Problem: An ever-increasing number of companies are storing and selling your data whether you like it or not. This data is independent of each company as well, meaning Google has a different profile of you than does Amazon, but to be sure, they are both leveraging their own conjured personality to make money. This is not only a problem because of privacy issues, but it also puts users at a disadvantage because they are not able to control the social networks that they so often use. This leads to hundreds of accounts and different social presences across the entire internet, which feels inefficient. Coupled with the privacy issues, it seems that with how interconnected our world is, social networks are ripe for a change and an amalgamation.
Solution: Farcaster is creating a platform that solves this issue by leveraging a blockchain-based foundational social layer. To explain, Farcaster is a social app that allows users to control their own data and identity on a platform that anybody can interact with and build on. When a user creates a Farcaster account, they are the stewards of their profile, and because Farcaster is a foundational layer, whatever application users want to build on top of the foundation is able to be built. Imagine this, you have an Instagram account and that is your foundational account, you put all your effort into building your Instagram network and personality. But, you want to be on an app that allows for payments, blog posts, also a cooking-specific app, and can’t forget TikTok, Netflix, and Hulu. As of now, all those apps would require different profiles and datasets. However, if that hypothetical Instagram profile was actually a Farcaster profile. Then there would be a Venmo, TikTok, Netflix, and Hulu sitting on top of Farcaster, ready to be used under that same profile. Importantly, if you choose not to share your data with any of those apps, it doesn’t get shared; it is stored in decentralized hubs that are maintained by the community and are completely private. In the end, this creates a decentralized system that gives users much more agency than they now have in the social network arena and solves a lot of the data problems people face every day.
Founders: Dan Romero and Varun Srinivasan are the founders of Farcaster and were both well-positioned at Coinbase before founding. Dan went to Duke University, and Varun went to Carnegie Mellon. Varun has founder experience as a co-founder of Sound Focus, which was a YC summer 2013 company.
Implications: Decentralized social networks are an extremely exciting category. To bet on any one right now would be a complete shot in the dark. I think this because the networks will be successful or not based on an outsized metric of taste. Decentralized social networks must have incredible taste because the technical base and features of the company are what the users will build out themselves. With both of these founders coming from a crypto background, I think their taste could be well-received, but an investment in a company like Farcaster is a massive upside, massive downside bet. Going beyond investing, though, decentralized social networks present a very exciting future. A future in which personal ventures are in the hands of actual people. In my opinion, one of the most exciting aspects of this is in the capital markets space. With blockchain, users are enabled to do any of the things that big banks do, but do it on their own. If you want to sell your mortgage on the open market, you hypothetically could. If you want to invest in other people’s mortgages, you could do that too. It gives a sense of financial freedom that nobody has ever seen before. People always say, “too big to lose,” and that is partly because some companies are so influential that they get bailed out of bad practices because of ripple effect fears. However, companies are also too big to lose when they have access to thousands of financial and market systems that the retail investor can’t sniff. Social networks on the blockchain give those same retail investors a chance to control their destiny and access new, decentralized versions of the same systems. Not only this, but it is built along the blockchain community, which holds privacy and security at the root of its cause. This makes me very excited about people having more agency and autonomy with these future systems. I think this will lead to a boom in founders and the next wave of the American Dream, but that is for time to tell.
Conclusion: To be sure, decentralized protocols are taking over wherever people look. If a company like Farcaster can successfully be the foundational layer to all those protocols, it will be a massive success. Not only that, but people will be able to control a little more of their actions, data, and identity online, which is an almost universal desire. I think newfound freedom and autonomy might be the catalyst for a new age of exploration, creation, and risk-taking that makes for a very exciting future.