Cent Raises $3M: Jack Dorsey's NFT Platform Secures Funding

Cent: The Platform Empowering Creators with NFTs and Seed Funding

Founded in 2017, Cent initially emerged as an ad-free network designed for creators, enabling users to reward valuable contributions with cryptocurrency. This system functioned similarly to Reddit’s award feature, but utilized Ethereum for transactions. However, a significant development occurred in late 2020 when Cent’s team, based in San Francisco, launched Valuables, a dedicated NFT marketplace for tweets.

The Dorsey Effect and Rapid Growth

In March of the same year, the startup experienced a pivotal moment. CEO Cameron Hejazi recalls receiving numerous messages as Twitter CEO Jack Dorsey minted the very first tweet through Cent’s Valuables application. Hejazi described the immediate reaction as a state of “mild shivering,” with the entire team preparing for potential security challenges.

Dorsey’s NFT ultimately sold for $2.9 million, with the proceeds donated to Give Directly’s Africa Response fund for COVID-19 relief. This event provided Cent with invaluable, unsolicited publicity. Approximately five months later, the company announced a $3 million seed funding round, attracting investors such as Galaxy Interactive, Jeffrey Katzenberg, will.i.am, and Mark Pincus.

How Valuables Works: Minting Tweets as NFTs

Valuables allows anyone to submit offers on any tweet. A counter-offer can then be made by another interested party. If the tweet’s author accepts an offer – requiring Twitter account validation for access to Valuables – Cent mints the tweet as a unique, 1-of-1 NFT on the blockchain.

The NFT encompasses the tweet’s text, the creator’s username, the minting timestamp, and the creator’s digital signature. A link to the original tweet is also included, although the tweet’s content resides externally to the blockchain itself.

Competitive Landscape and Potential for Growth

The process of minting tweets as NFTs isn’t exclusive to Cent; other companies could replicate the functionality. Twitter has even experimented with distributing free NFT artwork, but hasn’t yet ventured into selling tweets as NFTs. Nevertheless, Hejazi views Dorsey’s choice to use Cent as a strong endorsement.

He believes that Twitter is unlikely to impede their progress, given Dorsey’s personal financial gain from the platform. Dorsey opted for Cent rather than simply screenshotting his initial tweet and minting it as an NFT on a larger platform like OpenSea.

Building a Creator-Focused Ecosystem

Hejazi reports positive communication with Twitter representatives, though Twitter has declined to officially comment on the relationship. Cent initially considered extending this model to platforms like Instagram and TikTok, but ultimately determined that Twitter was the most suitable environment due to its conversational nature and concentration of cryptocurrency enthusiasts.

With the new seed funding, Cent aims to further develop its platform. The company’s primary objective is to empower creators to generate income through NFTs. This involves simplifying the NFT minting process and expanding its existing social network tailored for creators.

Cent’s content leans towards creative works, such as art and writing, resembling platforms like DeviantArt more closely than Reddit. These are ambitious goals for a $3 million seed round, but the platform’s Beta version demonstrates promising potential.

Decentralizing Wealth and Distribution

“There’s already inherent value in the content we share on social media. Currently, this value is captured through advertising revenue, but that doesn’t have to be the case,” Hejazi stated. “Wealth doesn’t need to be so heavily concentrated within a single entity. We can strive for a system that distributes wealth more equitably.”

Hejazi emphasizes the limitations of current social networks, which maintain monopolies over content distribution. He points out the inability to export a Twitter audience as a simple data file for direct communication.

Beyond Advertising: A New Model for Creator Support

In addition to independent distribution lists, Hejazi envisions a shift away from the ad-supported internet. He cites Substack as a model where creators control their subscriber lists and the platform remains ad-free through user subscriptions and venture capital.

However, Cent introduces a unique element by allowing users to invest directly in creators they believe will succeed. This is achieved through the “seeding” mechanism.

Seeding and Spotting: Innovative Engagement Features

“Seeding” a post functions as a subscription to a creator on Cent’s creative side. Seeders commit to a minimum monthly fee of one dollar. This support is incentivized, as seeders receive a share of the creator’s future earnings – essentially a bet on their continued success. Cent retains 5% of profits, while the remaining 95% is divided equally between the creator and their seeders. This system allows for networking and mutual support among creators, without restricting their ability to monetize their work on other platforms like Patreon.

Alongside seeding, users can “spot” posts, Cent’s equivalent of a “like” button. Each “spot” represents one cent from the user’s crypto wallet. Cent argues that 1,000 likes on other platforms offer only social validation, whereas 1,000 “spots” on Cent translate to $10.

Addressing Payment Challenges and Future Outlook

“When we launched Cent, we embraced cryptocurrencies because we believed in the potential for individuals to earn income solely through their creativity and a crypto address,” Hejazi explained. “However, we’ve discovered that cryptocurrency ownership is still limited, hindering widespread adoption.”

Cent is actively exploring ways to simplify payments to creators, considering both crypto-native and traditional payment options. This approach mirrors that of other NFT startups like Yat, which allows credit card payments as part of its “progressive decentralization” strategy.

The success of these companies hinges on public acceptance of a decentralized, blockchain-based internet. Until that vision is fully realized, platforms like Cent will continue to innovate and reimagine how creators can be compensated online.