Steemit Inc has the ability to create massive source of revenue for themselves and for the reward pool.
All they need to do is create an exchange just like any other major exchange.
Steemit Market
We have a Steemit Market, but that is only good for small volume trades between Steem and SBD. Have you ever looked at the large transactions? They never use the Steemit Market. They can't use the market. They also can't trade against other currencies. They are forced to take the large sums of STEEM and SBD offsite to a real exchange. Those exchanges are taking fees that profits the exchange. Steemit doesn't benefit from these large trading volumes.
BlockTrades
This is not a solution either due to high fees. BlockTrades is an Over The Counter (OTC) exchange. It will never compete with a real exchange and no one uses it for very large transactions.
Both of these trading options have their place, but there is a massive vacuum where a Steemit Exchange should be.
The Fix
I propose that the Steemit Inc build and operate an exchange. The Steemit Market can remain just like it is to cover small volume trades between STEEM and SBD. BlockTrades can remain just like it is to handle simple OTC transactions. The Steemit Exchange would work on a virtual currency system just like other exchanges use. One can transfer STEEM or SBD to the new exchange before trading takes place. That will fix the transaction speed issue from drowning the Steemit Market and provide another option. The exchange will also need to include other currencies. This would fix the volume issue and add revenue. Let's also give multilingual options. Open this up to the rest of the world. German, Russian, Spanish, French, Chinese, Japanese just to list a few.
If Steemit Inc would make an Exchange division to run this exchange and charge a tiny fee just like any other exchange, then they can generate revenue. Exchanges are highly profitable by doing this. Trades between STEEM and SBD can remain free as there is no cost to transfer STEEM and SBD. STEEM will also be a primary trading pair which will boost STEEM as a popular world currency. By adding other currencies and charging trading fees, they create a source of new revenue coming into Steemit to fund Steemit projects and upgrades. This revenue could cover Steemit Inc costs and could overflow into the STEEM reward pool. This would benefit everyone and could kick Steemit into high gear.
An exchange will bring in new users to this platform. Other major exchanges have around 10 million users. Binance has exceeded this in less than a year. Steemit is over 2 years old and barely broken 1 million users. If Steemit Inc runs an exchange, this will create an avenue for Steemit Exchange account users to become Steemit account owners. The amount of visibility to this platform would be enormous. Value would be added to Steemit platform as the value is expected to follow Metcalfe's Law. This is an exponential value prediction that Facebook closely resembled in which value is expected to increase by 4 times for every time the number of active users doubles. Steemit is expected to follow Metcalfe's Law.
In conclusion:
1) Steemit Inc can profit massively from running an exchange. This would support operations even when the price of STEEM is down.
2) They can make STEEM a common trading pair with everything else. This doesn't exist and would make STEEM a powerful currency like Bitcoin and Ethereum.
3) Excess revenue can fund our reward pool, witness reward pool, or both. This would support all Steemit users and foster growth.
4) A Steemit Exchange will bring in huge numbers of new Steemit users. This would provide Steemit dominance with all the other competition emerging and grow value.
Please Resteem this blog to let @ned know that we want an exchange. Let's tell Steemit Inc that they need to diversify their revenue source in order to be a competitive business in this space. Please remember to Upvote, and Follow. Thank you.
For a breakdown of how Steemit Rewards system works:
For a breakdown of Steemit Keys:
https://steemit.com/life/@socky/do-you-understand-your-steemit-key
For a breakdown of why Steem Power is Important:
https://steemit.com/steemit/@socky/why-is-steem-power-important-beginners-read
In other words more investors will come in, and when they do it will decrease the dependence of STEEM on bitcoin.
Absolutely.
Exchanges are already weaning themselves off Bitcoin by adding their own coin and implementing it as a common trading pair. What coin will come out on top will be anyone's guess, but if Steemit doesn't get in the game early, STEEM won't have a chance.
exactly really it's gradually waning the hold of bitcoin on STEEM, and believe me with this, it will totally wane, STEEM has got prospect in the future
If I have delegated power and I vote for a witness does it count as I voted for the witness with all of the voting power or only my power ?
No.
Only your invested SP goes towards the witness vote. The person that delegated to you will keep the right to vote for witness of their choice.
ok thx :)
Upvote and resteemit done. best of luck @socky.
Thank you.
Interesting take on an initiative to bring Steem more into the crypto mainstream, at least in trading! I agree though, it would help to have steem listed on other exchanges, or even better to have an exchange right here on steemit.
Have you looked into some of the decentralized exchange models? I think that using something like a relayer or other decentralized exchange model might give steem more liquidity without institutional buy-in... anyway, I wrote a post about that aspect a little while back if you want to check it here: https://steemit.com/cryptocurrency/@krisj/decentralized-exchanges-could-sbd-benefit
Anyway, good post, good content, upvoted :)
We really need a centralized exchange. Decentralized exchanges can't handle the volume. We all want decentralized exchanges, but it really is impossible to handle thousands of transactions per second with a decentralized exchange.
That's true in terms of transaction volume, because of the required interaction with the blockchain... but you don't think this might change as we wrangle with different types of scalability solutions? State Channels in ETH for example? Not a short term solution by any means of course, so maybe a centralized exchange to start is the best option, at least for now. I just dislike centralization in general, but for some uses it is currently a necessary evil for functionality ;)
Steemit would develop and build up the right exchange market with time.
Steemit is great platform
So good
It might work.... but whats the point, we already have bittrex and coinbase. Steemit would be under stiff competition from other exstanges, making it unlikely that they'd risk the money to get into that space.
Good question. The problems that exist today are.
F-Coin. I think that's more likely, and they'd easily have the funds and financial leverage to set up their own exchange