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:
- Consensus models
- Open source
- 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?
- Product-market fit between platform and developers to grow the platform and its attraction to users
- 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:
- Wrongly understanding “investor” and targeting returns too soon
- Me, me, ME!
- 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.