Nader Al-Naji is a tech entrepreneur and software engineer, known as the CEO and founder of Decentralized Social (DeSo), a layer-1 decentralized social network. He is also the founder of BitClout, a proof-of-work social media app on DeSo. ^[1]

Education

Al-Naji graduated from Princeton University with a Bachelor of Science in Engineering in 2013. ^[1]

Career

While at Princeton University, Al-Naji interned at D. E. Shaw & Co., an investment management firm, where he stayed to work as a quantitative software engineer until 2014. Afterward, he worked for Google as an engineer for the Google Ads team until 2017. He then left Google to start his first company, Basis.

Basis

In July 2017, Al-Naji founded Basis, an algorithmic cryptocurrency protocol. He wanted to create a monetary system that could resist hyperinflation and centralized control. Basis's stability was maintained by motivating traders to purchase and sell according to fluctuations in demand. These motivations were established through periodic on-chain auctions of "bond" and "share" tokens to regulate the supply of Basis. ^[1][2]

However, the imposition of US securities regulations set by the US Securities and Exchange Commission (SEC) had a detrimental effect on Basis's launch prospects. Legal analysis indicated that bond and share tokens would likely be classified as securities, necessitating compliance measures. Unregistered securities, bonds, and share tokens would be subject to transfer restrictions, requiring Intangible Labs, the company behind Basis, to initially limit token ownership to accredited US investors and perform eligibility checks on international users. ^[2]

Enforcing these restrictions would entail maintaining a centralized whitelist, compromising the system's censorship resistance, and reducing liquidity in on-chain auctions. This reduction in auction participants could undermine Basis stability and diminish its appeal to users. Moreover, the perpetual issuance of bond and share tokens under the monetary policy would necessitate indefinite transfer restrictions and a centralized whitelist, posing challenges to the development of the Basis ecosystem. ^[2]

Since there were no other viable options or way to balance the system while following regulation, Al-Naji shut down Basis on December 13, 2018, and returned all invested capital. ^[2]

Decentralized Social (DeSo) & BitClout

After the Basis project shut down, Al-Naji started working on trying to put social media on a blockchain. In March 2021, Al-Naji, under the pseudonym “Diamondhands,” launched BitClout, a blockchain protocol utilizing proof-of-work consensus tailored for social media applications. Developed by an anonymous team of developers, its supporters exclusively held its native token, BTCLT. The token was the transactional fuel and was anticipated to play a role in a governance framework overseeing the project's BTC reserve. Plans were in place to release the code on the BitClout website, enabling others to participate as nodes or miners without requiring permission. ^[3][4]

However, BitClout encountered significant controversy, particularly regarding the differentiation between opt-in and opt-out approaches for early accounts on the platform. While most other social currency platforms strictly adhered to an opt-in model, where users chose to participate, BitClout pursued an aggressive growth strategy by adopting an opt-out approach. BitClout automatically created 15,000 accounts by scraping information from popular public Twitter profiles, allowing users to buy “Creator Coins” shares associated with well-known figures like Kim Kardashian and Elon Musk without explicit consent. This approach sparked criticism, particularly from individuals unaware that accounts had been set up on their behalf, including many crypto-savvy users in the initial seeding process. ^[3][4]

At launch, BitClout had an unusual feature. Users could invest in the platform and convert Bitcoin into BitClout, but there was no option to withdraw funds. Users were required to acquire BTCLT to participate in activities on the platform. While users could convert BTC into BTCLT, there was no mechanism to convert BTCLT back into BTC within the platform. ^[4]

Six months after launch, Al-Naji confirmed his identity as “Diamondhands” to the public and explained in an interview with Coindesk that BitClout was a demo app for his new blockchain, Decentralized Social (DeSo) and why he tried to be an anonymous figure for BitClout: ^[5]

“We wanted to essentially launch a demo app that showcases the features of the DeSo blockchain, but what happened, which is kind of weird, is the BitClout app kind of exploded. A lot of mainstream celebrities joined – Tyga, Antonio Brown, Diplo, Blau all have profiles on the DeSo blockchain through the BitClout app.”

“I was anonymous because I believed that it would inspire the community to decentralize the ecosystem faster. The less people rely on a centralized entity to call the shots, the more they feel empowered to improve and build on top of the ecosystem.”

In another interview with the My First Million podcast, he explained more about BitClout’s launch and how he navigated the discourse at the time: ^[6]

“We thought, 'Hey, we should really launch a prototype app to start testing it out in the field,' so to speak, and that was BitClout. We didn't want it to go mainstream until at least the middle of this year, around the middle of 2021. But launching earlier is obviously better, so we accelerated. In March, we planned to share these password-protected links with a select group of people, just to get a few hundred users and see how the blockchain is handling this level of activity. However, what ended up happening was that it spiraled out of control, and the links were massively over-shared.

Al-Naji then discussed how he tried to clear up misunderstandings from negative press and how he wanted to do what Satoshi did with Bitcoin: ^[6]

“I kind of had to go out there, you know, I had to start, you know, saying, "Hey, like this is what this is and this is like, you know, what's going on." But for me personally, you know, I've always been really, I think I've always admired how like Satoshi kind of launched Bitcoin without creating kind of like a centralized person that everyone kind of relies on or like this is our, you know, our guy. So it was really I wanted to kind of do the same thing there, and so I launched with, you know, pseudonym Diamond Hands. And immediately, you know, it was kind of very hard to get press; it was hard to get people to kind of listen to the story that that is the real story versus making up their own. And so we had a lot of press saying, "Hey, like this is a scam," and by the way, because it was just a prototype, there were a lot of things missing so you couldn't cash out your money...Any other time I would say that's a complete scam. Also, none of the code was open, so, even though it's a blockchain and it was running on a few dozen nodes, like no one could actually audit it or be like 'hey this is a real thing.' Uh so, we were just not prepared at all.”