Do You Understand Steem?
Steem Is Not Facebook, Its LinkedIn!
By Blake Letras
Disclaimer:
This post is from an active participant of Hobo Media but does not necessarily reflect the views of the whole Hobo Media network.
People in crypto tend to get very emotionally attached to their ideals, hopes and dreams related to the coins or tokens they fancy. Please note that if something in this post is said that goes against your hopes or goals for Steem or another coin, it is said with no desire to devalue your goals, only to shed some intellectually honest light on the topic. I believe the case I am making here is accurate, but you are warmly welcome to explain any flaw you find in my logic in the comments.
... Also, after writing this I wondered to myself if I should just make it an eBook, because its a bit long-winded. Grab a cup of coffee, kick back and give it a look.
I hope you will give me the time needed to read and consider this post. In my humble opinion, it could change your life. When a project begins there's a rough idea about its goals and what it can become, but usually its a gradual evolution of sorts where even the creators of the project start to learn about its applications and what this thing they are working on in fact is.
A perfect example of this can be found with Ethereum, the smart contract blockchain. For those of us that love this idea of decentralization and elimination of trust-oriented business deals, it was gold. Some of us, in our naughty little anti-establishment ideals relished the thought of reduced powers to the courts by way of coded "legal" terms within a digitally enforced program.
The original idea of Ethereum transformed over time and the creators began to see what the users of it actually want out of it. Smart contracts still seem like a thing of genius to me, but they are mostly remaining unused as smart contracts. That's not what the world decided it wanted Ethereum for, rather they had other ideas...
What About Steem?
So, without further ado, let us jump in... Steem is not Facebook, its LinkedIn, well, also a lot like Google, maybe a bit of a merger between the two. But the point is, its not Facebook. So, what do I mean by this? Facebook is for everyone and their funny dog pictures, LinkedIn is for business and praying potential employer's never see your facebook. I'm going to argue in this post that too many people are looking at Steem as the blockchain of the social world and that they are wrong.
You and I both want Steem to become the coin of the people, where everyone on the planet has a $0.02 upvote power to share their feelings and leave a comment or post to the blockchain their outrage against Blake Letras for this post. I want that world, yet, with pensive frustration, I dare to say that it is almost impossible to achieve.
Perhaps under Daniel Larimer's imagined Steem it could have been. Alas, if we are to be realistic the game mechanics of Steem are not aligned with that goal. I'm not petitioning for changes on Steem, because I don't believe it could even be changed at this point. The role of Steem, as far as I am concerned, is locked in.
Steem is designed to attract bloggers and other content producers, but it provides no incentive whatsoever to content consumers. The curation reward concept only benefits people that invest large sums of money into SP, which is unrealistic to expect from your average website peruser.
Sure, the content is incentive enough to draw people into visiting, but not investing. Why would they invest? Right now, if you buy about $100 of STEEM and power it up, you'll have a $0.01 upvote, saying that the personal reward you receive is 25% of that x 10 upvotes per day, you get a whopping $0.025 each day you upvote actively and optimally. If you don't fail to upvote 10 times each day for a year you get rewarded with $9.125. Worth it to you?
Okay, okay, yes, its suppose to be like a bank account on crack, so many will definitely add more than $100. However, if we go off of what they say about the average American, most people can't even claim to have a consistent $400 in a bank account. So, let's say it was $300 on average per person, still not a lot of money for 365 days of optimal upvoting. Now, to be fair, STEEM value fluctuates and if there was mass adoption we might see more value. However, with more adoption you have smaller slices of the pie, so it eventually balances out to you getting what you pay for.
Therein lies the rub, you get what you pay for is a logical principle that I believe happens to be deeply true about Steem. To be exact, its excruciatingly over-emphasized on Steem! Let's say you want to have a powerful upvote, not just a little $0.01 upvote, but a real whale splasher of an upvote. So, you decide that the old 1967 Ford has to go, because you're taking life as a Steemian seriously. $30,000 in, your SP looks something like 90,000 and you have an upvote value somewhere between $1.50 to $5 depending on STEEM price fluctuations.
Now the world suddenly became this glamorous, steemy new place where people try to please you on the internet, the restaurant or where ever you go, kissing the proverbial ass so that they can get one of your precious 10 daily upvotes or a delegation. Sounds great, but are there enough incentives for people to do that?
Other than social honor for having the power to vote $3.75 of the inflation into someone's pocket, all you're getting is $12.50 per day, for staking $30,000, if you never fail to upvote 10 times each day. You also get something for staking, but its not a ton there either. I'm not saying this is terrible returns, but it most certainly suggests a future Proof of Bot scenario over Proof of Brain if anyone wants to keep the ROI optimal. Additionally, the math is funky here, because as time goes on, with each year 0.5% less inflation, your upvote receives less STEEM. Sure, STEEM will keep growing in value, but ultimately you're just getting SBD, because the STEEM will become less and less.
Inclusive vs. Exclusive
Would you say Steem is inclusive or exclusive? Very few blockchains are actually designed to be inclusive, at least in the sense that I mean for the word. Sure, anyone can join by mining/staking or investing in a network, I'm not dumb enough to miss that point. I'm describing something subtle in how a blockchain is structured, and in this example I would say Ethereum is the rare bird that is indeed inclusive. Bitcoin is not an inclusive model, yes, of course you can buy in, but its an early-bird special where the early bird is looking for an opportunity to dump on you and get that lambo.
Ethereum is different, even in how the currency is described is different. Its not "gold" or "money" but fuel. What is the fuel for? Basically, anything you want to make. This is an inclusive system, it welcomes the world in. For this reason, Ethereum is likely poised to experience massive adoption by businesses, because they are invited. In fact, their inclusive model is the very reason they have been the launchpad for most projects in the crypto space. Ethers are indeed proving to be "fuel" for creative fire.
Of course, businesses can build around Bitcoin, but its around it and outside of it. The difference is that Bitcoin is money/gold, and thats the limit of its design. Additionally, it was designed to become harder and harder to come by so that the few that already have it can sell it to you for a premium on their initial buy-in rate. Nothing wrong with that, but that is what I call an exclusive design, and it is less welcoming by nature than inclusive systems.
Getting back to the question, Would you say Steem is inclusive or exclusive by design? The original concept, according to Daniel Larimer, was likely an inclusive system. How so? Inflation, the high rate of inflation made terrible sense to investors seeking a blockchain that mimics traditional investing in businesses, in other words, its bad logic for an exclusive system. However, high rate of inflation is a powerful tool for on-boarding in an inclusive system.
Facebook is an inclusive system, it wants as many people in as possible, coddles and cuddles them as much as it can in order to get them there so it can take their privacy, sell it as a product and then get its users to buy the crap Facebook found out they like. Steem has certain functions that suggest it being an inclusive system, only, then it changed. See, with high rate of inflation, which sounds bad at first, you will draw in many people because the system will give people new to the platform a sense of fairness and equal opportunity.
It goes like this, let's say you're an early adopter and everyone is getting huge amounts of STEEM and powering it up, well, technically, the inflation rate is indeed making your portion of ownership on the network less at a rapid rate. Yes, it has become a red queen game of merit in the new meritocracy. However, that inflation is being divided by many newcomers and content contributors. Since newcomers are experiencing immediate gratification from joining and posting, they will likely become more active and also tell many people about it.
The thinking here is that high inflation makes sense during the on-boarding process, of course, to be sustainable inflation would have to gradually decline from something like 150% all the way to 3% by smoothly dropping 3% of inflation per year over the course of 50 years, at which time only newborns wouldn't be involved. Early adopters benefit, but its more gradual and subtle.
Although it is true that you have to share the wealth, 10% of inflation goes to SP hodlers and the network as a whole experiences mass adoption, plus the network's overall value increases, much like Facebook's network did. You also benefit from this because while there is now 20 trillion STEEM in the world, your 10 million STEEM is worth $3 and, looking out from your window at the beautiful city of Yabapmattia, you chuckle with your fellow Steemians over a nice bottle of bourbon about the good ol' days when Bitcoin and Ethereum were a thing. Yes, victory can be so boring at times...
Steem is an exclusive system like Bitcoin, not quite as much as Bitcoin thanks to the upvoting and delegating capabilities of Steem, but an exclusive system nonetheless. Need proof? Everyone knows that many people come to Steem thinking they will make money with content, or, in the case of some women, by taking sexy selfies. Quickly they realize that flipping burgers works out better and off they go to never return. The funny thing is that I see people claiming they joined for the wrong reasons, but in reality, the platform was designed to draw in exactly that kind of person, but it just can't keep them because it doesn't reward them. Why can't it reward them? Because it would make life difficult to stay a whale.
Yeah, Yeah, Yeah... Stop Hating On Whales!
No, I'm not hating on whales. I believe a higher inflation rate for the sake of massive on-boarding is the smartest strategy for adoption of the network, but I get it, nobody wants to pump money into Steem and then find out that its now easier to get STEEM. I'm a realist, the high inflation/high adoption strategy could only work for a separate blockchain at this point. If we tried raising the rate now we would likely see a mass exodus from all the whales and an all time dump, so don't misunderstand, that dream of being the next and opensource Facebook is dead.
We're not Facebook, we're LinkedIn. The mass adoption of Facebook's crowd is unlikely, but the people that utilize LinkedIn should like us. Our community niche is about businesses, business relationships and promotion. Communities of moms are fine and good, but I can't see how Steem can offer them much incentive to buy a lot of SP. At most, the curation reward would be a novelty to casual blog readers and hobby communities.
The Cold, Hard Reality About Self-voting
People don't like self-voting, because this was suppose to be a meritocracy, a way of rewarding people for bringing something great to the community. Sorry, but that's not reality. $30,000 powered up gets you $0.37 curation rewards in a bad market and around $1.25 in a good market. Don't get me wrong, $4,500 profit on $30,000 for optimal upvoting in a good market is not bad, but it is not passive, unless we just want to be one big bot community, which will likely mean a very poorly valued STEEM.
Delegations are a unique feature of Steem that adds value, but how is it or can it be leveraged? Delegation is very useful for funding not-for-profits, but that would depend on the not-for-profit self-voting itself to obtain rewards from the reward pool.
Another way delegation is being used is to improve the popularity of a community by rewarding members for content or actions. That is a top-down use of delegations to intrigue people, but unless the 25% curation rewards or beneficiary shares are enough, they'll still have to find other ways to monetize their business model. Leveraging delegations by self-voting are likely to appeal to businesses.
For example, one business I have been working on seeks to leverage delegations for profit to my business and exposure to my clients. I considered rewarding my clients with the lion's share of the delegation value, only, the model doesn't work. Time and labor demands don't match up with the curation reward profits, my business would need 100%. In fact, even the 100% is not enough and fees have to be charged, despite the fact that I was aiming for a "0% cost service" and reluctantly gave up that marketing pitch.
Steem Is A Goldmine, But Just For Businesses
I know what you're thinking, and I agree. "But Blake, Steem is a bank account on crack! Why don't you get how awesome it is for everyday people?!?!?!" I get it, I get it. Despite the fact that I love me some Ethereum, whenever I take a close look at a given aspect of Steem I just get stunned (except for DPoS, I hate it) by the sheer genius of its pumpamentals. Steem is so brilliantly designed that its outright unexplainable to people because its just so darn feature-rich. Bravo Hoskinson, bravo Larimer.
Still, its just not enough, because Steem is new (read as risky) and people are complacent. We need an on-boarding strategy with more pizazz than just that. The people most interested in this concept are going to be businesses, however, they're going to need help understanding how much they need it.
If you're a book author, blogger or podcaster, I am counting you as a business. But I am also counting online shops, social networks, bots, ohhh sooooo many, many bots..., and almost any type of business you can imagine, like coffee shops and porn, probably a lot of porn.
Businesses will be the key distributors of the currency via reward programs. That's great, but it also means its a top-down way of getting Steem into the hands of the whole human population. We're doing a terrible job of on-boarding businesses, partially, because nobody understands that this is what we need to do. The community is divided between people that deem the blockchain a sacred scroll for the ages, not to be tainted with nonsense, and the other side realizing the best way to get their hands on STEEM is doing nonsense!
The other issue is developers, which are awesome smart people and the builders of this little decentralized world we are creating. They lay the bricks, so nothing but respect for that. But here's the thing, tweaking is all well and good, but Steem is a solid product, its ready to ship. Sure, there's always room for improvement, and we love innovation, but econ brains often look at projects in awe how an incredible project fails to sell. The reason is that you have to cultivate an atmosphere that sells itself and that atmosphere is not: Hey what if we did this... Ladies and gents, Steem is ready to ship. What we need is a good on-boarding strategy.
Steem's Bright Future
Steem has a very bright future, but only if the right things happen. Steem is an exclusive styled blockchain, thanks Ned, and that means we need to attract the people that have adequate incentives to assist in the on-boarding and STEEM distribution. That's the business owners, bloggers and entrepreneurs. I can't recall how many times I've heard someone on Steem or Discord say, "Steem has enough content producers, it needs developers." If you said that, I forgive you, but you must repent from the error of your ways.
Bloggers are hands down, the biggest group to focus on and attract, anyone that doesn't understand this straight up doesn't understand Steem. How many sites use wordpress? That's how many sites, and more, that should be interacting and leveraging SP in their business. SMTs, ENG-backed tokens are all great too, but STEEM's where its really at and we need to be showing online shops, bloggers, edupreneurs, advertising and SEO experts and others how to leverage delegations and upvote rewards to motivate clients/customers/students to perform desired actions.
How To Leverage Steem In Business:
- Delegation-based Membership Access
Bloggers, vloggers and podcasters have needed services for their work. Lots of us bloggers get to be cheapskates and just get images off Pexels. But Steem is an exclusive blockchain, so let's embrace that. Steem needs a stock photo platform that is exclusive to Steemians that delegate 10-15 SP for access to images only they can use. This benefits Steem bloggers by empowering them to use images less likely to be used already by other sites.
Vloggers and podcasters need background music and sound effects. So music and sound professionals can start up a delegation-based membership service as well.
Know someone with a store, restaurant or coffee shop? Delegation-based membership programs can boost your business. Let's say you have a coffee shop, you could order specialized coffee cups with the Steem symbol combined with your business insignia, then for people that agree to pay some money upfront to create a Steem account if they delegate SP to your business account they receive a discount on coffee/food for as long as they remain delegated.
- Upvote Reward Systems
We all see it, bloggers come to Steemit or one of the other Steem frontends in hopes to strike it rich with rewards. Yeah, well, that's not going to work. And that's flawed thinking, you, the blogger, do not need to care about earning STEEM, you're the benefactor that gifts STEEM to your visitors. Say what now?!?! Yep, you read it correctly... Ever noticed how many Twitter darlings and Youtube idols give their audiences rewards in the form of t-shirts, chances to win some cryptocurrency randomly or something? Yeah, well, that's what you can do, rewarding comments. You just have to invest in a decent amount of SP to do it. Or, a much wiser choice, is to implement a delegation-based membership service combined with the upvote reward system, so you can keep your business cash flow liquid.
- Promotion
I'm a big believer in not buying cryptocurrencies but earning it. Sure, I buy, but I believe what crypto really needs to succeed is a thriving internal economy, not selling out for lambos. I encourage everyone to focus on how to earn Steem rather than just buy and hodl. What's a good way to do that? Promotion.
Promotion is a powerful tool available to SP holders and people that know how to profitably use bid-bots. A lot of people hate on bid-bots and while I won't cry if they go away, I disagree, I say we need more of them. Why do I say that? Because they empower us to do what we could never do on our own. Remember, $30,000 invested in Steem today only gives you a $1.50 upvote value, while you need 10x that to get SEO benefits for clients, so over $240,000 (as of time of writing) invested. Or, you know, you could just use bid-bots...
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Pumpamentals?
Word of the day! XD
Haha, thanks for reading!
This post has been included in the latest edition of SoS Daily News - a digest of all you need to know about the State of Steem.
Excellent, thank you again!
Very thorough thought process of positioning Steem blockchain. To me, it does attract potential bloggers but I would argue that those top earning bloggers will have less possibility to channel their traffic to Steem platform. Nonetheless, it could be a value added as a niche channel for them. Still, it is back to whether the ROI is feasible to work on Steem blockchain or not. I’m sure, full time bloggers and influencers are concern on their content and how accurate they can pinpoint their audience.
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Thank you for your feed back. You make some good points, there are some drawbacks for sure.
Anyway, I’m still happy to stick with Steem. Looking forward to see the launching of SMT.
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I hope you will give me the time needed to read and consider this post
Thanks for comment!
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Thanks!
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Loved reading this. Since money is involved, this place isnt just about sharing videos and content. People want to make money. Steem is like linkedin and DTube is like Vimeo but with amateur videographers lol.
I really liked your idea about delegation for membership access to music and photos. Thats actually a really good idea.
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Thanks for your comment! I am so happy you enjoyed it. :)
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