Current interest in social media for educational purposes has led many to consider the importance of literacy development in online spaces (e.g., new media literacies, digital literacies, etc.). Relying heavily upon New Literacy Studies (NLS) as a base, these approaches treat literacy expansively to include socio-cultural factors beyond mere skill acquisition and behavior modification. Within such expansive views, we need to better understand the relationship between identity and social participation within online spaces. In particular, we need to better understand issues of identity and literacy within social networking sites (SNS) and consider how embedded values of such media influence social participation and identity construction within them. A problem exists, however, because most prominent SNS rely upon an authentic identity model of participation that is interpreted in an essentialist manner and is contradictory to NLS views of identity. In this paper, I highlight the complexities of this issue, identify the authentic identity problem, and offer some beginning remarks for working through this problem of developing literacy in a medium while utilizing a model that may contradict the medium's assumptions.