The Green Sheet Online Edition

April 08, 2024 • Issue 24:04:01

How socialfi will change the fintech landscape

By Magda Schmid-Debska
PXP Financial

Socialfi is a new phenomenon that arose from the merging of cryptocurrency and decentralized finance (defi). Although it is still early days for socialfi, this advancement is poised to reshape the social media landscape. But what does it mean for fintech?

The next chapter in the fintech story?

With the advent of Web3 comes the next evolution in fintech: offering an unprecedented degree of access to digital wallets and data by merging the capabilities of decentralized finance with the user engagement and connectivity of social networks. As the world of finance continues to lead the way in digital innovations, socialfi has the potential to redefine the financial world in several ways:

• By simplifying the onboarding process and reducing traditional financial barriers, socialfi could boost financial inclusion by bringing millions of unbanked or underbanked individuals into the financial ecosystem.
• The integration of finance and social media also provides an excellent financial education platform where users can access financial advice, insights and resources seamlessly.
• Furthermore, because social tokens often come with voting rights, users are actively participating in platform governance to democratize decision-making processes and create a sense of community.
• By including digital tokenization as part of their social-media strategies, fintechs will be able to create a more inclusive and empowering financial ecosystem—bridging the gap between interactions, branding, expertise, content creation, and finances in a decentralized landscape.

Socialfi versus social media

One of the goals of socialfi is to provide an accessible, interactive hub for influencers and content creators to not only manage their interactions, but also generate income for the valuable content they share. It will ultimately benefit more than just influencers and content creators to include all users who engage with online communities.

As such, socialfi has the potential to take on traditional social media platforms by offering plenty of advantages:

• Firstly, the financial incentives for social interactions mean users don’t have to depend on advertisers to get paid. Users can now earn income from their online presence by monetizing their content, knowledge and creativity. This opens up opportunities for content creators, influencers and experts to capitalize on their social capital.
• There are also advantages in terms of privacy and data security, as the lack of a centralized database removes the risk of personal data leaks, and socialfi grants users full control over which data they want to share.
• Perhaps most importantly, asset ownership on a SocialFi platform can’t be changed by the platform’s owners due to the utilization of blockchain.

A promising start for SocialFi

Once used only for ensuring social interactions, social media is believed to have become an important part of businesses’ revenue generation. The emergence of socialfi represents a fascinating new chapter and is off to an extremely promising start. There are currently several examples of socialfi that are enjoying success, including KangaMoon, a new social-fi project with the stated aim of creating "one of the most vibrant defi communities in the world, connecting investors and meme enthusiasts in a single ecosystem." In February 2024, it attracted more than 2,000 users in a single week.

Another example is xNinja.Tech, which launched in February 2024 and offers a unique blend of social media interaction, gamified elements and cryptocurrency rewards. Since its launch, xNinja.Tech has already witnessed significant progress, with more than 79,000 active users joining the platform in its first month.

The success of such Web3 social apps will pave the way for others to position themselves as contenders against today’s social media giants. That’s not to say there are no challenges ahead, including blockchain scalability, user adoption, regulatory issues and cryptocurrency market volatility. Nevertheless, socialfi is off to a promising start. It’s already clear that the entire social media landscape will gradually change due to the advantages provided by Web3 elements and socialfi concepts.

Connecting consumers and fintech enterprises works to the advantage of both. Socialfi provides numerous benefits to communities and individuals, enabling enhanced user engagement, decentralization, transparency and lower transaction costs. In the coming years, we can expect to see Web3 and socialfi come into their own. By building a secure, open and interconnected Web3 social ecosystem, individuals will enjoy a decentralized approach to data management that will make data more secure and transparent than ever.

The end-to-end payment platform: PXP Financial provides a single unified payments platform to accept payments online, on mobile and at the point of sale. Powered by in-house acquiring, 120+ alternative payment methods and financial services, PXP processes over EUR 22.7 billion annually through its unified gateway. To find out more about PXP Financial family of companies, visit: www.pxpfinancial.com. Magda Schmid-Debska is head of marketing and communications for PXP. Contact her via LinkedIn at linkedin.com/in/mdebska.

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