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)

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.