A token of your affection

Crypto's growing fast. So is the creator economy. Why not mash them together? That's the notion behind a growing set of companies hoping to monetize fandom more directly than ever before through social tokens.

The $100 billion creator economy embraces YouTube and TikTok video makers, Substack newsletter writers, Instagram fashion influencers and more. Some make money through product placements and other forms of advertising, some get paid directly by the social networks they create on and increasingly some seek direct support from fans.

Crypto promises a new and different model for direct support. With tokens, artists and businesses can give more direct and tangible rewards to fans and customers.

Social tokens promise to drive lasting loyalty. Think of them as airline miles for fans, but easier to cash in.

• There are lots of examples. Socios has been helping European football clubs and other sports groups issue tokens that fans can buy. Depending on the rules, fans can vote on league decisions or get access to special experiences.
• Rally, headed by Kevin Chou, the former CEO of gaming company Kabam, enables anyone to create their own Ethereum-based coin. Artists like Grammy-winner Portugal the Man have created their own coins. Fans might use coins to get exclusive content or join a private Discord.
• Companies like Roll and Fyooz have also issued fan tokens.
• Patreon is dipping its toes in the blockchain: It's allowing creators to issue social tokens as a reward, but only to members who are paying the old-fashioned way.

These tokens could even upend social media. There are social networks being built around this idea.

• BitClout, Steem and Hive are among the crypto-based networks under development.
• On BitClout, every profile has its own coin that anyone can buy or sell. (The company drew criticism for setting up profiles for prominent figures in tech and crypto without permission.)
• This isn't lost on Facebook and Twitter, which are investing in decentralized social media and creator products.

What could go wrong? Plenty.

• Coin prices could swing wildly. Random whales are known to swoop in and drive up prices of obscure tokens. That could leave fans shut out of their favorite artist's token.
• Or the price could abruptly collapse, which could leave fans angry or disappointed.
• Social tokens may be uniquely vulnerable to the "rug pull" scam — look at the squid token that left "Squid Game" fans high and dry.
• Not everyone wants in on the crypto boom. Some Patreon creators, for example, don't love the idea of accepting bitcoin as a payment method because of its environmental impact. They might be similarly skeptical about the idea of issuing their own tokens.

Ultimately, the benefits of putting fandom on the blockchain may be intangible. David Berkowitz, a marketer who runs a Slack community online for others in his profession, isn't worried. He uses Rally to issue a $CMO coin, which is redeemable for ads in his newsletter, NFTs or other benefits. Anyone can buy or sell it, but he doesn't see most people getting involved to make money on coins like this.

So why buy in? For many in crypto, the value is in proving the power of collective effort. There may be some upside — and plenty of downside — in speculation. But the ups and downs of crypto prices can't erase the feeling of ownership a true fan has.

— Tomio Geron

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From Protocol | Fintech

There's a 17-year-old cybersecurity rule at the center of the Robinhood hack. Cybersecurity requirements for brokerages are largely governed by a SEC rule written in the year 2000 and last updated in 2004.

Overheard

"Web3 wallets are to crypto what the browser was to the internet." —Simon Taylor, in his Fintech Brain Food newsletter.

"Blanket statements like 'Wild West' thrown out to categorize the entire crypto industry are not language of public policy, but rather of politics." —Stuart Alderoty, Ripple's general counsel, in a tweet.

3 questions for Poulomi Damany, general manager of assets and tax at Credit Karma

What fintech trend is most troubling for you?

Fintechs have come a long way in making finances more accessible to the young and underbanked. Now, anyone with a smartphone can open a bank account, invest in cryptocurrencies or even set up their entire investment portfolio directly from their device. The convenience, speed and access provided by these new companies is a big step forward in giving everyone opportunities to save and build wealth. However, this democratization does pose elevated risk to consumers without adequate guardrails and education. As we continue to build sophisticated products, it's our responsibility to educate consumers along the way, arming them with the information and knowledge needed to use the products properly.

What's your favorite pastime that doesn't involve a screen?

It's been hard to do with COVID, but when I'm not working, I love to travel. My favorite part of traveling is getting the opportunity to immerse myself in the culture of an unfamiliar place, taking in the local sights, sounds and tastes of the location. Much of my extended family got together in India for Diwali this year, the first time since COVID. As you can imagine, I was experiencing all kinds of FOMO when they canceled altogether the day before celebrations kicked off. But I'm excited, now we're planning a trip for next year and I can't wait.

What was your first fintech or tech job?

I joined Credit Karma in January 2017 after serving as a digital services expert at the United States Digital Service, a startup in the White House that pairs leading technologists with public servants to improve the usability and reliability of our government's most important digital services.

Before my role as GM of Credit Karma Money and Tax, I was the vice president of data products, overseeing the platforms and models that power Credit Karma's predictive, data-driven recommendations. I've spent most of my career helping companies use data to enable fast and scalable experimentation, drive engagement and create user-focused services.

Need to know

Venmo will let users track crypto prices. The payments app can now send users push notifications when cryptocurrencies including bitcoin, litecoin and bitcoin cash go up or down by 5% or 10%.

BM Technologies is buying a bank. The fintech company is acquiring community business lender First Sound Bank in a $23 million deal.

Making moves

Sam Hillier joined dv01. Hillier will serve as the online fintech transparency software company's director of ESG.

Loren Padelford joined Podium. The former Shopify executive was named chief operating officer of the customer interaction management software company.

Alex Hart was named Payscale CEO. Hart, the former CEO of 2Checkout, will succeed Scott Torrey, who is stepping down as chief executive of the compensation software and data company.

Glenn Kurban is joining Capco. The veteran executive was named a partner at the tech and management consultancy company.

Deal flow

Stori raised $125 million. The Mexican credit-card company's series C round was led by GGV Capital and GIC.

Socure raised $450 million. The digital identity verification company's funding round was led by Accel.

GoTo Group raised more than $1.3 billion. The Indonesian technology company's pre-IPO funding round was led by Abu Dhabi Investment Authority. GoTo includes the ride-hailing giant Gojek and the ecommerce company Tokopedia.

Podium raised $201 million. The customer relations management software company's series D funding was led by YC Continuity.

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Data point

$4.7 billion: That's the projected market for in-vehicle payments, transactions done through vehicle systems without requiring smartphones, by 2026, up from $87 million in 2021, according to Juniper Research.