For the first time ever, content creators on these platforms won’t be constrained to the advertising-only model that generates very little revenue for the creators without millions of followers. Now, anyone will be able to accept virtual gifts through the Gifto platform and generate meaningful income from their content, directly from their fanbase.”
This means that, in the future, consumers will be able to award content creators in virtual gifts on a variety of networks. Creators can then sell these gifts on the Gifto platform’s marketplace in exchange for GTO, which they can then liquidate for fiat if they so choose. Additionally, virtual gift designers can list their creations on the marketplace at their own price.
A Concluding Take
So when you add up the logistics of Gifto’s model, you have content creators, consumers, and curators all fueling the digital entertainment/media industry using this platform. In effect, this ecosystem will ensure a more equitable payout to content producers for their services, cutting out the middlemen that the digital advertising model has created. Consumers can direct funds to their favorite producers, allowing them to contribute to their success in ways that current models don’t allow.
Even if you think the concept of virtual gifts is silly, value is in the eye of the beholder (just look at CryptoKitties). Looking at the bigger picture, Gifto is providing solutions that can help democratize the arguably broken revenue model that drives digital media. If Gifto ends up integrating with networks outside of Uplive, who knows? You might be tipping that crypto-trader you follow on Twitter in a digital Lamborghini one day for their investment advice.