Thoughts About Bitcoin & Steem

in #cryptocurrency7 years ago (edited)

Trust me when I say I barely hold any Bitcoin. To be honest, I still think it's quite a crappy coin, yet the price keeps going up. This is the wisdom of the crowd. Or madness. Follow the trend: the brand that keeps on getting mentioned, encouraging the rest to go crawling back to master Bitcoin. Yum yum, precious. SHA-256 Proof-of-Work. Burn stupid amounts of energy. Best security - they said. Sure, whatever. Just like a Steem post, here is an example of a Proof-of-Work submission on the Bitcoin network:-

1312af178c253f84028d480a6adc1e25e81caa44c749ec81976192e2ec934c64
e9afc424b79e4f6ab42d99c81156d3a17228d6e1eef4139be78e948a9332a7d8
ae37343a357a8297591625e7134cbea22f5928be8ca2a32aa475cf05fd4266b7

Wow, much value. Yes, it's true blue shit-posting that no one can ever understand, except computers. Many Bitcoin preachers go on and on about putting real hardwork to get ahead in life, but all I'm seeing is the pumping of more and more capital into money machines that churn out gibberish like the above.

Best of all, it's a race to produce more garbage with no real human work being represented in the network, except for human capital being involved in the production of the required computing equipment. Steem is different. It's one of the only networks that's perpetually growing in human capital - just look at all the content on the chain! *Steem zombie preacher mode activated!*

Sure, I'm not denying there's also plenty of human capital as well happening off-chain when it comes to Bitcoin, but that's besides the point because just about every blockchain out there has off-chain communities that form around them. However, it's sensible that Bitcoin is better off than Steem when it comes to sound economics on the surface, although Steem's technology is light-years ahead in every way. It's also a case of perfect objectivity versus leaky subjectivity.

Bitcoin requires initial and ongoing capital investment and will inevitably attract investor types that will likely put profits back into production. This is somewhat at odds with Steem where participants don't really have to put up any material capital and it's possible for anyone to just take all the time without giving back. Steem attracts more non-investor types which is why the network is bleeding more readily than others. But I believe this could be remedied through promoting a culture of investing. It's a more difficult game for sure, but this is why I prefer it. Bigger problems to solve is better business potential. From the point-of-view of the blockchain, Steem is a humanised system filled with stories and friction, but Bitcoin is not - it runs entirely on cold hard capital and objective computing power. Here's the shift of capital risk in Steem's free-to-earn model:-

  • Human capital. An intangible form of capital in which marketprice isn't solidified and often misjudged. This means that reward isn't always necessarily given to someone who's invested in the network.

  • Voters. Capital risks are shared and distributed between community members. This is why voters should practice more responsibility when it comes to staking up accounts. Investing in accounts that aren't investor types while not wrong, remains to be a source of network bleeding, especially for a relatively small and young network like Steem. The hope is that network participants learn over time.

This is why Steem is a rather different system. The alignment of risk and reward is distributed rather than concentrated. Maybe a better way to frame the difference between Bitcoin and Steem is to think of them as public toilets, in which people tend to abuse and not clean up as well as private toilets. Without requirement of fees for users to use Steem, there isn't any real capital to take care of the facility. This reinforces the point that Steem relies more on culture rather than the Bitcoin's enforced requirement of materialised capital in which a culture of investing is baked-in.

Some ways to improve the culture of investing:-

  • Use rewards as start up or complementary capital for entrepreneurial activities.

  • Use rewards to invest in other assets, digital or not.

  • Use rewards to alleviate the most basic of necessities in order to be productive.

  • If clueless, powering up and voting is just as effective.

  • We could use more dedication, trustworthiness, and punctuality in the community. I'm guilty of this myself. There's plenty of distractions around the cryptosphere and some of us tend to get unnecessarily busy being involved in too many random projects.

  • Spending frivolously on luxury upon a windfall is very poor conduct from a capitalistic point-of-view. This is one of the reasons why most lottery winners usually end up broke, bleeding their own capital reserves before the rest of their network. So.. invest!


Image taken from Sapiens by Yuval Noah Harari

The key is to reduce wastage and non-productivity of resources. When growing the pot, we may turn to the capitalist creed for pointers. It's just a cycle of re-investing profits back into production. Bitcoin miners do this all the time, naturally to keep up with the mining difficulty and turning out enough profits to cover their cost of operations, creating a virtuous (or vicious?) cycle. A great portion of earners on Steem don't have to upkeep any actual investments on the network in order continue earning. So in short, supporting the network is entirely voluntary and the state of the network will only be as good as the culture we build here. This is the price to pay for onboarding everyone and going for mass-adoption. In the end, it depends on what we do with the rewards we get out of this game.

Regardless, Bitcoin's rise is ultimately good for Steem and many others over the long-run although it's being a pain in the ass at the moment for some of us cryptocurrency contrarians. My thoughts about Bitcoin shouldn't be taken too seriously, by the way. It remains to be an indisputable way of contributing and distributing resources - objectively (and we're lacking this in the real world).

Rant over. What are your thoughts?

Sort:  

hmmm... I read from start to finish on this one. For long time I have tried to get and understand certain crypto languages but after talking to @ememovic today and the lessons and lecture from him I have started paying more attention to crypto.

Now from what I have taken from this post, I now see and understand what steem is actually and this has explained most things that seemed magical to me in a simpler language.

I used to think if one does not have bitcoin or other coins that you ave not started the crypto journey, but today I think I will stick to steem and help the community grow and invest more here.

If I can join in mining steem, then I can be better here. Thank you for this wonderful post @kevinwong. I have so waited for your post and am glad to learn a lot through it.

You're mining Steem as we speak :) Enjoy the ride, crypto is an emerging field of study and there are no real text books on it yet, so it's a good time to get into it and build. Steem is a good platform for anyone to do so.

Thank you very much.

I agree with many points in your post. Bitcoin is a dinosaur compared to many other coins. The proof of work model I don't really like because the carbon footprint from bitcoin mining is huge. They say that in 2020 the energy consumed by mining bitcoin will be the equivalent of Denmarks energy consumption. That's quite crazy !

Steem as you say can be mined by anyone and I find the way that Steem is mined to be much more interesting and definitely much more environmental friendly. Anyone can mine on steemit through participation and by putting work into the Steemit platform. For bitcoin only a few even have the capital or technical knowledge to mine.

You do bring up a point about Steemit though, that it tends to bleed a bit due to its model where people might take money out but not put so much in.

I think when the platform has become bigger, let's say 1 million active daily users then you will have more and more of the bIg investors that will come.

I actually made a post just yesterday with a hypothetical scenario where Steem is pitched against another altcoin. I see so many more advantages with Steem, I really do. But due to the constant dilution it might not be as fast of a money maker as some other coins. I think when the market has calmed down a bit, and when people realize that just by adding blockchain technology to a certain idea it doesn't make it sure to succeed. It's a bit similar to when they added .com to companies back in the days.

Steemit is a bit ahead of its time I am sure many will catch up soon enough.

Great post !

Good response to a good post here, I'm with you.

You do bring up a point about Steemit though, that it tends to bleed a bit due to its model where people might take money out but not put so much in.

As you know I'm hoping SMT will be the new price driver for Steem, and we don't even need to get involved with whoever adopts - just hoard our SP and blog about how loaded we all are! 😋

You are definitely right, the SMT is a game changer in this aspect. Glad you pointed that out . I wonder when we will start hearing about some ICO using SMT ? That will be an igniter

Not until next year I think, which could mean a quite couple of months for the price of Steem...

When things are quiet it is the best time to buy ;) what do you think ? 💭

I'm hoping so, added a little more two in the past week 😀

It really is a good time right now. I added some during the last dip. But now would also be a good time to buy some other crypto as well because the price has dropped quite a bit !

You are probably right re: diversification. I just cant help buying Steem to Power up!

Steemit is a bit ahead of its time I am sure many will catch up soon enough

And what a great time it is to invest in it like RIGHT NOW

I agree with you a hundred percent! If Steem would have been promoted like crazy we wouldnt have the chance to still get in when it is cheap, so i am thankful for that :)

Bit-Coin is Elvis, but
Steem is The Beatles

@kevinworng Bitcoin Day by day increases if we see from 2016 bitcoin growth is spectular! It's only one reason is After legalising in some countries bitcoin growth is really milestone and many billionaires also trying to invest into in btc they also know what they make profit from bitcoin in future. So Yaa Bitcoin future is very bright!

Steem is a really interesting experiment that may turn into a really nice business. The Steem founders are experimenting in multiple dimensions at the same time which is really good. Steem is really best coin for long term!

Yes, Bitcoin's rise works in favor of everyone. If crypto hodlers understand Steem is a gateway to onboard billions on the blockchain, I'm sure the support will come in sooner or later. It's a worthy project to fund and keep some position in.

It can take a long time to overcome first mover advantage. Being first and network effect often results in long term rewards far out of proportion to quality of the current technology.

When was the last time you saw IBM do useful innovation? Their market cap?

When was the last time you saw Mr. Softie do useful innovation? Their market cap?

When was the last time you saw Cisco do any of its own internal innovation? Their market cap.

Sure. BTC technology sucks and is outdated per the current "hottest" ideas.

But being first gives you a lot of room in the market to be mediocre and still exist.

Until eventually of course if a company refuses to do ANY INNOVATION WHATSOEVER, then the company will slowly die off.

Don't believe the scribe above? Go make a Xerox and read it for additional clues.
And if you don

@kevinwong - My greatest concern and reason for holding a few different crypto's is security from things such as civil asset forfeiture which is going to become more of a problem as the currency wars escalate. Bitcoin is rock solid in that regard as are several other crypto's.

My interest in Steem and Steemit is because ultimately it could become the next FB. I haven't read the Steem white paper so I don't know for sure the level of security, but I'm pretty sure that if authority wanted to shut it down, it could (correct me if I'm wrong). Is the Steemit website fully decentralized? I'm a software dev for the past 20+ years so feel free to get technical if you wish.

I know the blockchain is decentralized, but as for security in Steemit, the master password is sort of hot wallet-ish and being powered up through Steem Power definitely is.

However, anyone managing to remember their 12 -24 word seed and storing on a hardware wallet like Trezor using duress passwords makes it nearly impossible for authority to take control of anything significant.

Authority in all forms will soon become desperate and that's when things will start to get ugly. I expect this to happen sometime over the next 2 - 6 years.

Nope, Steemit is not a decentralised application. However, it's easy to just come up with another interface, as with the likes of Busy.org. About security here's an old post on it: https://steemit.com/blockchain/@dan/steemit-releases-groundbreaking-account-recovery-solution

I think the game will have so much movement and layers that it'll be a headache for any auths to do anything significant anyway. 13-week powerdown + account recovery for Steem is good enough imo. Not a jedi-level security expert here though. Btw, what do you mean by

the master password is sort of hot wallet-ish and being powered up through Steem Power definitely is.

Referring to the latter part of the sentence.

I mis-spoke. The first part was referring to the fact that my master key is on my computer and the second part that when powered up I don't really have access to the funds. But then again, that's committed to the network it would seem, so nobody else has access either as long as it's tied up in the decentralized network (not sure how that works exactly). I know that with bitcoin, encumbrances function in this manner as proof of ownership. I don't hold any of my other coins with an exchange, but prefer cold storage.

PS - thanks for the link!

That was an interesting article (by Dan Larimer?). It introduces a new wrinkle should a government request or try to coerce anyone to seize assets.

Has there been any discussion of including a "warrant canary" in the case an account holder becomes deceased and nobody has the key? Is the "account recovery partner" allowed this function?

I see Bitcoin (and Steem) as technological experiments and as such Bitcoin is very important as it is the longest living and the ones where many faults were first detected. As a real currency I doubt that it will be the one that will go mainstream, but it will maybe become a bit like gold because of its scarcity principle.

Scarcity is not meant for the masses but for the already rich so I agree that things like Steem is much better and more democratic. That said this is all in the baby-age and I consider it all to be promising but volatile and erratic. The cynical part of me (about 88.9 %) sees a future where the national banks take over big parts of the crypto-market.

Yep I agree on that bitcoin could be maximum gold, but a currency... I am 99% sure that it can't happen. It wouldn't be practical, because the fixed amount of supply (the scarcity) will keep the price rising.

Haha most crypto evangelists would be sad if cryptos build be in the hands of banks. I think at first it will be taken over by the banks, and maybe in the far future let's say 30 to 40 years from now, we may move on to a decentralized currency.

BTC will never be a day to day currency, that you use to buy your over priced $6 coffee at SBUX

Great Post. Followed!!!

I think the only real power that is sustaining Bitcoin is that it is most easily converted into USD, which makes it the defacto reserve currency of the Crypto space.

I mean, if I want to purchase Steem using USD, I have to go through Bitcoin (or Litecoin or Etherium) in order to "get me some".

If Steem really want's to take the next step, they need their own conversion platform.

Steem would go from $1 to $100 overnight if we could just bypass the Bitcoin gatekeepers.

Sounds like that's the case. It would seem like more trading activities = sustained price. I guess anyone can come up with direct gateways?

Great Article @kevinwong!
I totally agree with you on the fact that Bitcoin is a crappy coin.

I posted rather a similar thought on my 🚀 What cryptos do YOU own? – October, 10th 🚀 just below:

Bitcoin was the first Crypto, but…

How is it so special? Its mining process is clearly outdated and other cryptos are trying not to use this incentive model nowadays as it is economically and ecologically inefficient. What does Bitcoin brings? Payment. I can name at least 10 cryptos that do the same faster, cheaper and with more anonymity.
Just ask yourself, if Bitcoin was not so “well-known” and the first crypto, would you have bought it?

Probably not…

I share very similar thoughts. I also believe Bitcoin is a shitcoin and quite outdated. Reminds me of those precious metal preachers. Really, what remains is just worship of an old technology.

New investors need to buy BTC in order to buy everything else. As long as we have this limitation in the markets we will see pumps in BTC and then pump of alts. It is what it is. Steemit is one of the best coins out there but very few realize it because again, we are still too early on.

Bitcoin might be in a bubble and it will burst. But not the same thing will happen with the other alts that have already put safeguards in place. This constant forking of the chain will eventually decimate the reputation and functionality.

with the other alts that have already put safeguards in place

What kind of safeguards by the way?

wider distribution through whitelisting, scalability as with ethereum, coalitions of chains.

heck the very presence of competing coins and technologies safeguard the entire decentralisation system. I think Jamie will be proven right about one thing. After segwit, shit will break loose when the first-late adopters see their investment disappearing slowly while alts get pumps. This is when the true wild west of crypto will begin.

Coin Marketplace

STEEM 0.16
TRX 0.16
JST 0.030
BTC 58389.55
ETH 2482.59
USDT 1.00
SBD 2.38