Huobi: Blockchain brings digital content back to producers and consumers

Author: Justin_Zhang from Huobi Blockchain Research Center

According to the Huobi Blockchain Research Center, with the rise and development of UGC, decentralized content and message platforms have become a trend. In this context, blockchain, as a value carrier, has become the most powerful cutting-edge technology in this field and has been favored by more and more companies. This article will start with the development of UGC and briefly describe the application of blockchain technology in digital content with the most representative examples.

1. Overview of UGC

a) Definition and origin

User-generated content (UGC) refers to the content of websites or other open media generated by their users. Around 2005, many sites on the Internet began to widely use user-generated content to provide services. Many websites such as pictures, videos, blogs, podcasts, forums, comments, social networking, wikis, Q&A, news, and research have used this method.

b) Characteristics and impact

User-generated content (UGC) is one of the components of the Web 2.0 concept. Some user-generated content sites will also use or provide open source, free software programs or related API support for the website to promote user collaboration, technical support and development of the website.
Some user-generated content websites only allow a small part of the content to be generated by users. For example, on a sales website, products cannot be edited by users, but users can provide their own comments on the products. For-profit user-generated content websites make money from the content provided by users. Users may upload their own content for free (or for a very small fee), and the content is contributed to the website's database. The website then collects and organizes this large amount of data and builds it into web pages for visitors to browse, making profits through page advertising, sponsorship, membership fees or other various methods.

c) Development Trend

In general, UGC is developing towards platformization, and UGC will increasingly meet the profit needs of users. On some UGC platforms, some users can even make a living just by creating and disseminating digital content. Take the UGC platforms BiliBili, Orange Light Games, and DeviantArt as examples for a brief introduction:

i. BiliBili

BiliBili has captured most of the Chinese ACG user market. Its content is mainly divided into three categories: animation dramas, original videos and live broadcasts. According to data from 2015, BiliBili's public valuation has exceeded 1.7 billion yuan. The following figure shows BiliBili's historical financing situation:

ii. Orange Light Games

Orange Light Game was founded in 2012. It is an open game production tool and has a platform and community for publishing user-generated games, mainly web and mobile text avg games. The UGC model is the key to Orange Light's success. The game production interface of Orange Light Game is as follows:

The internal data of Orange Light Games revealed recently shows that as of now, Orange Light has more than 1 million authors, of which more than 20,000 have had their games reviewed, and more than 500 are contracted high-quality authors. According to data from 2015, nearly 30 people have become full-time Orange Light game authors. According to incomplete statistics from Orange Light, the number of Orange Light game projects that have been established has reached nearly 4 million, and the number of works published by users has exceeded 500,000; at the same time, the number of registered IDs on the website has exceeded 25 million.

iii. DeviantArt

DeviantArt is an online virtual world for artists. It was founded in 2000 and has tens of millions of members. On this website, users can register for free, enrich their personal homepages, open a blog or space, post their own artworks, and chat with other artists, send messages, or comment on each other's works, etc. Content is the greatest vitality of this community. Every day, 155,000 new works are uploaded to the website, and 2.4 million independent users contribute 1.5 million comments to the community every day. The website interface is as follows:

2. UGC meets blockchain

a) Definition and characteristics of blockchain

The Ministry of Industry and Information Technology's "China Blockchain Technology and Application Development White Paper" defines blockchain as follows: In a narrow sense, blockchain is a chain data structure that combines data blocks in a sequential manner in chronological order, and a distributed ledger that is tamper-proof and unforgeable by cryptography. In a broad sense, blockchain technology is a new distributed infrastructure and computing paradigm that uses block chain data structures to verify and store data, uses distributed node consensus algorithms to generate and update data, uses cryptography to ensure the security of data transmission and access, and uses smart contracts composed of automated script code to program and operate data.

Blockchain technology has the characteristics of decentralization, openness, autonomy, information immutability, and anonymity.

b) From information transfer to value transfer

The traditional Internet is more about the transmission of information, whether it is text, pictures or videos. With the help of blockchain technology, the transmission of value can be easily achieved. William Mougayar, the author of "Business Blockchain", published an article on Coindesk, The Theory of a Blockchain Circular Economy, in which he proposed a circular economy market economic chain model based on blockchain, expressing his views on how blockchain and digital currency change the way we work and how we get compensated. This new circular economy model may become a new way to create jobs and wealth in the future (as shown below).
BiliBili and Orange Light Games mentioned above also have their own value transfer systems, but because they do not use blockchain technology, their systems are prone to data forgery, and power is overly concentrated in centralized institutions, making it difficult to ensure absolute fairness in the production and consumption of digital content. The following will introduce the blockchain project of DUGC (decentralized user-generated content).

c) Example of DUGC (Decentralized User Generated Content) blockchain project

i. Decent

DECENT is a distributed self-running organization based on blockchain technology, without any third-party intervention. It is an independent Web 3.0 publishing platform for creative people, authors, bloggers and publishers and their fans. The platform can share any text, image, video or music content without national boundaries.
The following is a simplified diagram of the economic model given in the Decent white paper:

Compared to Netflix, Hulu, and Amazon Prime, on DECENT, authors do not need to go through publishers to directly mark the price of their own content. The author is the publisher and there is no need to share the profits with others.

The Decent white paper lists several application areas:

Decent's team is quite diverse, with good backgrounds in distributed technology, marketing, and law. People like Matej Michalko, Wayman Kwan, Jana Bodova, Frantisek Borsik, and Marek Zamecnik all have good backgrounds in marketing and event organization.

ii. Yours

The social platform Yours (powered by the Bitcoin blockchain) allows content creators to receive monetary rewards for sharing their work, users who discover good works can also profit from it, and content creators can obtain permanent ownership of their content.

There is currently no formal white paper.

Yours' team includes core developers Ryan X. Charles, Steven McKie, and Clemens Ley. Charles recently left Reddit (where he briefly worked as a cryptocurrency engineer). Yours' team is more technical and slightly weaker in market and marketing, but because Charles was once at Reddit, his team has a certain advantage in the community.

Latest developments:

Yours launched the world’s first Bitcoin micropayment network wallet in late October, as shown below:

Over the past 12 months, the Yours development team has explored different methods for Bitcoin micropayments. As the Lightning Network continues to be delayed and no specific timeline has been announced, the Yours developers have reached a consensus to release their own micropayment system.

Yours plans to have a generally available version of the software available in early 2017.

Charles said on social media that the team will release Yours' white paper in the near future.

iii. LBRY

The content sharing platform LBRY is a decentralized blockchain application and a corresponding cryptocurrency system that allows content creators to share their works directly without going through a third party. This not only guarantees the content creators’ ownership of their works, but also allows them to make a certain profit from their works.

The launch of the LBRY app and corresponding digital token was deliberately timed to coincide with July 4, the United States’ Independence Day.

The Windows beta version was released in late October, which includes the following functions: search, browse, download and live broadcast of all digital content in LBRY; upload original content; and transfer of LBC tokens between users. The following is the interface of the beta version:

Some commentators believe that the introduction of LBRY tokens (LBC) means that the binary era of Bitcoin and altcoins is over, and the era of "application currency (Appcoins)" is about to come.

III. Review and Conclusion

Traditional centralized media, such as television, were once our main channels for consuming digital content. New UGC platforms such as BiliBili and Orange Light Games, although not completely decentralized content publishing and consumption platforms, have allowed us to see the possibility of the success of the decentralized trend. It won’t be long before decentralized content publishing and consumption platforms such as Decent, Yours, and LBRY, with the help of the decentralized characteristics of blockchain technology, will return the focus of digital content to the makers and consumers (without publishers and distributors). This will be a common manifestation of the digital content economy in the future. Kevin Kelly also expressed a similar view in his book The Inevitable.

Disclaimer: The blockchain projects mentioned in this article are only used as examples to illustrate the problem and do not contain investment advice.

References :

User-generated content, Wikipedia;

"White Paper on the Development of Blockchain Technology and Applications in China", Ministry of Industry and Information Technology;

The Theory of a Blockchain Circular Economy, Coindesk;

Investment and financing data, IT Orange;

DECENT Whitepaper;

LBRY now on Windows. Bringing Blockchain Video to the Masses, LBRY Blog;

The Inevitable, Kevin Kelly.