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Weiss report on Steem, Feb 16th

in steem •  7 months ago

"
All About Steem (STEEM, "B-").
Plus Our Response to Reader Criticism
Since so many cryptocurrencies currently get "C"s and "D"s right now, there's a big focus on Steem. That's because it is one of the few on our list that gets a good rating.

Readers ask why Steem stands out from the crowd. Some specifically criticize Steem because, in some ways, it's more centralized than other cryptocurrencies. Most just want to know what to buy and when.

First up, let's talk about the No. 1 virtue of Steem: It's a social media platform (Steemit.com). Equally important, it's a very user-centric social media platform.

When you sign up, you don't get the typical crypto mumbo-jumbo of other cryptocurrency resources. Instead, you immediately see that Steem is a blog where you get rewarded, in money, for the content you produce.

The scheme is pretty straightforward: If you write a post and a lot of people like it or vote for it, you'll get your reward dropped directly into your account within seven days. At the bottom of each post, you can even track how much money you're currently making.

If you want to promote content, you use the money in your account (or pay out of pocket) to get it advertised. Your post goes into a "promoted content" section. And if people like it, you can get your ad cost back and then some.

However, unlike Facebook, it's a two-way street. You don't contribute content just for the benefit of the Facebook company and its shareholders. You also reap the benefits yourself directly.

This platform was created with two core missions:

Mission #1. Easy entry. To give you an easy on-boarding platform into the crypto world, even if you don't have much prior experience.

Mission #2. Miners as content producers. Founder Dan Larimer explains the rationale. Instead of users spending time, money and resources on wasteful activities like Proof-of-Work mining, they can devote their time to productive enterprises, like writing good content that people will enjoy. Those who produce the best content, get the highest rewards.

Plus, there are other key strengths to this concept:

Strength #1. Decentralized. Steem's architecture has built-in decentralization. Specifically, this means there are 21 block producers on the Steem platform at all times.

These block producers are functionally equivalent to the large mining pools on the Bitcoin or Ethereum networks. But there's one key difference: The latter are controlled by just three to five large pools that concentrate the majority of the hashpower, effectively creating an oligopoly on who gets to create new Bitcoin or Ether.

Strength #2. Voting. It's the users themselves who get to vote on who those 21 block producers (called "witnesses") should be. If any witnesses misbehave (for example, not allowing certain individuals to send transactions), users can call them out, vote them out, and replace them with witnesses approved by the community.

Strength #3. Easy upgrades. The voting also provides a clear mechanism for upgrading the software. Someone proposes a change. Users vote for witnesses that support the change, or for those against it. If two-thirds of witnesses support the change and win the needed votes, the upgrade goes into effect. All without splitting the community -- thus avoiding the kinds of battles we've seen, for example, between Bitcoin and Bitcoin Cash, or Ethereum and Ethereum Classic.

Strength #4. High speed and low costs. Steem can process thousands of transactions per second, one of the fastest in the world today. That's faster than Ripple's XRP network, which is considered Ripple's No. 1 strength! And within its network, Steem does this with zero fees. That's right. If you want to send money to another Steem user, it costs you nothing.

Strength #5. High usage. Steem boasts 1.5 million on-chain transactions daily (and growing). That's twice the usage of Ethereum and some 60% more than Ripple's.

Here's the kicker: All that activity barely puts any pressure on the network. Unlike the vast majority of cryptocurrencies, Steem is built to scale. And our ratings model rewards it for that.

Strength #6. Popularity. This is another way Steem earns points in our model. Thanks to its a social media platform, it's naturally popular.

Strength #7. Individuality. Steem supports individual accounts that allow each user to select a unique name -- clearly more consumer-centric than competitors.

Strength #8. Other apps. Steem is also capable of supporting other applications, among which DTube has enjoyed the most growth.

All of this adds up to VALUE -- a direct response to crypto critics who say cryptocurrencies "are created out of thin air" or "have no intrinsic value." Steem has a clear purpose, a steadily growing user base and a clear value proposition.

The Steem Confusion
What about the concentration some folks worry about? Granted, that's one of Steem's weaknesses and we give its rating a haircut as a result. But it's not nearly as serious as some people think. At least not yet.

From our subscriber feedback, it seems much of the criticism of Steem stems not from a problem in the blockchain code or even the platform itself. Rather, there's a misunderstanding about how the platform works.

As we explained above, Steem is a decentralized social media platform, where users get rewarded for the content they produce. This reward comes directly from the Steem blockchain in the form of newly created Smart Media Tokens.

The sad reality of traditional social media platforms is that all or most of the profit generated (usually in the form of advertising) goes to the company behind it and its shareholders. Like Facebook.

And as you saw, Steem aims to change this model by rewarding content creators directly from the blockchain itself. All good, right?

Yes. But the devil's the details …

You see, Steem is a 3-tier currency system, with three different cryptocurrencies. Each serves a different purpose:

Their first cryptocurrency is STEEM itself. It is the basic currency used in the Steem ecosystem. We call it the "native token." (Like Ether is the native token of Ethereum.)

When new blocks are created, the rewards are in Steem tokens. Then, 75% of these tokens are distributed to content creators; 15% is paid as a "dividend" to Steem Power holders, and the remaining 10% goes to the block creators (the "witnesses" we referred to earlier).

The Kingdom of Steem
The second cryptocurrency is Steem Power (also called "vests"). Let's say you are a citizen in a virtual country called "the Kingdom of Steem."

If you're like an average consumer, the currency you own is Steem itself. But if you want to be like a property owner with a vested interest, then you need Steem Power.

Steem Power represents share ownership in the Kingdom. When you convert your Steem into Steem Power, you lock it up for a minimum of three months in exchange for some benefits:

As mentioned earlier, 15% of the block reward is distributed among all Steem Power holders, proportional to the amount each account holds.
Steem Power is what determines your voting power. This is a biggie. You get to "upvote" the posts you like.
Similar to "liking" a post on Facebook? Sure, but with one critical difference: In Facebook you get one "like" per account. In Steem, you essentially get one for every unit of Steem power you hold.

This means that, rather than a democracy, Steem is more like an oligarchy. It makes sense because it all ties back to the value Steem places on your content contributions.

The third cryptocurrency is Steem-backed dollars: I won't trouble you with the details. But it's basically used as a mechanism to facilitate conversion of Steem Power back to Steem tokens.

So what is the big criticism people have? It's the whales! They are large holders of Steem Power. They can have too much influence on Steem's voting and reward system. This, in turn, could potentially introduce an element of censorship within the platform.

Are we aware of this problem? Absolutely! As we said, we do clip points because it.

But it's understandable and does not kill the golden goose. At least, not yet. The Steem blockchain is relatively new, and the rationale for concentrating Steem Power in the hands of a few makes sense; it allows the founding team to properly moderate the platform in its initial phases.

Could the concentration of Steem Power become a barrier to adoption for Steem in the future? If left to fester, yes. But we are tracking it carefully. If it becomes a problem in the future, we will downgrade accordingly.

For now, thanks to all its strengths, it's a buy. (You can find our initial writeup from Feb. 2 about "why Steem is a buy" here.)

Best wishes,
"""

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Nice. These are those little steps that are going to get STEEM to the Moon. 🚀

Thanks for posting.

Thanks for sharing this @newsflash, it is really insightful and shows the true strengths of Steemit as a platform, as well as the cryptocurrencies that back the platform.

STEEM really does deserve the great grade that it got compared to other cryptocurrenccies, as it has so many use cases, a very low barrier to entry, and everything else that you mentioned. The main reasons as to why I love Steemit are:

  1. Fast transactions
  2. No fees
  3. You can invest your time instead of money to earn it

There are many other reasons of course, such as the financial freedom it can offer. I am really trying to build myself on Steemit, especially through my project, the Steemit Success Initiative.

Thanks again for this great overview!

Hello @newsflash i am upmewhale bot owner can you delegate some power to me ?

I am curious as to know why steem wallet is under maintenance most of the time? Should one be concerned? I've been on steemit about a month now and always looking for new ways to improve my steem power or buy steem and purchase some steempower.

About for 2 weeks now this has not been possible due to the wallet issues/maintenance. What is your (@newsflash) take on this matter?

·

On mine side, nothing is wrong with Steemit wallet and I never ever experienced any glitch. You must have some other problems.

·

Are you talking about exchanges? Because the wallet work perfectly, you can try https://blocktrades.us/ for example, the exchange from @blocktrades. Is working perfectly.

Some exchanges have problem with configuration or ... sometimes they try to manipulate the market putting the wallets in mantenance mode .... yes, it happens and now that Steem is a B- (Buy the hell out of it) coin in this report could a be a good way to mantain the price down and buy a lot of it.

I do not say this is what is happening but, could be ;)

·

@cryptoscout its for sure you are talking about an exchange were your steem wallet is under maintenance.

Here on Steemit or any other App of the steem blockchain, you always have control of your funds, and you always have access to your wallet with your keys, and you can transfer your funds by using @blocktrades or other gateways that have wallets working.

You can also use Bitshares dex to exchange Steem for other crypto, so you always have control of your funds.

Regards, @gold84

Great find by the Weiss group. I had seen the rating but not the write up of their reasoning.

All they say is true and a big reason why this will be successful. I have yet to hear anyone complain about the blockchain itself. Sure some of the apps have challenges but then again, that is true of all apps, especially when new. Any programmer will tell you bugs are a part of a coders life.

As for the distribution, I have been posting how the Whales influences is declining. It was down over 7.5% last year. The system is working. As more people sign on and take a larger share of the reward pool, those who have the large SP simply will not keep up on a percentage basis. Most of the reward pool goes to authors meaning the Whales cannot create content at a quick enough pace.

Plus, at some point, the early adopters cash out...the rewards get too attractive. We already saw that in a case or two.

Thanks for the find.

Some concentration of power is unavoidable, the first adopters will always have some sort of advantage, but that's ok.

The important thing is that with time, the SP gets descentralized, and for the community to remain healthy so new members can feel happy when joining.

I think this project is looking good and will certainly be one of the successful ones long term wise.

2018 should be the best year for steem ever!

Hi,
Nice to read about you and you posts and views. I am into steemit from august 2017, I am interested in photography and I am also into crypto trading and investing,I have followed you so you can also follow me. Let us all join hand and work with one common objective to make steemit reach to great height.
Best Of luck
Teenovision

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Nice post
Follme @edysukmawan

Tank you @newsflash. This is very informative. I hope that Steem can make it in the long run, the way real estate does. I've never heard the word "oligarchy" been spoken out. You have quite a smashing sense of vocab @newsflash..

There is no denying the fact that Steem holds way more value than Facebook. It's been so long i used my Facebook account, but really, why would i? Steem is totally different and valuable. Even the future for it is so promising.
This post really opened my eyes to some things i never really know before now. So, when i power up, i lock it up safely in a 'vest' for three months. Talking of long term investment over short term gain. Super exciting seeing it's promising future and the rate of increment later on.

15% is paid as a "dividend" to Steem Power holders, and the remaining 10% goes to the block creators (the "witnesses" we referred to earlier).

I used to think 25% is mainly for curators, didn't know the 25% is even divided into two; Steem Power Holders and Block creators.
Totally an eye opener. Thank you for this update. Learning never stops.

Wow... This is an eye opener. Thank you @newsflash

Very nice explaination about steem block chain and steem. Steem deserve to be in double digit soon. Hope for the best.

terrific & captivating!

significant & phenomenal!

significant & remarkable!

elated & delightful!

how are you friends, posting good friends, stop by friends in our account and upvote, if you do not want nothing

Thanks for sharing this. Seems they have done their homework (something I wasn't sure about on first hearing about Weiss, and their ratings).

I do agree that Steem is one of the most promising blockchains, and it's woefully undervalued, but we may be on the cusp of that all changing. New user sign-ups seem to be really ramping up recently and we're starting to see more attention.

It'd be interesting to know how many non-users of Steem apps are invested in the Steem/SBD.

Salam dear . Why you down vote me please remove your downvote because its low my reputation from 33 to 11 .... please remove i will be very grateful of your this act of kindness
@muhammadabid

hey please remove my down vote I did not do anything