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RE: Flaws cripple STEEM potential.
I'm guessing it will cause more regulation and 'great firewall' solutions... in the end. However IP abuse is a popular activity so moves to curtail it will be slow. Its sad but many think IP should be free. Even the incredibly talented author of DSOUND seems to think that a DJ, layering songs, should be rewarded for doing that but not the creators of the songs themselves who went to massively more trouble to make 99.9% of the content. In that world view, the low skilled thief should get all the money and the highly skilled musicians and their expensive support infrastructure should get nothing. When, even the smartest people can think this kind of thing, there is little real support for paying creators in an 'open source' world.
Yes, it is sad to see the emergence of incentive systems that seem to mirror the existing lack of meritocracy in the real world. I guess smart people in one domain may like the idea of a meritocracy in their domain, without really hoping it generalises across society. I'd like to think there are more enlightened people, but like you, I'm not too hopeful.