Smart Media Tokens for Dummies!

in smt •  10 months ago

Wow, I can't believe it's been months since I've posted on Steemit... Sometimes things just get away from you. I guess in the last six months or so I've defended my PhD, started a new job, bought a new house, moved, etc... and now here we are. But I suppose you're probably not interested in all of that given the title of this post, so... let's get too it!

Smart Media Tokens for Dummies!


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Introduction


I don't know about you, but with the rapid pace that the cryptocurrency world is evolving and changing, and the myriad new technologies that continuously pop up, I know that for myself at least it can be overwhelming to try to follow all the trends and keep up to date with the latest and greatest crypto advancement. This is especially so given the fact that the majority of us do not have the appropriate computer science and applied math background to fully understand new technologies, and most of us probably also lack a sufficient background in economics to fully grasp the implications of these new technologies. So, I don't claim to fully understand any of these things for myself either, but for what it's worth, I hope that these "Crypto for Dummies!" posts will help to simplify the important points about some new technologies and illustrate some of the potential advantages and disadvantages of new technologies and ideas.

Toward that end, in this article I hope to describe and break down the most important aspects of Smart Media Tokens (SMTs): what they are, how they'll work, and how they can be a tremendous step forward for the Steemit community specifically, but also for the pro-decentralization, crypto community as well. Before we get into things, I would just like to point out that there are many other valuable sources of information regarding Smart Media Tokens. These are a few that could be very helpful and informative for you if you are interested:

  1. Official steem.io SMT whitepaper: Here
  2. Official steem.io Steem bluepaper: Here
  3. Official SMT announcement post from @ned: Here
  4. Dissecting the SMT whitepaper by @nanzo-scoop: Here
  5. The day the paywalls died by @donkeypong: Here
  6. Why Steem and Smart Media Tokens by @kevinwong: Here

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What's contained in this post?

  • Chapter 1: What are Smart Media Tokens?
  • Chapter 2: Example use cases for Smart Media Tokens
  • Chapter 3: SMTs vs. smart contract platforms for your business (Ethereum, EOS, NEO, etc...)
  • Chapter 4: Automated market maker
  • Chapter 5: "Shared influence": air-dropping influence to Steem Power holders
  • Chapter 6: Smart Media Tokens and their relationship with Steem

Chapter 1: What are Smart Media Tokens?


I suppose the most obvious way to answer this question would be to start with a definition straight from the whitepaper, which says that SMTs are "a token protocol for content websites, applications, online communities, and guilds seeking funding, monetization, and user growth." There is a little bit of ambiguity here, because SMT may refer to a specific cryptocurrency token, or it may refer to the protocol built on top of the Steem network that enables the creation of Steem-style social media tokens. In this way, Steem is an example of a Smart Media Token, but the SMT protocol is like a layer built on top of the Steem network that lets anyone launch their own community-oriented crypto-currency.

The SMT protocol also includes a built-in option to launch an Initial Coin Offering (ICO) for the newly-designed tokens. An important part of the protocol will be an economic incentive structure that encourages development which will help users seamlessly integrate the use of the different SMT tokens into their applications and websites. Furthermore, the SMT protocol will use a private/public key management system that is the same as the Steem network, i.e. user-friendly social-media-style account names, with different levels of privilege delegations, etc... This has some distinct advantages over, for example, Ethereum's ERC-20 protocol which does not have user-friendly account names and key management. The SMT protocol will have an ~$1 fee to launch a new SMT, which is primarily to prevent spam to the network.

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The SMT protocol will provide a new avenue for social-media and content-oriented web business and entrepreneurs to adopt new sustainable revenue models that are centered around the SMT currency. One of the really exciting aspects of SMTs is the ability to use a "shared influence" model, which is equivalent to air-dropping influence over the SMT economy to Steem Power holders. This is described more in Chapter 5. In addition, SMTs have the option to use an automated market maker that locks some Steem away to provide liquidity to the SMT internal market. This is described more in Chapter 4. The main hope for the entire SMT protocol is that it will act to properly align financial incentives between websites and users, just like steemit.com provides rewards to posters, commentors, and voters for adding value to the site. Part of the financial opportunities created by the SMT protocol will be the option to designate rewards in unique and creative ways, which will incentivize developers to create a growing body of open-source applications and libraries that will make it easier for web entrepreneurs to incorporate the SMTs into their web business.

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Chapter 2: Example use cases for Smart Media Tokens

The SMT whitepaper provides several example use cases for the new Smart Media Tokens. These are described briefly here:

  1. Content publishers: Social-media and content-oriented sites may choose to add single token support to their sites. This would be similar to the way that steemit.com has incorporated the Steem and Steem Power concept to help align financial incentives between the website and the users. For example, Twitter could incorporate a TWEET SMT along with the idea of TWEET Power to financially incentivize users to add value to the network.
  2. Forums: Forums will have the opportunity to launch multiple token support. For example, a Reddit gardening "sub-reddit" could launch a REDDITGRDN coin (along with the corresponding REDDITGRDN Power), and another basketball "sub-reddit" could launch a REDDITBSKT coin (and REDDITBSKT Power). This would enable individual sub-forums to develop their own internal economies that revolve around more base tokens, such as a REDDIT coin. The idea is that value would flow to the most valuable communities.
  3. Comments widget: The development of Steem-based and SMT-based comments widgets would make it much simpler for online publishers to incorporate Steem and/or SMT support and financialization to their sites and businesses. Fortunately, the SMT protocol makes possible delegation and funding opportunities that will actually incentivize developers to produce these types of tools so that they can earn rewards from their efforts. This will lead to a growing community of app development that will grow the ecosystem.
  4. Sub-community moderators and managers: This idea is related to the forums topic above. Essentially, moderators of forums can launch SMTs to help boost the curation quality of their sub-community by insentivizing valuable curation according to their specified algorithms.
  5. Arbitrary assets: The SMT protocol will make it possible for entrepreneurs to create new tokens potentially representing real-world assets. These businesses can create strategies to peg the SMTs to real-world assets, for example in a similar (but possibly more ethical...) manner as the Tether tokens, and will likely add to the liquidity of the Steem ecosystem.

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Chapter 3: SMTs vs. smart contract platforms for your business (Ethereum, EOS, NEO, etc...)

If you are interested in adding cryptocurrency/blockchain technology to your content-oriented or social-media style website or business, Smart Media Tokens have several distinct advantages over other smart contract platforms such as Ethereum, NEO, etc... The main reason for this is that SMTs have built-in social-media and community-centered specificity. To name a few of these advantages, SMTs have: a proof-of-brain model that provides better incentives for social media blockchain projects, they have the same fee-less, bandwidth-limited design structure as Steem, which is more conducive to social-media and content-oriented platforms, they have the same blazing transaction speeds and network capacity as the Steem network, and finally, the built-in algorithmic reward structure encourages members to add value. The creativity and flexibility that are possible for SMT creators when designing their reward allocation algorithms will allow tremendous experimentation (and thus innovation) in achieving truly efficient, effective, reward structures. Some of these SMT experiments could even be used as experiments to design new and better incentive structures for the Steem network itself.

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Chapter 4: Automated market maker

One important aspect of Smart Media Tokens is the ability for the creator to choose to use an Automated Market Maker. As far as I understand, the way that this will work is that a portion of the funds raised during the ICO period will automatically and trustlessly be delegated to the market maker according to a specified reserve ratio. The purpose of the market maker is then to provide liquidity to the SMT market and allow newcomers to easily move in and out of their investments in that platform. My personal opinion is that the benefits of this market maker and additional liquidity will probably inspire more confidence in the platform, as liquidity could be an issue when some of these SMTs are starting out. There is one main deviation from the market maker proposed in the Bancor proposal: whereas the Bancor market maker will have special powers to create and destroy tokens through the exchange process, the SMT market maker will not have any special powers, but will instead just as an ordinary economic agent to handle the trades.

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Chapter 5: "Shared influence": air-dropping influence to Steem Power holders

Probably the one feature of SMTs that I am the most excited about is the option for SMT creators to delegate periods of "shared influence" between Steem Power and other vesting SMTs. The idea is, that when an SMT launches, it will have it's own reward structure for distributing tokens to users. One difficulty with this process is that upon launch the SMT will likely have very limited distribution, and so the number of users that can actually influence the rewards distribution will be small. Historically it has been a challenge for new cryptocurrencies to effectively distribute the tokens in their early periods. This is why many have resorted to the use of air-dropping tokens to holders of another cryptocurrency. This is what happens, for example, whenever Bitcoin forks, and existing Bitcoin holders instantly receive a portion of the new coins.

So, with SMTs, you can choose to share influence over the SMTs reward structure with existing Steem Power holders. For example, suppose Twitter launches a TWEET SMT and chooses to use shared influence. That means that holders of vested Steem Power could immediately interact with the TWEET SMT network as if they were TWEET Power holders. Of course the rewards would only be in TWEET and not in Steem. In this way, new SMT networks can overcome the initial period where very few users could actually interact with the network, and it would greatly increase the number of available users, as well as the distribution of TWEET to other TWEET users, who may not have much vested yet. This means that new websites and applications don't have to completely build from the ground up, but can instantly have access to thousands of existing Steem potential users.

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Chapter 6: Smart Media Tokens and their relationship with Steem

Finally, I just wanted to comment on the ways that I believe Smart Media Tokens will boost the growth of the Steem network, as well as increase the price of Steem! First, because SMTs are bandwidth-limited, just like Steem, as successful business that incorporate SMTs grow, they will be required to hold more and more Steem Power to keep sufficient bandwidth to maintain their applications, boosting demand for Steem tokens. Secondly, because many SMT creators will choose to use the built-in automated market maker features, some supply of Steem will be "locked away" in the market makers, decreasing the available Steem supply and boosting the price. Third, due to the influence sharing feature I described in the previous chapter, with each new SMT that chooses to use influence sharing, the utility of holding Steem Power grows, as Steem Power holders are continuously opened up to new markets. This should boost demand for Steem as the utility and value of Steem Power increases with new SMTs. Fourth, the ICO model of SMTs can potentially boost demand for Steem, because the money that flows into those SMTs will first flow into the base Steem token. Finally, each new SMT and ICO will bring new attention to the Steem network, and their successes will reflect well on the Steem network and community in general.

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I hope this post has been informative for you. I believe Smart Media Tokens are a step in the right direction, providing new opportunities for web entrepreneurs and businesses to decentralize themselves, provide new sustainable funding sources, and breathe new life into the growing crypto community.

I hope you all have a wonderful new year, and I wish you well. I hope I will be able to post more frequently in 2018.

All the best,
Trogdor :)

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First of all, this was an excellent and useful read as a newbie to cryptocurrency in general, much less Steem. I'm still a little unsure what the relationship between Steem Power and bandwidth is. I do understand as a general rule why more bandwidth is needed as communities grow larger, but why does that necessitate buying more Steem Power? I guess my next question there is, buying it from whom? Forgive me if this is a silly question; my knowledge of both cryptocurrency and general economics is pretty shaky.

Also, while I understand the value of Steem Power transferring to newer communities to help them get started, would that be true in reverse? For example, would someone who had amassed a lot of Tweet Power have the same kind of transference if they then moved over to Steemit? I'm curious what effect this has on the original economy, in either case.

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Thanks, regarding bandwidth, the more steem power you have, the more bandwidth you have for posting on the blockchain. For example, a brand new member might not be able to make two small posts right back to back, while someone with a lot of steem power can make huge posts one after the other. If some app is using a smart media token, all of those transactions are also recorded on the steem blockchain using the bandwidth of the account that created the smart media token. So as that smart media token becomes more popular, that account will be required to hold more steem power, otherwise it will eventually reach its bandwidth limits. As for who they would buy steem power from, I guess the answer is... anyone! Most likely an exchange though. Or they could just make weekly posts about their token and power up those rewards, etc...

As far as I know, holding smart media tokens will never give someone influence over the distribution of steem power and SBD rewards, only the other way around.

Best,
Trogdor

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Ah, I see. Thank you, that makes a lot more sense to me now.

No need to apologize for your absence, burninating the countryside and the peasants in their thatched roof cottages is a full time job on its own.

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Thanks! IT's good to know someone out there understands!

Hi @trogdor , first of all Happy Holidays! I just read everything and you clearly explain SMTs here, and all the advantages it will bring to the Steem ecosystem, and for sure to Steemit too!

I don't know if you ever heard about me or if you went across any of my previous posts, however, I wanted to let you know after going around, stopping by very smart and creative people on steemit, I finally realized what could I do to add value to the steem blockchain and steemit.

Thanks to @blocktrades , @lukestokes , @cryptographic , @starkerz , @steempower , @stephenkendal , @extrospect and many other smart people on steemit, is that I was inspired to create the 11 chapters/posts full Steemit guide, for new visitors on Steemit, new users, minnows, to learn as much and as fast as possible about Steemit, and the steem blockchain, and thus help them make their way on the platform.
With their support, they are also helping the full steemit guide to reach 3,000+ people hands and already got 300+ comments, questions from several people combined on the 6 chapters.

I already published 6 chapters, and here is the link to Chapter #6.

Chapter 6 of 11: Learning about "The Vision of its Creators, & the Power of the Steem Blockchain (Current Huge Developments and the ones in Process)" - This is part 6 of the 11 Chapters (Full Guide) to help new people make their way on Steemit
https://steemit.com/steem/@gold84/chapter-6-of-11-learning-about-the-vision-of-its-creators-and-the-power-of-the-steem-blockchain-current-huge-developments-and

@trodgor, if I knew about this great post you have done about SMTs I would have mentioned you on the corresponding chapter, and added a link to this top quality contribution you made here for the steemit community. Thanks for helping the steemit community be a better place every day!

Looking forward to hear from you!

Regards, @gold84

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Hi @gold84, Thanks for the message, I will check out your post series. I see that one of your later chapters includes a section about EOS. I also have several posts about EOS which you can feel free to reference in the future if you are interested.
https://steemit.com/eos/@trogdor/eos-vs-ethereum-for-dummies
https://steemit.com/eos/@trogdor/the-eos-ico-for-dummies
https://steemit.com/eos/@trogdor/introduction-to-eos-the-epic-blockchain-operating-system

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@trogdor sure I will! Thanks for the follow up on this! I am following all your posts with much more detail and will take a look and read this 3 posts about EOS.

A random question about bitshares. Do you know about the CryptoBridge? I wanted to know if its secure to enter the bitshares cloud wallet password on the CryptoBridge exchange.

Regards, @gold84

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Sorry, I don't have much experience with Bitshares, and this is the first time I've ever heard of CryptoBridge :)

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@trogdor , Not a problem at all! Thanks for getting back to me so fast.

Regards, @gold84

Worthy work @trogdor.
btw, when will be the launchment of the SMT?

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Thanks for the message. Honestly I have no idea. Things are in the works though, and a recent post by @dragosroua caught a change on the Github that suggests things are moving along.

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Yes, I read it, subtle changes but nothing clear about the Date milestone.
I bet a sudden rise of steem as soon as they publish it ;-)

Great work Mr. Ph. D. @trogdor ;)
Seeeing this quality post makes me feel the community is missing out on something if you should stop posting for such a long time again!
I saw you upvoting and commenting on #introduceyourself posts from time to time - great effort, I am trying to do something there with @welcoming as well.
Hopefully you decide to post more often in the future ;)
Greets!

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Thanks for the message and the compliment! I will try to post more often in the new year. The problem is I tend to over think it and get a little OCD trying to make good posts... but I'll try!

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If something like the above treasure is the result of long thinking, I don't mind you doing so :P

Wow dude, very well written and very informative. This should be a must read on steemit! I will resteem. Definitely worth the read for anyone in the crypto space today. I don't even know how many people are aware of SMT's.

Thanks for the great info.

Peace,
The Last Sage

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Thanks for the message and the resteem. I think more information will become available as the project gets closer and closer to launch.

Great to see you posting. Moving and acclimatizing to a new job is a lot at once! Happy your life is settling down some :)

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Thanks for the message. It definitely is time consuming just getting things settled. I'm hoping to post more in 2018 if I can find the time. Cheers

First of all welcome back, secondly.. holy moly it sounds like you had a full plate! Congrats on the new house, job and successfully defending your PhD 😎 Thanks for explaining SMTs, I know alot of us here didn't have a very good grasp on what exactly they were and this helped alot, well put together post. Have a fantastic day

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Thanks for the message. Yeah, I've definitely been busy, I s'pose, but who isn't? haha. Part of my problem with posting too is that I'm so OCD perfectionist that I really like to have really complete thorough posts that are important.... and I don't have that many ideas that I can write quickly, haha.

Wow how awesome, how good to see your posts after so long. I'm glad you've accomplished goals last year and done such good things. I hope this year is very prosperous and follow your successes.

Greetings from Venezuela a big hug for you. I hope we can continue reading

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Thanks for the message. I hope you have a happy new year.

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Thanks to you for taking your time and answering me, I hope we can continue reading both our publications. Follow your success doctor :D

great post to share more info about the smts, thx!

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Thanks for the message!

How does the reward pool thing work for sites wanting to adopt SMT? I’m just thinking - I’m a forum owner or a news website, do you just switch the SMT and everything pretty much manages itself as it does here?

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As far as the reward pool works, it will be basically identical to the way Steem works as far as I can tell, with the caveat that the creator of the SMT can design all of the parameters of the reward pool, max number of votes, reward allocation algorithms, etc...

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Does the blockchain provide the pool or is this something the people running the site have to put into it? Sorry for Q central, it’s the one bit about adopting SMT that I just haven’t been able to get my head around.

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With the option to hold an ICO, I believe that will raise some of the initial capital and give the tokens their initial value, but the reward pool I think will basically come from inflation, just like it does with Steem, which is primarily delegated to the authors, curators, etc... In Steem, all of the reward pool are tokens that are just created out of thin air per day, according to a known inflation curve. Hope that helps.

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That's true, initial investments will give value to tokens and afterwards the growth of that token is depends upon the demand and supply, and also market capital and supply.

Thanks, this is really nice. It's very well aligned with the white paper. I'm following the development of SMT very closely and a few things changed from the white paper definitions, but nothing that could break things.

Looking forward to see this released.

BTW, if you're interested in the nitty-gritty, I had a 3 posts series related to SMT, including Market Makers and their role.

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Thanks for the nice message. I will also be interested in seeing how things progress moving forward, and I will definitely check out your SMT series posts!

Thanks for the highly informative post Mr. Burninator. I'm new, both to the steemit community and to the cryptocurrency space in general and reading this was incredibly beneficial for me.

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Thanks for the message and glad you liked it :)

What great informative and really into detailed view of the upcoming SMT tokens. Guys check out this, is one of the first SMT http://bobsrepair.com/
and shows how creative business can implement Steem Blockchain to there business.

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Thanks for the message. I will check out the link. :)

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I hope you will be positively surprised by this one. Even John McAfee is on Board!!!

@Trogdor it is great to see you posting! You should certainly post more often. It is always great seeing you welcoming new members in the replies! Keep up the good work.

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Thanks for the message. I'm going to work on posting more this year. I've been spending the time I have just upvoting a few new members per day, mostly because I just don't have much time to work on huge posts like this one, but we'll see if I can get some out a bit more regularly.

Congratulations on all of your awesome milestones. I hope to see more content from you. This is just the kind of information that helps us to understand and navigate this space.

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Thanks for the message. I'm going to try to post more in the new year, if I can get over my need to write crazy long, time-consuming posts..... :)

ThBks for the research and report on SMTs. The potential will be huge.

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Thanks for the message, and I think it will be huge too!

Excellent high quality post!

Bookmarked! And will resteem later as well.

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Thanks! I'm glad you liked it!

Awesome, detailed work!

Hey @trogdor I noticed you late. Your shares are great. I think you should share more often.

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Thanks, I'll try!

First of all, thanks for the deep and informative six chapters related to SMT, I think everyone is awaiting for the SMT's to launch, because after launch of SMT's, it can increase the investments. Personally I am curious to see the trend of Steem and SBD after launch of SMT's, currently Steem is uptrended unbelievably and I am hoping that this graph will move towards the more uptrends. Thanks for sharing, happy new year to you and your family.

Have a great day and stay blessed.

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Thanks for the message, glad you found it interesting :)

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Welcome ☺️

Very nice post, beautifully presented and explained. detail oriented with nice pics. thank you for sharing this with us, Upvoted

If you mind checking out my blog for latest posts and updats @kingjan

This post has received a 100% UpGoat from @shares. Send at least 0.1 SBD to @shares with a post link in the memo field.

To support our daily curation initiative, please donate 0.01 SBD or delegate Steem Power (SP) to @shares.

Support my owner. Please vote @Yehey as your Witness.

Great work Mr. @trogdor Ph. D. ;) This is a great help for me. I am not a technical person, but this post is detailed. Such a quality post. Warm regards

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Thanks!

Great Book Definately Lot Of infomation.Upvote Me I Upvote You Back Surely

Thanks for this valuable information and explanations, I somehow got an Idea of the SMT by now and how it goes. Most of all the hopeful thought of Steem to be on demand in the very near future that will raise its value to the moon!

Good post and useful

Thanks for this post. Following you already. Would be looking forward to your next post.

I think I saw that book in Amazon, I must get it but in Spanish hahaha

WOW. Extremely Valuable. Thanks. I'll have to reread this a few times, so I can fully digest this. Thanks @Trogdor

This article is very helpful, voted and followed the author to help writer continuing to post such articles.

Please be kind enough to follow me as well. Gracias!

wow wow, I have been looking for this for a while. I am glad you came out of hibernation to allow me gain this knowledge. Thanks once again @trogdor

I read your post
is very informative article.

We need more real people like you here and less robots. lol

This is the best explenation i've seen so far, would liko to resteem or upvote but... :)

Great content! I love the introduction to this opportunity. I look forward to researching more on this.

We all knew the benefits of using SMT's how about providing "How to procedure" on how to setup in action, let's say for example using a website or forum.

This will expedite the growth and exposure of Steem.

Let me say that , this is a wonderful and useful topic my dear friend i appreciate your efforts thank you for sharing your great experiences with us

if I see your post a bit late, I really like your post.your post has been successful. Thanks for sharing.. @trogdor

Your share is just like a thesis report. Carefully writing. I really like. I hope I write as attentive and beautiful as you can write.

I just heard about this! The SMT protocol? emm i will give it a try, maybe this is one of the answers to my career and my job as a gardener in steemit! and promote some stuff there. @trogdor Thanks for information

All the best trogdor.
god bless you.
Wonderful thinking have your post.
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Hi @trogdor! Great post.
Best regards.....

Hello. For me, as a pioneer in this, this kind of help is very welcome. You have published a lot of data that I should understand if I want to do the right thing. However, if I want to be honest, the data is so much that I have no idea what I read. In order to know at least a little what I read, I will read one chapter one after another, then it will be easier. Thank you for your guidance

@trogdor increíble 🔥

good friend, congratulations :)

@trogdor Your posts are great. I hope you share more often.

I have seen your post. I really like. it is clear that you are good at this job. I am following you. I hope you will share more. @trogdor

First of all, thank you for this incredibly useful piece! I really appreciate the way you used Powerpoint slides throughout. You were right in the introduction to point out that many of us don't have the financial or technological background -- that's me. I know content and design (been making MySpace layouts my whole life, or so it feels) but the "back end" has always confused me. This makes it a lot easier to understand, and I definitely see SO much room for this in the media industry. It is so awesome knowing that I have so much to learn!!

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Thanks, glad you liked it!