Lies about Steem and Steemit
STEEM POWER is debased up to 6.7% yearly, not 5%, but it can be much lower even 0% or even a compounded gain if the demand for STEEM is great.
This post is an experiment to see if the voters on Steem value the truth, or if they will reject any truths they don’t want anyone to read.
There is very valuable information here for users and investors of Steem, which is not available in any other post on Steem. I’ve put a lot of effort into researching and vetting these (via 24 hour marathon discussions on Bitcointalk).
Note there are far too many details to write into this blog post, so readers will need to click the links below to read the long justifications that support the conclusions stated here. All but one of the linked posts are mine. (iamnotback is my current user account on Bitcointalk)
- The lie that because investors in Steem don’t own the content, then there is no inertial value in the users’ sunk cost into their social connections and communities on the blockchain (which afaics Steem can’t yet facilitate). Coupled with the lie that indie artists can’t produce content that is competitive with the music industry or even Hollywood.
- The #1 witness on Steem, @arhag, calculates that the debasement of STEEM POWER holders is approximately 5% yearly. But the corrected calculation is up to 6.7% yearly. As far as I can see, @arhag didn’t incorporate all the factors into his calculation.
- The Steem white paper claims there are no transaction fees charged to vote and post blogs to Steem, but this is an obfuscation of the truth. Steem limits activity by stake-weighted bandwidth limits. A user’s stake is roughly the amount of STEEM and STEEM POWER they own. But stake is continuously debased, thus being the equivalent of subtracting a transaction fee via the inflation tax. This choice of design for Steem instead of a design based on transaction fees, results in a top-down controlled blockchain which is vulnerable to corruption and legal action by the government and the copyright industry. Note I’m referring to the bandwidth costs on this point, and not the paying of the rewards due to voting, which must be stake-weighted to charge the cost to the collective, else the incentive to vote would be much less.
- The overly bullish assumption that Steem has proven it can cross the chasm from signups from those one-degree removed from blockchain nerds to mass-adoption:
- Signup attrition rate appears to be approximately 80 to 85%.
- Simplistic Reddit feature set only caters to a small fraction of the Internet population. Achieving Facebook-level feature set and ecosystem requires 1000s of employees and/or an open source movement, but Steem and Steemit are not entirely open source.
- Bitcoin is estimated to have 100,000 to a million users, and at even the maximum rate of Steem signups seen thus far will not surpass a million users until after several years when factoring in the attrition rate.
- The misconception that Steem has any investment value other than if transactions (i.e. transfers, not voting and posting activity) can scale up to the $billions per year. And that is a big if. The only way to displace the up to 6.7% debasement of STEEM POWER is to have sufficient demand for STEEM so that the ratio of STEEM POWER to STEEM is significantly less than 9, which then results in a compounding interest rate gain for STEEM POWER holders w.r.t. to their percentage of the market capitalization. And investors have to weigh this against the 1 year weighted average price cash out delay risk cost. The greatest risk may be if I am correct that the voting and reward algorithms are fundamentally flawed.
- The misconception that as adoption of Steem increases, the centralization of having only 20 simultaneously active witnesses of the underlying Graphene blockchain will improve; and the misconception that the insiders’ control over the Steem blockchain will reduce significantly soon.
It amazes me how people assume Steemit comes out of the box a full and complete product. They assume that everything is set in stone from day one. Steemit is designed to be able to adapt to what is needed. There are many more features that will be added to off set some of the criticism people have. Steemit is hybrid company/government economy. There are many variable that can and will be tweaked. The developers right now are focused on making Steemit a stable platform to interact on. Once that is done, they can continue to focus on the economics. It's funny how quick people want to try and tare something down . But if you gave these people a million dollars to build something valuable from scratch they couldn't do it. It is easier to throw rocks than build a castle with them.
There are some items listed in my blog which can not be changed nor improved because they are fundamental to the vested interests and/or the design of the system. For example, this issue #2 reducing the 15 - 21% debasement rate for STEEM POWER holders would reduce blogging rewards.
The issue #5 is inherent in the business model of Steem which is dictated by the way blog rewards are funded in issue #2.
Even if rewards reduce, they will still be more than any other platforms pay which is zero. Second i beleive i read somewhere that inflation rate will reduce to 14% after the first steem split four years from now. The point is people are arguing and conjuring over incomplete facts. The whitepaper needs to updated.
You can not assume no one will make a Steem competitor.
I look forward to that updated white paper, because I and investors can not form analysis based on vaporware or vague allusions.
Btw, I think I just figured out why the current reward and ranking algorithm is entirely wrong. I mean fundamentally wrong on the basic assumptions. Will be detailing my thoughts at BCT, not here as this is not really a discussion site yet.
The 'sufficient demand for STEEM', will be determined by the contributions happening now- on this platform.
How does published (blog and comment posts) content get automatically converted into transactions transferring STEEM?
content/participation can validate steem as a currency.
I mean 'facebook' was an idea worth some $.
The only reason it's so valuable now is because people bought into the idea.
check my blog, if you like :)
Facebook earns money from advertising. Content can sell advertising. Content selling microtransactions is unproven. And there is a lot of development work that would be required to test that unproven hope. And so far we only have a simplistic Reddit clone with a ranking system that is coming under fire for being too circle-jerk or groupthink. In order to monetize, there needs to be tight targeting of user preferences, not a site-wide groupthink effect.
facebook shares were in huge demand even before the monetization began.
Its's about believes. check my blog.
But Facebook wasn’t debasing investors by up to 6.7% yearly while also demanding a 1 year weighted average price lockin (unless you are referring to angel investors which received the stock at much lower prices than the current market capitalization). Afaics, there is no incentive to invest long-term in Steem, unless you are a fool who hasn't read this blog, or you believe they can definitely ramp up transactions built around this ecosystem of content and you think they can fix the voting system which I appears to me to be "winner takes all".
Where does the 10% interest paid to holders of Steem Dollars factor in your equations? I don't see.
In both @arhag and my computations, we are assuming they are converted to STEEM.
If SD can be openly traded like Steem, why would they need to be converted? Except straight to fiat or btc
We are just assuming they'd prefer to be powered up or exit to fiat, and that anyone purchasing STEEM from them would power up since holding STEEM is debased at 50% yearly (46.125% while liquidity rewards are currently paused).
Also the 10% interest isn't guaranteed to remain constant. Also that depends on how many SD are held. I really don't understand the SD well, so I can't comment meaningfully on that scenario.
Perhaps you could ask @arhag to run some calculations. I frankly don't have too much more interest in splitting the hairs unless it will make a huge difference on the debasement rates for SP holders.
When the marketplace is added for users to buy and sell goods like craigslist, which token do you think they will prefer to transact in?
Just because it's not voted / flagged , does not mean people don't see it. They probably need time to digest the information or they don't see it as crucial information so they choose to ignore it. Not to mention that a lot of them did not understand half of it.
As far as i understood, there were a lot of changes since the original launch , changes that were not added to the docs and they do say at some point
....which i tend to apply to everything related to rewards, shares, % on steemit as the platform continuously adapts to new needs/content/users.