Misunderstanding Decentralization and Steemit Inc.

in decentralization •  10 months ago  (edited)

Following on on my recent post about Steem and Steemit Inc I need to highlight that since Steem’s evolution - which for many happened on and around Steemit - there has been a large misunderstanding in what decentralized platforms are and need to grow.

Once that understood the current reigning and expressed feelings towards Steemit Inc may change. That is not to say that they may not have made errors, but they who don’t will never make errors.

The first point, and most important one, I wish to make clear is that the economic model is not wrong. It even is not of any importance at this point. It’s a novelty, it’s an experiment and those who are dissatisfied with 75/25 and linear will be as dissatisfied with 25/75 and n^anything if Steem hits multiple millions of daily users. Curation rewards do not scale and will not be a viable ROI model at scale.

If you think that your investor behavior deserves higher rewards, you’re wrong. You’re not an investor, you’re a token holder. If you were an investor, you most likely understood that any expectation sooner than 8-10 years would be frivolous, with the exception for angel investors - a breed of investors who are used to high risk investing and many investments which never lead to any returns. Often even not to receiving the keys when the doors shut.

Besides, as far as I know no Steemians discussing that have invested in Steemit Inc.

Glad we got that out of the way and thanks for agreeing.


The Decentralized Blockchain Internet

Historically the Internet was built upon open protocols, protocols controlled by the Internet Community. That these protocols were open also meant that their evolution was slower and because they were controlled by the community everyone knew where the direction of those protocols went, but more importantly that they wouldn’t change overnight.

This has allowed large companies to be built upon that infrastructure, some of the most important ones probably being Yahoo!, Google, Amazon, and of course email. Email and also thousands of different, often premium, solutions to the problem that is and was spam. This was possible because the protocols were open and there was not a central entity which could switch the game over night.

There was no Facebook which could suddenly turn off the access to data, there was no Twitter which suddenly made building on top of its platform almost impossible, there were no app stores which could change the share they take at a whim, and there was nobody who would change discovery of overnight like Google has done multiple times with algo updates and continues to do at an almost daily level thanks to its manual “spam team” and ability to change its search results as it wishes.

Those examples only happened in the second generation of the Internet, the Internet which most are currently using and which is dominated by few centralized players. Players who outgrew the pace open protocols could maintain and update at. That even more amplified with the tremendous growth of the mobile web.

The new Web 3.0 the blockchain scene is trying to bring us, the internet of infrastructure led by base layer blockchains like Steem, EOS, TRON, Blockpass, Ethereum, and others - or what we call “decentralized platforms”, is the third era of the internet and somehow reminiscent of the first era, the era of the open protocols. A return to the times when it was possible to build businesses upon open protocols without being punching up against few dominant players (the GAFA mostly) and all issues we now know the centralization in the second era of the Internet brought us.

While all three eras will be entirely different, they all also share a similar evolution story, because that’s technically how they grow and achieve scale.

Both in the first and second era developers and companies were able to build upon the technology. In the first era of the internet that led to several new large companies to originate and also to the Dotcom crash.

The second era saw a more centralized group of players in the game but before they become the monoliths of the time, they almost all allowed developers to build upon there platform. Facebook games, dating, apps? Remember those days end last decade, beginning this decade? Twitter apps, apps which did Twitter better than Twitter? When there were no trending tags yet. When the Firehose was still available to devs. When developers and companies basically thought that much like in the first era of the Internet they could build upon the new technology and survive.

Survive and grow rather than be killed by the suddenly monolithic competitor rather than base layer platform because the centralized platform needs to continue its growth, rather than the flattened S-curve leg.


Cryptonetworks Have a Different Approach

Contrarily to the second era, the new (base layer) cryptonetworks have a different approach to this, mostly by making every contributor “an owner”. This is often found in the form of tokens, or like for example EOS does by making everyone a source of hardware in exchange for a rental fee.

At the same time, since most cryptonetworks are open source, if the community doesn’t like the evolution it can fork the platform and start over and do better. Like Steemians can see happen now with Bear- and Whaleshares.

There’s many other uses for cryptonetworks being developed, as most of us know, but all have this in common and different from previous eras:

  1. Consensus models
  2. Tokens
  3. Open source
  4. Highly superior core technology compared to previous internet eras

And many of them are built on the same old protocols which power the Internet and have been used since 3 decades now.

The biggest difference compared with the second era of the Internet (GAFA) is the decentralized nature of the networks, preventing that the main platform operator can flip the game and change the rules. Nobody but the consensus mechanic can turn off the switch to the data. And when that were to happen, the platform can be forked - and most likely in such drastic situations it would also lead to a token harakiri its own value.

Cryptonetworks incentivize contributing and staying, while trying to stay neutral by letting the code rather than humans decide. Rewards are feedback loops. Code is law.

This multi-layered, and incentivized, decentralization protects the common goal of the whole network.

This true decentralization protects the network first and foremost from itself, from malicious intent rather than from say governments, censorship, and those more commonly heard reasons why decentralization matters.

Can Decentralization Scale?

One of the earliest known “decentralized” platforms was Wikipedia. While there wasn’t necessarily true decentralization at work, Wikipedia was handed to the community and within the shortest time it became the most influential reference platform in the world. That much that it deadpooled the formerly superior digital competitor, the centralized Encarta.

Of course, before that organization likes Apache[.org], W3C, Linux, and other groups already were “decentralized” in nature but that worked mostly because the technology in the first Internet era developed less fast and the protocols could be maintained at a slower pace.

Will the closed true decentralization loop protect itself and lead to superior platforms thanks to the multi-layered incentives to contribute, stay, and HODL?

Will it allow cryptonetworks to find both needed product-market fits?

  1. Product-market fit between platform and developers to grow the platform and its attraction to users
  2. Product-market fit between the ecosystem and the users

While many are throwing fits over the wrong economic model “for investors”, Steemit Inc has done right in focusing on developing a platform which allows developers to build businesses on it. The developers will need to build the apps attractive enough to become a destination for users.

We’re throwing the wrong fits and much of that seems to be driven by:

  1. Wrongly understanding “investor” and targeting returns too soon
  2. Me, me, ME!
  3. Misunderstanding the evolution and growth of decentralized networks

The good news is that if you fall under #1, soon you will be able to develop your own model, while benefitting a “centralized decentralized userbase” you can target. If your economic model is indeed better, your SMT token will do well and benefit many who want to invest in it at high value. Which will bring even more active Steemians to your platform, Steemians who will most likely be attracted by rewards... short term rewards.

Steemit Inc. has made errors. Every company, and definitely startup, makes errors. But only those who do make errors.

They who never do will never make errors.

At the same time, Steemit Inc has not changed the vision and has [arguably] not harmed the decentralized nature and protected loop that comes inherent with cryptonetworks.

Has the community focused on the right thing for the stage Steem is at though, that’s the true question to be asked. Maybe, first the token should hit $0.00 so we can focus on building the long term platform just for a token without financial value for now.

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Much here needed to be said, and you've said it well. There is a vast difference between investors and profiteers, as you note, and there are obvious reasons profiteers claim to be investors. The focus on ROI is a clear indicator of a profiteer, while investors will be focused on capital gains, and business execution that keeps current costs under control so that a disruptor can survive it's (entrenched) competition.

Decentralization didn't spring into being with the computer network, however. For most of human history, society has been far more decentralized than it is today. Just as the internet 2.0 has highly enabled centralization of the media, society has become ever more centralized of late.

Just as internet 3.0 will reverse that course as a result of decentralized protocols being robust in the face of hostile raiders that can come from within an organization, the increasing totalitarianism of society across international governments being prosecuted by domestic profiteers is also going to be reversed. In time.

Not without enormous disruption, either. As you note regarding mistakes made by disruptive startups, there is general mayhem during such transitions. We, hopefully, are seeing this now in France. It is a fact that highly stratified society based on stake is unstable, and the inherent and incessant tendency to collapse inevitably results in society that reduces the stratification. Glubb, in his works on empires, has shown the average lifespan of an empire is ~200 years, due to this mechanism.

I personally note the potential of Steem based UX, like Steemit, to play a strong role in the wider transformation of society as we shed the centralization and rigid stake-based hierarchy of society 2.0 and begin to exert society 3.0 - where social power is far more decentralized, and outfits like Antifa, 'yellow dog' Democrats, and Neocons become obsolete, and the very American traditions of independent personal control of one's own policies and possessions becomes ever more practiced.

Blowback from the attempted narrative control that has cost society so much blood and treasure of late will be a very strong impactor on this process of transition, and mistakes will be made, just as they are in business. The concatenation of the birth of Steem, censorship resistance in social media, and the increasing power individuals have to freely prosper by not only eschewing controlled media, but by using nascent technology like 3D printing, CRISPR, Aquaponics, and the various means that are becoming able to free individuals from hierarchical social control is not coincidental.

There is a global trend to decentralize power, from media, to finance, manufacturing, and agriculture, and even including heath and medicine, and Steem is but one factor. The extant profiteers of hierarchies will do everything they can to hold onto their power, and we will see that will be successfully countered in time, although not without dire upheavals.

Let's hope that transition can be undertaken on Steem without existential risk to our social fabric, and even less important things, such as our capital. In the market we presently endure, that latter may not be very likely, but we shall see, in due time.


... profiteers

You’re nicer than I am. :D

Can’t blame them to go for 5 minutes of fame tho. In their investing irrelevance they would even more be invited to most tables.

I wonder how many would react when told truths from the internet startup world. Truths like “You will lose your first thousand users” or “Each successful startup may pivot up to three times before path to no losses anymore”.

So what do you suggest the newcomers should do, buy in or wait to see how the Steem ecosystem reacts to current problems?

I think nobody should give up on Steem at this point. Steem will live on, we are merely in the third year.

When the Internet (the WWW) was three years old... there was barely anyone and most people on this planet would not have said that being connected to the internet should be a universal right.

Excellent explanation of what happened with the different stages of the internet.

I agree that Steemit getting back to the vision of building a platform for developers to create upon is what they need to focus upon. Give the developers the tools and then let them do what they do best.

This is all an experiment but if we keep the goal in mind, we can all get there.

A token at 0.00 sounds like a funny idea. At second thought, there is much reason in it. You gave me something to think about.

At times it feels that “social capital” was the better reward. At least the smarter reward.

That hardcore nerd who helped develop whichever Linux or open source server software often did land really good professional offers. But never received any direct reward for their code contribution.

The first point, and most important one, I wish to make clear is that the economic model is not wrong. It even is not of any importance at this point. It’s a novelty, it’s an experiment and those who are dissatisfied with 75/25 and linear will be as dissatisfied with 25/75 and n^anything if Steem hits multiple millions of daily users. Curation rewards do not scale and will not be a viable ROI model at scale.

I have read many arguments about this. The only thing that makes sense to me at this point is 50/50. Curation rewards may not scale, but the value of Steem can scale based on how attractive it is for investors small or large.

50/50 would solve many issues. Most importantly it would make Steem more attractive of an investment. The more people want to buy Steem, the higher Steem price will go.

Because all other 3,000 tokens have a model like that.

It’s irrelevant, it’s even not a distraction. It’s a bunch of wank talked about only by those who don’t understand... see above.

It trulyis the largest hurdle the platform and blockchain needs to embrace is that steem is not steemit. Steemmonsters will save steemit in my opinion if things get really bad so I am not worried

Steem Monsters is a venue for steemians to spend their liquid tokens on, and one of many croptolectibles. There’s that many that dApps monitoring platforms even have an own category for them.

This is not a criticism of Steem Monsters btw. Steem Monsters is a perfect example of both product-market fits actually. But we need many more of those success stories.

That many that the demand for RC eventually leads to $TEEM scarcity.

It’s an awesome example app built on steem. But it won’t carry the value don the token alone.

Steemmonsters is about (i envision) to become a major gateway to the public in the steem ecosystem. Every single kid is going to want to own these cards and play in games for real money. Daily games and tournaments are going to Combine Pokemon, with Draftkings. You are going to see a major move in adoption of steem strictly based on this DAPP because it will appeal to many many younger generation kids.

When steemmonsters has a $10,000 daily tournament with $2,500 going to the overall winner, you are going to see people flooding to this ecosystem. That is the beginning

That’s rather idealistic but as I said they are a great example. If it happens I won’t be the one who said it couldn’t happen.

But even a daily $10k tournament can not power the degree of scarcity needed.

Let’s first beat cryptokitties.

How would you come up with the $10K in rewards? I find it very VERY unlikely for that to happen because of the pure costs associated with running tournaments. BJJ tournaments costs from 50-100 for entry after you cover all expenses and pay everyone for their work, and there isnt even a reward for the overall winner.

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