Hey everyone, first I would like to talk about the reason I am writing this piece. I apologize for the long article. However it is very important I convey this message to all of you. There is a ton of suppression going on right now. Bravenewcoin and other "big time" blockchain news publications have come out and said this is some kind of ponzi and are making desperate claims. I have been in the blockchain space since 2011 and I have never seen this level of FUD coming from a news source. The fact of the matter is, many people slept on this chaotic rise to $5 USD. If you go back and look at articles Bravenewcoin and other magazines were not even reporting on Steem. They will do anything they can to get in cheap. When ETH started trading last year in August it rose from .60 cents USD to 2.20 then fell back to .80 cents for almost the entire remainder of the year....the rise here was much much quicker and faster than ETH ...the Market Cap went up faster than ETH...a correction is normal. This platform truly rewarded the users who have been here from the start. It has a very fair distribution. The point is, keep your STEEM safe, keep your mind clear and stay focused. I believe this is a historic moment in the blockchain space. We are all very lucky to be apart of a platform like this one.
"Think of steemit.com as the backbone or spine of the STEEM eco-stystem. In the future an entire body will be created around this spine. Things we cant even imagine yet." -KingJohal
The important things we should be focusing on are how we can improve the UI/UX aspects of the site and how we can create more demand for STEEM. I believe there is a ton of disinformation out there right now surrounding Steem. Many people are confused and dont understand what the true implications of this platform may be even though they are using it. That is not a bad thing at all. I think that is part of the beauty of Steem and why it will become a success. You dont have to understand it to use it. However for those of you who wish to dig deeper, read on. This article is for any non technical person out there who missed this info, or even all you crypto peeps out there like me who maybe just missed this. Can you imagine if Steemit charged you -0.01% interest to hold Steem Dollars or Steem Power like your bank does? Me either.
Store of wealth:
Any form of commodity, asset, or money that has value and can be stored and retrieved over time. Possessing a store of value is an underlying basis for any economic system, as some medium is necessary for a store of value in order for individuals to engage in the exchange of goods and services.
THE LAW OF SUPPLY AND DEMAND
Cryptocurrency market values are determined by the utility of the currency. The more use and value you get, the more demand there is. Now where does steem fall? The more sellers and miners for a cryptocurrency, the more supply there is because more people are willing to sell at the given market price. When there is more supply than demand, price falls, and when there is more demand than supply, price rises.
Steem has more utility than bitcoin, because steem already is a clone of bitcoin with less coins in circulation. 97% is being
"saved" in SP accounts. You can keep it as a store of wealth, if you choose to store it in your "steem power account" (savings account). So that is a reason there will be a higher demand for steem than bitcoin. I will discuss more below on what innovations the Steem platform brings in regards to this. Before I get to that though, the first thing anyone should take away is that the more steem you own the more power you will have on this platform and the more money you will make for posting creative posts. The more you post and the more quality content you create and curate the more demand will increase for Steem. This decreases supply and in turn increases peoples desire to power up part of their Steem and invest in this platforms future. I really look at Steem Power as a savings account with super powers and steem is my liquid fuel, day to day funds I need to pay bills..... the more people on this site, the more people will refer others to this site which further increases demand, which reduces the supply of steem, and drives traffic, paying the content creators for their time.
Now where is the supply? Who is selling? The answer is: speculators which accounts for at this point a very small portion of all buyers. The owners of steem power/dollars don't have an incentive to cash out because they know their fortune today will be worth 5% more tomorrow. Why settle for pennies on the dollar when you can let your profits run into infinity? Why sell an asset that will appreciate?
And that's why steem is a good investment, because once you realize that there is no incentive to cash out and that there is a huge untapped, undervalued market, you'll buy some steem, and hold it, and tell your friends, power up, create more money through content creation, and so the cycle continues.
STEEMIT can potentially do everything REDDIT does and FB...and much much more.
Take a look at this quote: "As for the deal, the $50 million round would be for about 10 percent of Reddit, according to Re/code’s sources. That would give the company an estimated $500 million valuation. Last year Reddit was also rumored to be raising a funding round, just $1 million for a $400 million valuation. Investors included in the alleged new round would likely include Andreessen Horowitz, Sequoia Capital, and even Reddit cofounder Alexis Ohanian, who rejoined Reddit as a board member years ago." They have been re valued and now REDDIT is valued at over 4 BILLION USD! That was their first initial valuation.
http://www.breitbart.com/big-journalism/2015/07/16/ellen-paos-ouster-preserved-reddits-4-billion-valuation/
http://www.worthofweb.com/website-value/reddit.com/
http://venturebeat.com/2014/09/08/reddit-reportedly-raising-50m-at-a-500m-valuation/
http://www.breitbart.com/big-journalism/2015/07/16/ellen-paos-ouster-preserved-reddits-4-billion-valuation/
Are we worth more than Reddit? Lets hear from the community.
STEEMIT IS STILL IN BETA
One major thing to keep in mind is we are still in BETA. As is our current market cap is around a quarter billion dollars. We still have not even fully mapped out and linked our site. Their are countless features that will bring more value to this platform and further empower all of us, such as Profile pages, friending, following and chat. We cant even think of all the implications this has yet.
HOW MUCH STEEM IS AVAILABLE TO BUY?
For people who are new to trading in the alt coin space I want to clear up Steems coin supply. The economics of Steem can be hard to decipher so I hope this helps you guys. From what I understand based on the following math this is the amount of liquid steem available on all exchanges.
if you look along the right hand side of steemd.com
current_supply and total_vesting_fund_steem are the relevant ones
current_supply - total_vesting_fund_steem = liquid steem
1 - (total_vesting_fund_steem / current supply) = ~97.1%
115,797,075.616 STEEM - total_vesting_fund_steem
112,480,690.235 STEEM
= 3,316,385.381 LIQUID STEEM avail across all exchanges as of writing this article
There is less STEEM in circulation than Bitcoin or Ether at the moment. Keep this in mind. See @dan's post here
https://steemit.com/steem/@dan/supply-of-steem-decreasing
Below the information has been taken directly from the Steem website for easy reading here. The potential of the Steem algorithm is only one of the many implications this platform has.
STEEMS INNOVATIVE ALOGRITHM
Consensus Algorithm
Ensuring a robust, censorship resistant social media platform.
Consensus is the process by which a network of computers can reach an unambiguous agreement about who owns what. The goal of the consensus protocol is to make it difficult for anyone to create an alternative history, shut down the network, or censor individual users. Steem combines techniques used by Delegated Proof of Stake and Proof of Work mining to create a new protocol that is more robust and censorship resistant than any existing protocol.
Consensus is the process by which a group of individuals reach unambiguous agreement over the current state of a distributed ledger. The primary requirement for consensus is an agreement on the order of events and a deterministic algorithm for processing those events. A secondary requirement for consensus is censorship resistance. Censorship resistance means that all individuals have an equitable opportunity to publish events in the ledger.
Every 21 blocks (a round), 21 individuals are selected to be the current set of active miners. Active miners are shuffled and scheduled to produce a new block every 2 seconds. The selection of active miners done in the following manner:
19 top miner measured by vested STEEM holders approval voting
1 miner seat is timeshared by all other miners
1 miner seat is selected by proof of work mining.
Approval Voting
Every user may vote for any number of miners either directly, or indirectly via proxy voting. Proxy voting may be up to 3 levels deep. The process of voting is very similar to how Bitcoin miners vote for Mining Pools. Only STEEM that is committed to the network for over 1 year is allowed to vote. No one commits their capital for a year or more without being paid to do so. We contend that the value of liquidity is just as real as the value of electricity and therefore both represent an objective measure of work.
Scheduling Remaining Witnesses
The top 19 block producers are given high vote priority and get to produce blocks every round. The remaining individuals who wish to produce a block must take turns getting scheduled about once every 42 seconds. The goal is to efficiently schedule these remaining producers proportional to the votes they have received. Someone with twice as many votes should be scheduled twice as often. The algorithm chosen is a variation of weighted fair queueing (WFQ). WFQ assigns each block producer a virtual time based upon their vote weight and how long they have been waiting to produce a block. Any time votes change the virtual time is updated to reflect the new priority. At the start of each round, the block producer with the lowest virtual time is selected to produce a block and their position is moved to the back of the queue.
If the individual fails to produce a block then the network will simply skip a block. If none of these remaining miners produce a block then the network will still be 95% reliable at producing blocks every 2 seconds.
Proof of Work
We would like to have the benefits of Proof of Work (aka mining) without the downsides such as unpredictable block production time, mining pool centralization, or the potential for recent blocks to be orphaned. The primary benefits of POW include:
An objective measure of quality that is expensive to forge
A financial incentive to optimize a useful/necessary computer algorithm
A distribution model that attracts tech-savvy users
Creation of a robust low-latency network
Unlike traditional mining, block production time is separated from the time when work is performed. When a solution is found that meets the target difficulty, a transaction is submitted the network and included by the current block producer. To be included, the POW must be derived from the current head block. The user is then added to a queue to be included in a future block production round. The target difficulty becomes a function of the queue length. A simple algorithm would require a number of leading 0 bits of a POW hash equal to the number of producers in the queue.
With two-second block times, a POW miner needs to operate a node with minimal network latency so it can get the new head-block as quickly as possible and then submit its result to the network with enough time to propagate to the next block producer. The introduction of a mining pool would add additional latency that would dramatically reduce the percentage of time available to actually do work.
Mining Algorithm
While any mining algorithm could be used, we would like to introduce a new algorithm that has several beneficial properties. The mining algorithm requires proof that the miner possess the private key for the account that will ultimately produce the block and receive the reward. The algorithm also requires the user to do an elliptic curve signature verification, the optimization of which will benefit the validation of all transactions and lower the cost of operating the network in the long run.
Let HASH = a secure cryptographic hash function (SHA256 or better)
Let H = Head Block ID
Let H2 = HASH(H+NONCE)
Let PRI = Producer Private Key
Let PUB = Producer Public Key
Let S = SIGN(PRI, HASH( H ) )
Let K = RECOVER_PUBLIC_KEY( H2, S )
Let POW = HASH( K )
To be valid the POW must be less than the target difficulty and RECOVER_PUBLIC_KEY(H2,S) must equal PUB. The miner introduces randomness in either the selection of the NONCE or via the randomness required for elliptic curve signature generation. This, combined with the private key selection should ensure that no two miners are searching the same work space.
By starting and ending the POW with a cryptographically secure hash function we can ensure that any vulnerabilities or computational shortcuts that may exist in the RECOVER_PUBLIC_KEY algorithm or SIGN algorithm will ultimately cause the POW algorithm to revert back to a simple HASH-based POW.
Double Spend Attack
A double spend can occur anytime a blockchain reorganization excludes a transaction previously included. This means that the miners had a communication breakdown caused by disruptions in the infrastructure of the Internet. With DPOW, the probability of a communication breakdown enabling a double spend attack is very low.
The network is able to monitor its own health and can immediately detect any loss in communication which shows up as miners failing to produce blocks on schedule. When this occurs, it may be necessary for users to wait until half of the miners have confirmed their transactions, which could be up to 42 seconds.
Transactions as Proof of Stake
Each transaction on the network may optionally include the hash of a recent block. If this is done, the signer of the transaction can be confident that their transaction may not be applied to any blockchain that does not include that block. A side effect of this process is that, over time, all stakeholders end up directly certifying the long-term integrity of the transaction history.
Blockchain Reorganizations
Because the vast majority miners are elected, highly accountable, and granted dedicated time slots to produce blocks, there is rarely any situation where two competing chains can exist. From time to time, network latency will prevent one miner from receiving the prior block in time. If this happens, the next miner will resolve the issue by building on whichever block they received first. After 14 confirmations (about 30 seconds) the transaction has been confirmed by 2/3 of the active miners which means there is no possibility of reversal without manual intervention.
While the system is robust against natural chain reorganization events, there is still some potential for software bugs, network interruptions, or incompetent or malicious miners to create multiple competing histories that are longer by a block or two. The software always selects the blockchain with the highest miner participation rate.
miner operating on their own can only produce one block per round and will always have a lower participation rate than the majority. There is nothing that any miner (or minority group of miners) can do to produce a blockchain with a higher participation rate.
The participation rate is calculated by comparing the expected number of blocks produced in a given period of time to the actual number of blocks produced.
Maximally Decentralized
Under DPOW, every stakeholder has influence that is directly proportional to their stake, and no stakeholders are excluded from exercising this influence. Everyone who wishes to participate in the process has an opportunity to produce a block without having to participate in a political campaign for votes. Every other consensus system on the market excludes the vast majority of stakeholders from participating. There are many different ways that alternatives exclude stakeholders: some alternatives use invite-only systems, others exclude participation by making it cost more to participate than they earn. Still other systems technically allow everyone to participate, but they can be safely ignored by a few large players who produce the vast majority of all blocks. Only DPOW ensures that block production is evenly distributed among the most people and that everyone has an economically viable way to influence who those people are.
Conclusion:
I really hope this piece of information helped you understand the potential implications this platform may have. I really urge you all to continue to research and try to understand Steem on a deeper level. Stay focused and follow your gut. These are going to be key times that will shape your lives in the years to come. Use your own logic and the information you have at hand. Always remember people have their own agendas. If we all work together and use our minds to contribute to STEEM we can make this a platform fit for the entire world.
Sources:
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https://steem.io/documentation/consensus/
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I don't know about steem itself due to dilution, but steem dollars, giving 10% interest, and assuming a relative parity / peg at near 1-1, yep, that seems like something that you don't get anywhere.
Dear Kingjohal: The information you've presented to us is invaluable. Thanks for your diligent work.
My pleasure. Hope it helped you see what you needed to see
Upvoted
thank you
I am new to the realms of steemit but it is very encouraging that one of its core ideas is the distrabution of wealth amongst its members, as well as the sharing of information and ideas .
Ii am glad to be involved.
Glad to have you here
That's gonna be a lot of reading. :-).
I really hope you still read it!
좋은 글 잘 읽었어요. south korean, Shin,min-chul. 좋은 하루 되세요
Thank you
Thank you very much
appreciate it buddy