Was the Launch of Steem a Scam or the Only Legal Way? - Thoughts on Steem by Charlie Shrem a Week Later
Recently I've found myself in a Twitter storm of anti-Steemness. How? I have no idea. It has been focusing on different aspects of Steem, but I'd like to focus on one right now.
We've all seen it before. The fated Bitcointalk Announcements (Altcoins) sub, where scamcoins, altcoins and the like come to live and (hopefully not) die.
If you look a little closely, there is an announcement for Steem - An Experiment Proof of Work on March 24th
Then on May 9th, the official Steemit platform was announced.
What happened during those 2 months has been one of the biggest arguments of people calling Steem a scam.
Steem as a company and its founders mine a large stake of Steem themselves between that time period, giving themselves one of the largest stakes in Steem.
Does that make it a Scam? I don't think so. Here is why.
I am more sensitive to the plight of companies trying to get off the ground and how hard it is to stay on the right side of the law. I believe the way Ned and Dan launched Steem was the one of the only kosher ways to do it. (I am no legal expert)
Take a look at Dan's article on the subject: https://bytemaster.github.io/article/2016/03/27/How-to-Launch-a-Crypto-Currency-Legally-while-Raising-Funds/
He writes that there are 4 bullet points must be satisfied for a blockchain launch to be considered legal:
- Do not pre-allocate any currency to yourself or others.
- Do not sell currency directly to others
- Aways sell through a regulated exchange.
- Complete the currency and protocol prior to launch.
One of Tone's biggest arguments is that on march 24th there was not enough information given for people to mine Steem and the lack of transparency. However Dan addresses that:
"A startup that attempts to comply with all of the FinCEN regulations AND all of the Bitcoin community cultural regulations finds itself in a pickle. If you reveal enough information about your product with enough warning then the market will speculatively place a high value on your tokens. The higher the value the market places on the tokens, the more capital is wasted on a computational competition to acquire the tokens."
I tend to agree with this.
In working on my own project in the past I realized that if I launched a token and announced it, many people would mine it making the value go up very quickly and my inability to mine enough for the company to fund development.
Why is it a bad thing that Steem and its founders mined so many in the beginning? Wouldn't you want the founders and the company to have enough money to further development of the platform thus making everyone else's Steem value worth more? Everyone who has Steem or Steem Power has an economic interest in furthering the project.
Playing devils advocate here. It is rumored that Satoshi Nakamoto owns a very large percentage of Bitcoin due to the fact that many of the earliest coins have not moved. I don't think thats a bad thing, he deserves those coins as the creator of Bitcoin. His development has brought us one of the most important technologies of our lifetime. https://bitslog.wordpress.com/2013/04/17/the-well-deserved-fortune-of-satoshi-nakamoto/
I concede the white paper is very long and may not be perfect. Steem is new and experimental. However I don't think we should throw a project under the bus because of that. Besides, what financial investment is required to participate? NONE!
Let's try to be a bit more objective in our arguments