Build it and they will come – or so the old adage goes. In reality, if you build a social media network based on blockchain, almost no one will come. The crypto world received another reminder of this last week when Farcaster, which raised a $150 Series A round in 2024, abruptly ended its operations.
If you’re unfamiliar, Farcaster was co-founded by Dan Romero, a former Coinbase employee, and allows users to share various content via a Twitter-like timeline. The project had the noble goal of breaking the data monopolies of platforms like Facebook by offering a decentralized alternative, where users retained control of their data and identity.
Despite a billion-dollar valuation and a few influential backers, Farcaster never built a significant audience beyond an army of bots and a small clique of VC cheerleaders. Eventually, the founders acknowledged the obvious (that no one was using Farcaster) and threw in the towel, but announced to save face that they had organized a “sale” of the protocol to a third party. To his credit, Romero also announced that he would return the $180 million he raised to Farcaster investors.
So what happened? Some on X have pointed the finger at the management team as the main reason for Farcaster’s failure, a claim that may or may not be justified. What East It is clear that there has been little appetite in the market for a crypto social network. This is evident from the failure of previous efforts, including the BitClout scam network, and Coinbase’s recent decision to focus on financial rather than social applications.
All of this reflects how much people may like the idea of using blockchain for data sovereignty, but, in reality, they will seek their solution on social media on X, TikTok or Reddit. Indeed, these platforms have millions of users while providing a much more elegant interface than what a crypto startup can conjure up.
There may also be a bigger problem for those trying to build social and other applications on the blockchain. Namely, the technology may just not be suited for this – and this crypto should stick to what it’s always been good for, which is finance.
In about 17 years, crypto has developed three flagship applications that have found a large place in the product market: Bitcoin, stablecoins and DeFi. All three fall squarely in the realm of finance. Meanwhile, the idea of using blockchain to transform other sectors like media or supply chains seems more distant than ever, although there is renewed interest around using decentralized technologies to increase privacy.
As for Farcaster itself, it may be the culmination of an earlier era of cryptography defined by a popular book on data ownership titled Read Write Own. As one observer on X noted: “With Farcaster losing its founders, Chris Dixon’s group Read Write Own the era is over. Crypto is for internet capital markets. Period.”
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
DECENTRALIZED NEWS
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THE fate of the Clarity Actwhich would provide a regulatory structure for crypto, remains uncertain amid a row over rules for stable coin returns. The bill is stalled in Senate subcommittees, but one insider thinks it has momentum. (Fortune)
Binance moves to Greecewhere it applied for a pan-European MiCA license and created a holding company. The license will become mandatory for all EU crypto companies from July 1. (Fortune)
Ties to crypto video games largely proved a failure, but a startup called ZBD with ties to a Bitcoin OG thinks it has found a pattern. He raised 40 million dollars from Blockstream Capital to focus on crypto-based payments for gameplay. (Fortune)
MAIN CHARACTER OF THE WEEK
Krisztien Bocsi—Bloomberg/Getty Images
Even at a rally in Davos heavy on crypto contentCZ stood out for a television interview with Andrew Ross Sorkin in which he described in detail the strip search process during his time in prison.
EVEN WHERE
@RampCapitalLLC
In a final sign that the era of the metaverse is definitely over, Mark Zuckerberg has turned off the lights on the remains of a project that once seemed so important that he renamed his company for it.
