What does the death of Steem mean for cryptocurrency?

in #steem4 years ago

Hi Everyone,

RIP_STEEM_THUMB_Alt.jpg

Technically Steem is alive. It has a price and a market cap and it can be bought and sold on exchanges. However, currently, for most exchanges, you will not be able to move your Steem between the exchange and your account. Steem HardFork 23 has caused this lack of mobility. HardFork 23 removed Steem, Steem Power, and Steem Blockchain Dollars (SBD) from over 60 accounts. This was done based on some proclaimed crimes against the Steem Blockchain; this excuse is explained in the post Steem Consensus Witness Statement : Hardfork 0.23 (Codename: New Steem). I personally believe the funds were taken out of spite for the creation of the Hive Blockchain and for tiffs that occurred prior to the creation of Hive. Most of the targeted accounts belonged to Hive witnesses or accounts that contained substantial amounts of Steem. Altogether over 23 Million Steem was taken. Bittrex (a cryptocurrency exchange) is currently holding the 23 Million Steem; it is unclear what will happen next.

I believe Steem to be dead because it has lost its credibility as a blockchain and investment. If HardForks can be used to seize funds from any account at the discretion of one person or entity, funds cannot be considered safe to stake. Why would anyone stake his or her tokens with such a possibility? The only reason to buy Steem would be in anticipation of a price pump. In this case, Steem would only need to stay on the exchanges.

Steem was on the deathbed before HardFork 23


HardFork 23 was not the decisive blow to Steem. The decisive blow came when exchanges powered up customer’s funds and decided to give Steemit Inc. control of the Steem Blockchain. The community rallied within hours to create a stalemate for control of the blockchain. If it wasn’t for a few large account holders who decided to hold the community ransom, the original Steem witnesses could have regained control. Instead, the Hive Blockchain was created. Steem accounts were copied to the Hive Blockchain and they were airdropped the same number of tokens that they held on Steem. Several accounts were excluded from the airdrop. These were the Steemit Inc. accounts and the accounts of those that supported the Steemit takeover with their witness votes. After the creation of Hive, most witnesses disabled their Steem witnesses and many large stakeholders began powering down their stake. Steemit Inc. obtained full control of Steem and most of the community choose Hive to migrate their efforts to Hive.

A blockchain has very little benefit or value if it completely lacks decentralisation. It would resemble a database run on a single server. Hive is significantly closer to being decentralised than Steem. This is one of the reasons most of the community and now many of the former Steem DApps are migrating to Hive. The State of the DApps rankings tell the story of the fall in the number of DApps as well as the popularity of the remaining Steem DApps. Steem has also fallen dramatically in the Global Public Blockchain Technology Assessment Index. It ranked 5th in February 2020 but only ranked 15th in April 2020.

Cause of death is more of a problem than actual death


Failure of cryptocurrency projects is not something new. Steem was ranked quite low in terms of Market Cap and therefore, its failure should not be significant to cryptocurrency. However, what is significant is how it died. Steemit Inc. taking control of the Steem Blockchain was the core reason for Steem’s failure. This was possible because of the involvement of exchanges that held significant amounts of their clients Steem. This involvement by the exchanges is far more significant to cryptocurrency than the failure of Steem. The buying and selling of cryptocurrencies mostly occurs on exchanges. Therefore, large exchanges normally hold very large quantities of many different cryptocurrencies. This puts many other blockchains at risk of being taken over by exchanges. Blockchains using proof-of-stake and delegated-proof-of-stake would be more vulnerable as stake dictates governance.

HardFork 23 was made possible because of the exchanges handing control of the Steem Blockchain to Steemit Inc. If HardFork 23 results in permanent removal of funds from the 60+ Steem accounts, the reputation of cryptocurrency, in general, will be negatively affected. The extent of this negative effect, will depend on how much attention Steem and this HardFork receives. Cryptocurrency is new to many people, if owning cryptocurrency is perceived risky because funds can be removed based on a whim, mass adoption is going to become significantly more difficult. Likewise, if the funds are returned to their rightful owners, cryptocurrency would look significantly more secure. There would likely be minimal long-run damage to the perception of security of holding cryptocurrency.

Is Hive completely safe?


Hive is considerably more decentralised than Steem ever was because there is no equivalent to Steemit’s massive stake. However, Hive may not be immune to a centralised threat. An outside entity could buy large quantities of Hive from exchanges and/or buy several large accounts directly. This new entity could have influence with exchanges, which could lead to yet another take over. This might seem unlikely but if it did happen, the existing DPoS system on Hive is as vulnerable as the DPoS system on Steem. Blockchains need to be more resilient to external threats such as exchanges and/or need to change their relationship with exchanges so that they cannot pose any threat to a blockchain’s governance.

More posts

More_Contnet.jpg

If you want to read any of my other posts, you can click on the links below. These links will lead you to posts containing my collection of works. These 'Collection of Works' posts have been updated to contain links to the Hive versions of my posts.

Pt1_N.jpg

Pt2_N.jpg

Pt3.jpg

Pt4_N.jpg

Future of Social Media

Hive_Future_Social_Media.jpg

Sort:  

One of the keys is going to be changing/altering the governance model.

You hit the nail on the head. It might take a lot more money but there could be deals made that give a big money player control of the blockchain. This has to be averted by altering the consensus voting mechanism.

I dont know if the solution is more consensus witnesses, less votes per account or some other combination of factors.

Either way, something needs to be done.

Posted Using LeoFinance

I have seen several different ideas regarding alternative consensus voting mechanisms. It would be good if some of our top witnesses or developers could make a comparison between the impacts of alternative mechanisms. Then a proposal could be put forward to change it.

An outside entity could buy large quantities of Hive from exchanges and/or buy several large accounts directly. This new entity could have influence with exchanges, which could lead to yet another take over.

As you mentioned also, this is quite unlikely.
Hive would see a massive pump in price with these quantities purchased and witnesses have 30 days after powering up these massive hives to HP to investigate and react.

But yes, it's not impossible if done very clever and over a longer period.

HIVE ON!!!

I think it would need to be done through a combination of actions. Someone could gradually accumulate Hive on the exchanges and we would not necessarily notice much of jump in price. The Hive could be distributed to over 50 accounts so that a large accumulation of Hive is less noticeable. There are also several large whale accounts that have been inactive for a while. It is possible these could be bought without anyone noticing.

All of this requires a bit of work and could become expensive if Hive pumps. We also have to consider if it is worth the effort to control Hive. I would guess, it would most likely be a competitor. Fortunately, I don't believe the biggest centralised social media platforms consider Hive a real threat. By the time they do, taking over Hive by accumulating Hive will become considerably more expensive. There is also the possibility Justin could try buying up lots of Hive and plan a takeover out of spite.

I am in favour of turning unlikely into close to impossible. Changing consensus voting could do that.

I 100% agree with your opinions/thoughts.
Well, let's hope it will not happen!

Use that steem and

Buy Splinterlands!


That's actually quite a good option. I think the cards will probably hold their value better than Steem. You can always just sell them for Hive anyway.

I'm relieved Binance has allowed us to trade again, as it has 1) Raised the STEEM price, 2) Allowed me an escape route that doesn't involve hive-engine or steem-engine.

In 4 weeks I'll be gone and will leave the nightmare behind.

I am thinking about using Binance. I will give the other exchanges another week. I am still not fully comfortable using Binance considering their role in the hostile takeover.

How things changed so fast.

Who would have thought steemit and steem will be in this situation at the beginning of this year.

The greedness of Justin caused the downfall

We can blame Justin directly but he should never have had the opportunity to do what he did. Steem and Hive governance models are flawed. Witnesses need to address this problem or else Justin 2.0 could come along.

I remember, when I joined Steem everyone was talking about "Steem to moon" and now in no time , steam is empty which sounds more. Everything is shifting to hive(users/dapps) but will it be easy to take it granted ??

I think there was a lot of misplaced trust in Steemit. There have been several red flags with Steemit for years. The excessive power downs, lack of development, empty promises, lack of interest in Steem from Ned and so on.

Hive is very promising but there is still a lot of work to be done.

Exactly, it's a baby yet need to make it grow bigger and better. The mistakes happened on Steem should not be repeated here

Wasn't STINC's Ninja Stake removed in HIVE's HF? The narrative to make it somehow different blows my mind. It is a delusional rational. Anyway with Justin Sun pumping STEEM let's see which coin goes to dust first once the power downs have finished on STEEM in 4 weeks or so. My money is betting on HIVE being first in the dust bin.

Quite possible. Sunny can pump steem and dump hive.
Double whammy.

Posted Using LeoFinance

Yeah, not the greatest idea to double down against a billionaire. 😎

I am sure Justin and his friends will help pump Steem several more times. But what value will Steem offer other than making a few quick bucks out of speculation. The community and DApps bring meaning to participating. Steem are losing both.

The community and DApps bring meaning to participating. Steem are losing both.

Both chains are doomed in my opinion. There will be the hard core 10k believers on HIVE just like there are still AOL users. A fair and truly decentralised DPoS will soon emerge where investors will feel safe to place wealth in again.

Loading...