Stacker News is a Hacker News style website that requires users pay sats to post or comment. Sats is short for satoshis, the atomic unit of a bitcoin equal to one one-hundred millionth of a BTC, or 0.00000001 BTC. There will only ever be 2.1 quadrillion sats, and as I write this the sats/usd exchange rate is 3,575 sats/$.
Stacker News has an integrated non-custodial lightning wallet which allows users to frictionlessly pay sats to post and send sats to other posters as a tip, as well as move sats into or out of their Stacker News wallet from external lightning wallets. Click button, send sats. No entering a credit card number or logging into a digital wallet with a username and password.
A lightning wallet is just an internet-connected bitcoin wallet (i.e. a “hot” wallet) built on the lightning network, and the lightning network is a bitcoin layer-2 scaling solution allowing for signiciantly increased transaction throughput and lower costs than transacting on the Bitcoin network, i.e. the base-layer. On the lightning network, you can send sats around instantly because you don’t have to wait around for the next block to be confirmed (the Bitcoin base-layer adds a new block of transactions to the blockchain on average about every 10 minutes), and you can send for virtually no cost, which enables micropayments. Micropayments (payments of, say, a fraction of a penny) are not economically feasible using the legacy tradfi system, because it costs more to send a micropayment then the micropayment is worth.
Here’s my profile if you want to check it out. I’ve stacked 469 sats ($0.13) in three posts!
What I think is fascinating here is the potential new types of business models and user experiences micropayments enable. Tired of getting spam texts or emails? Opt-in to a network where users need to attach 10 sats to every message they send.
But I think the really big idea here is disrupting social media and internet search advertising-based business models.
Start with social media. Advertising has always been the business model that’s made the most sense for social media companies because it’s massively, massively easier to grow a network when it’s free to join. Then, once the network has enough users and network effects are established, you monetize all those users by serving them ads.
This has the effect of accruing all the monetized network value to the platform instead of the users. Facebook/Instagram/Twitter/YouTube make hundreds of billions in advertising revenue and users pay, and receive, nothing unless they strike their own deals to advertise on their own feed (YouTube has an advertising split with creators, so in that instance the users do capture some value). Sure, they presumably get some form of entertainment or educational value, but the fact is users are leveraged (exploited?) for hundreds of billions in annual ad revenue.
Twitter, even before Elon, was/is perhaps trying to veer away from this model by charging a monthly subscription fee, but the ridiculous outcry from millionaires over paying $8/month to support a social media platform that is not captured by advertisers makes me think the masses might not opt-in at a high enough rate to make subscription social media a viable business.
But, what if Twitter integrated a lightning wallet and made it, for example, 100 sats ($0.028) to send a tweet, with that payment going to Twitter, and 1 sat ($0.00028) to like and 10 sats ($0.0028) to comment, with that payment going to the content creator? I think this would be awesome and would accomplish so many things.
First, it would largely solve the bot problem by attaching a cost to posting, liking, and commenting.
Second, it would allow content creators to share in the value they create for the network in a very granular and fair way. A post would only need to get ~5 comments and ~50 likes to breakeven, and the stakes are low with only a ~$0.028 up front cost to post. All users, including power users and highly visible, respected voices would get their fair share of value back from the network for contributing to the public discourse.
To put some numbers to it, Elon’s latest tweet (happy belated 420 to those who celebrate) received 20.1k comments and 278.6k likes. Under the proposed structure that’s 20,100 x $0.0028 = $56.28 in earnings from comments and 278,600 x $0.00028 = $78.01 in earnings from likes. Some portion of those comments and likes are from bots, so the numbers go down accordingly, but you get the rough idea.
Would this make sense for Twitter if users bought in? About 200 billion tweets are sent in a year. Multiply that by $0.028 per tweet and you get $5.6 billion in revenue. Twitter’s revenue in 2021 was $5.1 billion, so that’s in the ball park!
You can figure the number of tweets sent decreases with the reduction of bots and the $0.028 charge giving some fraction of real people pause before they hit “send tweet,” bringing revenue down. On the other hand, the signal to noise ratio and density of high value content on the platform probably increases immensely.
To play with the numbers further, why not 1,000/100/10 (~$0.30/$0.03/$0.003) sats to post/comment/like instead of 100/10/1? If users accepted that with less than a 90% decrease in network activity, that brings revenue up. You’d have to find the pricing sweet spot, but you get the idea.
Let’s assume the 1,000/100/10 sats pricing structure causes network activity to decline by 50%. This means Twitter makes 100 billion tweets x $0.028/tweet = $28 billion in annual revenue. Twitter has 330 million monthly active users. Monetizing them at $7.50/month through micropayments seems, idk, reasonable? Coincidentally (or not?), that’s pretty close to the $8/month they are charging for verification, and also close to the $7.95/month Meta earned per user on it’s family of apps in 2022.
Maybe the right strategy is to start cheap at 100/10/1 sats and plan to increase pricing ~10% a year for a decade to get to 1,000/100/10 sats (or the sats/usd equivalent of $0.30/$0.03/$0.003). All this to say, we’re in the right ballpark here and the numbers seem reasonable.
But, remember, Twitter captures only a fraction of the value created on the network, with a large portion being paid out to users on an extremely granular and fair basis based on their contributions to the network as determined by the free market. The total value creation of the network is monetized much more efficiently and distributed more fairly. Under this model, content creators get a much larger piece of the pie, as opposed to subsidizing both lurkers and the platform as they do today.
Speaking of lurkers, how about monetizing them more efficiently via a sat streaming model? If you’re logged in to Twitter, sats get streamed from your wallet to the platform at a fixed rate of sats/unit of time. Maybe it’s 100 sats/minute. You scroll Twitter for an hour, you pay $1.80. Your wallet empties, you’re logged out until you top it back up. As a user, would you prefer that to being served ads? I certainly would. Not to mention, this might be a highly effective antidote to doom scrolling and have positive net benefits for society in providing people an incentive to limit their time on social media.
I’m hopeful that Elon, as a DOGE fanatic and somebody who seems to understand bitcoin, figures this model out with Twitter. For a bitcoiner, implementing this model successfully would have the added, and more important, benefit of giving hundreds of millions of twitter users a good reason to acquire their first sats and learn how to use a lightning wallet on the web, and experience the magic of frictionless, costless microtransactions first hand. Maybe Jack was the right person to run Twitter all along.
Think about Google having an option where you connect your lightning wallet and you pay 10 sats to run a search query but you don’t get served ads. Sounds nice, right?
But here’s the reality. Google would jump at the chance to pay you 10 sats to run that search query if you opted-in to being advertised to. And if Bing offered 100? Google would probably offer 200.
Google’s search ad revenue last year was $162.45 billion on 1.2 trillion searches. That’s $0.135 in revenue per search.
200 sats is $0.053.
This is how we recapture the value of our data online, instead of continuing to farm it out to the internet giants for free.
Right on cue: https://twitter.com/stephanlivera/status/1654128466575654913
And right on cue: https://rewards.bing.com/