Bitcoin is often compared to the Internet of the early 1990s. One of the reasons for the comparison is that is when the first wave of innovative companies really began to break on the scene and start creating the Internet that we all know and love today. When I first started using the Internet, I used to visit Justin’s page, a guy who would scour the Internet and find fun things for people to look at and do. Then Yahoo came along and made finding things ever so much easier. Then, Google came and knocked Yahoo off its perch as the top search engine.

In Bitcoin right now we are seeing that same energy. Companies like Bitpay and Coinbase have already made their mark, but will they have the ability to survive the massive competition which is surely yet to come. Companies right now that are little more than pen marks on the back of cocktail napkins might be the next Facebook or Google. It’s hard to tell, but it’s also damn exciting.

In just a few hours, Gems, a new social app based on rewarding the community and built on the Bitcoin network by way of Counterparty will be hosting a initial sale of its eponymous coin, gems. The Gems team hopes to take social networking and using the technology of the cryptocurrencies, revolutionize how we connect. With Gems, sending to people in your network is free, but sending to people you don’t know will cost you some gems – cutting down on spam. With Gems, if you see something advertised that you like, the purchase can be made with gems with one click. These are just a few of the advantages.

When something like this comes out, I often have questions. This time I sent just three to the Gems team. I got back quite a lot of detail. Enjoy the read.

BW: There are already a lot of social apps out there now. It seems to me that people may actually be a bit overloaded with the different ways they have to connect with others. I understand that people will 
be rewarded for contributing to the network, but can you lay out what you think will really hook users?

Gems introduces revolutionary features into the mobile messaging application market. Our key differentiators are:

1) Gems offers a built in wallet to enable transfer of value in addition to communications

2) Gems enables users to profit from using and promoting our application incentivizing viral growth

Every privately held social network (ie. Facebook, WhatsApp) profits from user contribution to the network (users introducing other users). The Gems model revolutionizes this industry by rewarding users directly for their relative network contribution. 

3) Gems enables fully secure, anonymous and encrypted communications for all actions available so at no point is the users data at risk or available to third party without the user’s consent.

4) Gems effectively solves the spam problem in communication networks and allows users to finally publish their username openly without fear of receiving uncontrolled amounts of unsolicited messages. We are building a social system based on attention economy (please see further explanation at the bottom)

BW:  Users will be rewarded in Gems. Are Gems more like a point system or more like a currency? What can people do with their Gems? Can they be converted to Bitcoin or traded on exchanges?

Potential uses for Gems:

(1) Users pay the network in gems for sending unsolicited messages. Unsolicited messages are different from ads. Spam is a major issue with any communications platform (consider email and spam), causing users to hide their address in order to protect themselves. Having to pay with gems for unsolicited messages solves this problem at the core.

(2) Advertisers pay the network in gems for showing advertisements. Advertisements are different from standard unsolicited messages, and are considered the standard monetization method for social networks. Most of the revenue made by giants like Google and Facebook is made from targeted ads. See separate discussion of the proposed advertising models: https://bitcointalk.org/index.php?topic=758004.msg9017388#msg9017388

(3) Another feature of an in-app wallet is the ability to purchase third party offers directly from within the app with the click of a button. This is a key advantage for advertisers.

(4) Gems are the standard and native way for sending money within the Gems network. Whether you owe a friend money for lunch or looking to buy a service from a third party you’re communicating with, paying using gems will be a very convenient method (especially for people who don’t have a strong crypto currency background). Every Gems username is synonymous with gems wallet, making payments to contacts as easy as clicking a button in the app.

(5) Anonymous users must hold a minimum of gems in order to be fully trusted by the network. One of the problems with any social network is abuse and fraud. This problem is easier to solve if users are validated against some physical identity such as a phone number. Since privacy and anonymity are becoming increasingly important, trusting users through identification is becoming increasingly difficult. Some delicate actions within the network will be reserved for trusted users, for example participating in airdrops, appearing in the user directory, sending friend requests, etc. Owning gems (and not necessarily spending them) is a quick and easy way for anonymous users to become trusted and enjoy privileged actions.

(6) Gems is a virtual currency, and like any other currency, it has a monetary value (tradable against bitcoin, USD, etc). Since the number of gems you own is a factor in daily airdrops (combined with your network contribution of active users), owning gems is key to receiving more gems. In other words, users must obtain gems in order to maximize their profit from the network.

(7) As the network grows and new features are added, some of those will require payment to sustain. Gems will always exist as a payment option for any value added features available in the app. Additionally, as new p2p reward models are created, new opt-in features will become available enabling sharing economy type activities, crowdfunding, and more. Since this is the first time the users will control the core value of the social network it is too early to predict what new novel ideas will come into existence

 BW: It does seem to me that one way to really bring on a cryptocurrency tipping point would be to make using it fun and cool. How are you going to market your service to people outside the cryptocurrency ecosystem?

The strongest selling point is that we are building a social network based on attention economy. If someone wants your attention they need to pay you directly. (With LinkedIn you pay the company to send unsolicited messages to users. In Tinder you can’t send unsolicited messages to girls you like even if you wanted to. In Instagram you can’t get the celebrities attention because their hashtag is being “spammed”. In Gems you will be able to do all these things if you pay the right price in xgems. The cost to send such an unsolicited message is dependent on the relative popularity of the recipient using a bidding system commonly employed by Google.

Pay for sending personal unsolicited messages

One of the main problems of any communication platform is spam. The fact that communication is constantly becoming cheaper enables spammers to send bulk messages to unwilling recipients. The common approach to spam is heuristics-based flagging and filtering (this is how gmail works). The problem is that this method is extremely inaccurate and only works well if the same exact spam message is duplicated thousands of times. Users resort to hiding their personal address in order to avoid spam. Consider what would happen if a celebrity like Oprah would publicly share her personal email – no spam prevention algorithm would be able to handle that.

In a world where the spam problem has been solved, there would be no need to hide your address. Everybody’s personal address will be public and we will no longer rely on secrecy to stop abuse. If you think about it, every major personal communication platform – such as email, phone, SMS, WhatsApp – fails at this point.

Why do we hate spam so much? The answer is basic economics. Reading incoming messages is time consuming, and our time is a very valuable resource. The straightforward solution is therefore basic economics as well. If consuming messages is expensive, sending them should be expensive as well.

By placing a gem price tag on sending personal unsolicited messages, we can guarantee that users pay for the right to contact you. It’s important to emphasize that sending messages between friends (approved contacts) is not considered unsolicited since the recipient has explicitly agreed to receive messages from the sender. This means that within the Gems network, sending messages between friends will always be free.

How expensive should sending a message be? The natural answer should also rely on basic economic principles. The more popular the recipient, the more expensive contacting them should be. This concept is found in the bidding system employed by Google for their adwords platforms. Every advertiser enters a bid of how much they agree to pay for a click. Roughly speaking, the system displays the highest bids, making popular keywords more expensive because people are willing to pay more for them. Borrowing this principle to our model, we can decide on the number of unsolicited messages a recipient will receive in a period of time, and take the highest bids from competing senders.

It might be a good idea to make this mechanism opt out. If a user is willing to receive unsolicited messages, they should be able to allow strangers to message them for free.

Another interesting feature of this mechanism can be read receipts. The sender of an unsolicited message is probably interested in whether the recipient has read the message or not.

Pay for sending private message ads

Unlike unsolicited messages which are personal in nature (like introducing yourself to a beautiful girl and asking if she’s single), ads are commercial in nature.

The central distribution channel in Gems is instant messaging. Private message ads are messages that will appear in the incoming message screen next to messages you receive from your contacts. These messages will be marked as promotions so recipients could differentiate between them and regular personal messages. A popular similar advertising channel is the promotion tab in gmail – where users receive promotional emails from advertisers directly into their inbox.

The key for maximizing the effectiveness of ads is targeted advertising. Keeping ads relevant makes both the viewer and the advertiser happy. Advertisers will not choose a specific list of recipients to receive their ads, but define some relevancy criteria for the target audience. Criteria can be based on content, similar to how Google adwords works – ie. show this ad to users interested in buying an engagement ring. Criteria can also be based on an audience profile, similar to how Facebook ads work – ie. show this ad to single males in the age of 20-25.

Employing content based targeting within Gems is mostly a privacy issue. Platforms such as gmail analyze (anonymously) the content of read messages and try to match a relevant ad based on keyword similarity. This can be performed automatically within Gems, but only on non-secure messages. Secure messages are encrypted client-client end to end and cannot be deciphered by the Gems infrastructure. In addition, content analysis should be opt out to protect user privacy upon request.

Profile based targeting within Gems is a little more tricky. The Gems network does not require users to fill any profile information. An interesting potential solution is to let users provide a voluntary profile by answering questions that will help Gems deliver relevant content more effectively and personally (ie. what is your age). To encourage users to give as much details as possible, the network can compensate users using gems for doing so. A natural way to implement this is by taking part of the cost paid by the advertiser and giving it to the ad recipient. We can even make the payout proportional to the amount of provided profile data. Some profile data can also be generated automatically, but usually at the expense of privacy. A good example is geo-location. As long as the user agrees to share his location with the app, we will be to use this data in order to show local ads. It’s important to emphasize that profile data will never be shared with the advertisers and will only be used by the network anonymously to deliver relevant ads.

The cost of advertising should probably be based on bids as well. The size of the target audience is limited (the number of participating users that fit the ad criteria), so only the ads with the highest bids will be shown. Another interesting question is whether these ads will be paid per exposure or per click (an advertiser only pays if a user opens their message and reads it). If we choose the latter, the natural approach would be to maximize the network profit from ads by factoring both the amount of the bid and the success click-through rate of previous exposures, and choosing which ads to display accordingly.

Pay for priority messages

Quality of service (QoS) is an interesting factor worth exploring for monetization purposes. Consider the real world example of shipping packages. The free shipping method is usually a standard service such as USPS, which takes a little longer to deliver and offers less control over tracking and delivery status. The shipper can pay extra for a premium shipping service such as FedEx, which arrives much faster and is generally more reliable.

Borrowing from this example to the Gems ecosystem, users will pay for sending messages with a higher priority. Delivery speed and reliability are probably not the aspects to play with, because the standard free messages on Gems always arrive virtually immediately and are extremely reliable.

So what aspects can we use instead? One option is the sort order of incoming messages. Normally, incoming messages are sorted according to arrival time. It makes sense that high priority messages will always appear first regardless of arrival time. Another option is to highlight high priority messages and mark them for special consideration. This can be achieved by using a more prominent notification sound or by using bolder colors / urgency icons for the message in the incoming message list. Another option is to send several push notifications regarding a high priority message if it hasn’t been opened by the recipient (instead of just a single one like we do with normal messages). Another option is to provide tighter control over delivery indication and notify the sender more prominently immediately when the recipient has opened the message. Another option is to display priority message inline in the incoming message list, meaning the recipient will not have to click on them in order to read their content.

Generally speaking, if recipients are aware that an incoming message was paid for, they will be more inclined to open and handle it in a timely fashion.

Pay for a sponsored appearance in the contact list / user directory

The Gems user profile will potentially include a status message. Every user can choose their own status line – which is very similar in concept to a Facebook status or WhatsApp status. This status line will appear below every username in the contact list / user directory.

The status line is an excellent platform for a quick 1-line advertisement. Consider the following use case – a startup looking for new developers. A member in the startup will set their status to “looking for talented ios/android developers” and invite any of their contacts to message them about potential applicants they know.

It makes sense to make these appearances sponsored as well. A sponsored result will probably appear first in the list of contacts (and probably be labeled as a sponsored result). In addition, we might also show sponsored results in user contact lists which aren’t related as direct contacts. For example, even if I don’t personally know the startup member looking for a developer, I will still see their sponsored result when I enter my contacts screen or when I search in the user directory.

Keeping advertisements relevant is similar in nature to previous channels, such as targeting by content and targeting by profile. In addition, another interesting criteria is the distance between users (hop count or connection degree – 1st degree are immediate friends, 2nd degree are friends of friends, etc). It makes sense to show sponsored statuses from users who travel in similar circles.

Pay for a commercial company page / e-commerce

The traditional entities within the Gems network are private individuals. Any user can join Gems and connect with their friends. Just like how Facebook grew to accommodate businesses as an entity within the network, Gems might make the same decision as well. Registering a new user as a commercial entity / business is a good candidate for a paid action.

How will company / business users be different from regular users? First of all, the profile page will have a commercial orientation and show relevant details about the business – such as an address / map location, website, logo, phone number, email, link to mobile app, opening hours, etc. In addition, business users will be geared towards e-commerce. Since the Gems network allows for easy fund transfers between users, it will be convenient to use for light e-commerce (1-click purchases).

Deeper e-commerce capabilities will allow businesses to present a goods/services catalog, support checkout with Gems and provide light order management.

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