Powering Up Cryptocurrencies on the Steem Blockchain
What if any coins out there, like Bitcoin can be staked on the Steem blockchain, much like Steem Power? Doing so will enable anyone to tap into a parallel Bitcoin supply distribution running alongside Steem's activities. Now, extend this concept to any other cryptocurrencies out there. That said, there are both great benefits and problems that come along with this idea. Something I've been thinking about for the past couple of weeks without much of a good understanding of its technicalities and economics, so I'll just throw it out here.
Multicurrency wallets are on the rise.
There are plenty of cryptocurrency projects out there that have included multicurrency wallets into their roadmap. One big reason to do this is obviously to add up to any project's utilities and improving the chances of retaining their users. However, I personally think that most projects out there is failing to drive attention and frequent usage. With Steemit rising up the Alexa rankings, it is good sign that the Steem blockchain is ahead of the pack and it will make sense to consider developing a secure multicurrency wallet of some sort. The hope is, of course, to pivot such a wallet into being part of some decentralised exchange.
But the problem here is this - decentralised exchanges these days are still lacking in volume and liquidity even for most of the top performing cryptocurrencies out there. This is, in my opinion, largely due to the platforms just being decentralised exchanges at their core. While some projects have plans to include various features like merchant POS and payment gateways, what's ultimately lacking is a social layer that drives mass adoption. I think it's the necessary ingredient to make decentralised exchanges successful, other than ease of use. You may check here to verify that none of the decentralised exchanges are even in the top 50 performing markets - https://coinmarketcap.com/exchanges/volume/24-hour/
So shooting for a decentralised exchange directly first might not be the best idea. I think the ability for anyone to deposit and power up their cryptocurrencies on the Steem blockchain may present a better case before any form of decentralised exchange becomes successful.
Power up your cryptos on the Steem blockchain.
No, please don't do this. Do not send any other coins to your Steem wallet! Just an idea at the moment. So what if we're able to deposite and stake any cryptos on the Steem blockchain and bestow them Steem-like qualities? Below I will describe some of the benefits and problems with the idea, so feel free to comment about them:-
Time-locking and staking any cryptocurrencies just like Steem to Steem Power provides security benefits from network exploits. At least anyone would have ample time to react before their funds get stolen. Problem: if it requires the Steem blockchain to create a derivative token, then this concept may not be possible.
If staking bestows any cryptocurrencies Steem-like features, then we can imagine that it could have its own pool of distribution that runs parallel along with Steem's. It's quite like the pooling of resources just like Steem, so this is conceivably only for those that have staked the same cryptocurrency. For a lack of technical know-how about this matter, I can only think that once a cryptocurrency is staked or powered up, the Steem blockchain creates another derivative token that's Steem-like, but associates itself to the originating cryptocurrency.
One of the major benefits from doing so is to be able to conveniently reward contributors in a social manner without the need for paying-to-play, just like Bitcoin's Proof-of-Work that requires participants to spend capital on computing resources. It's something that would otherwise be only reserved for any cryptocurrency's rigid distribution protocol. Granting them Steem-like abilities could enable further decentralisation, which is central to the heart of any cryptocurrencies that expect mass adoption.
Here's the problem: Steem blockchain's distribution is based on the ongoing emission or inflation of the protocol in order to provide new Steem tokens to contributors. This is rather unique only for the Steem blockchain when it comes to subjective proof-of-work, because no one is actually spending their Steem while voting on the network. So would non-Steem cryptocurrencies be subjected to such similar inflation-based reward pool allocation mechanism? It may or may not make any sense by having a market specifically for trading between the actual cryptocurrency, and the Steem-counterpart tokens that are created out of staking the originating cryptocurrencies. For example, once Bitcoin is powered up on the Steem blockchain, it will subscribe itself to a parallel pool - let's call this a Steemified Bitcoin with its own token (SBTC) which is also tradeable with actual Bitcoin. Still very unclear on what can be done, but I hope you get the idea.
The Steem blockchain is a collaborative commons, so far only for the Steem asset. What happens if this notion is extended out to other cryptocurrencies? Maybe that'll be possible one day, since there are already several mentions of community tokens by @ned (check here) and @joseph (check here). All said, I'm looking forward to a future when I can tell people to "Just Steemit!" and they'll will know it's the place to be for posting, voting, and supercharging all of their other cryptos.