Ned Talks: Steem, Steemit, and SMTs

in #steem6 years ago (edited)

For the Korean version of this post, go here

Hello Steemians,

I’m Ned Scott, the CEO of Steemit. Today I wanted to share with you a video of a presentation I recently gave in South Korea at a meetup for the digital asset exchange GoPax. In it I give a high-level overview of the Steem ecosystem.

Since Steem, steemit.com, and even the team at Steemit have all grown so much over the last year, I thought it would be good to share this video with those of you who might be less familiar with how everything ties together, or those of you interested in explaining it to others.

For those interested, here is a video of that presentation:

Starting with Steem

Because steemit.com is usually where people first hear about Steem, it’s often what they want to learn about first. However, I believe it is necessary to start with the foundational concepts. Once people understand how everything works at the base level, they will be better able to understand everything that sits on top of it.

As a database, Steem stores redundant, high-reliability data about two things: STEEM (the cryptocurrency) and content-related data (blog posts, comments, upvotes, etc.). Content management primitives for the content-related data allow any entrepreneur who wants to build an application (or applications) on Steem to understand very quickly how they can use that data to set up their own site. In this sense, Steem can be viewed as the only Content Management System on a blockchain.

What’s novel here is how the account system ties back into the cryptocurrency. It is the interlinking of these two types of data that unlocks a new world of possibilities for entrepreneurs.

Delegated Proof of Stake

This data is made redundant through the use of a Delegated Proof of Stake (DPoS) system, where different validators of transactions process all data that comes into the blockchain. We call those validators “witnesses,” and they run “nodes,” which are connected to one another via a peer-to-peer protocol that enables them to speak to one another in a reliable and predictable way.

This system allows them to “ask” one another if they have the same copy of the data. If one of them has a different copy of the data, their node can become invalid, giving someone else the opportunity to take their place and their job.

One thing that makes this possible is the cryptocurrency that was bootstrapped in the ecosystem from the beginning: STEEM. Part of the logic programmed into the Steem database dictates that a percentage of the STEEM tokens created by the blockchain must be paid out to these nodes at a predictable rate. This provides the witnesses with the incentive to perform the job of running a node and performing that service reliably.

Steemit.com

Steemit.com is a web portal that exists outside of the Steem database. In this type of scenario, a group of people run nodes that connect to the Steem blockchain. These nodes hold their own copies of the data that is stored on Steem. This enables entrepreneurs to leverage this data to populate web applications of their own design. People can then use those applications to submit data to the Steem blockchain (as blog posts, in the case of steemit.com). The data is then reconciled with the cryptocurrency system, thereby enabling cryptocurrency tokens to be paid out to those people who are submitting data.

More than steemit.com

Dozens, probably even hundreds, of other websites are now plugging into the Steem blockchain service in this way. A notable one is DTube (a YouTube competitor), which combines the same content management and cryptocurrency primitives with another data service called IPFS to serve up videos. DTube has also become very popular due to the fact that it distributes cryptocurrency rewards, thanks to Steem.

These early adopters have helped to show how these cryptocurrency reward systems inside content applications can be so powerful, and why there are now over a million accounts on the Steem blockchain. With the upcoming release of our Smart Media Tokens (SMTs) protocol, these same entrepreneurs (along with entirely new ones) will gain the ability to create their very own STEEM-like token that launches their application - and their business - to the next level.

Smart Media Tokens

SMTs are a new piece of open source software that we are writing and submitting to the Steem github repository, where it will be either approved or rejected by the witnesses, depending on their assessment of whether or not it will compromise the security of the network, and whether the Steem community supports the idea.

The way to visualize Smart Media Tokens is to imagine the STEEM cryptocurrency as its own database within the Steem database. SMTs simply enable transaction logs for other currencies to be created inside that same blockchain database. With SMTs, anyone will be able to launch their own currency (or currencies), and the data relating to those tokens will be accessible to any of those entities and entrepreneurs previously mentioned. Even steemit.com could, theoretically, leverage these new cryptocurrency databases in interesting ways.

It’s going to be very interesting to see how other entrepreneurs decide to make use of these tokens. I fully expect that the information gained through these experiments will help us improve steemit.com and make it even more inspiring to both entrepreneurs and users.

Why SMTs?

STEEM is currently being used in multiple applications that are gaining mainstream acceptance. Through this integration we’ve learned a lot about how cryptocurrencies interact with websites and their end users. It’s been almost two years that we’ve been observing these behaviors and we now know that we’re only scratching the surface of what’s possible with respect to incentivizing behaviors through cryptocurrency. That being the case, we had to seriously consider that STEEM, as a sole cryptocurrency, may not be tapping into all of those potential use cases.

Bootstrapping

As we have been communicating with entrepreneurs who want to use the cryptocurrency, we’ve learned about the various elements of their businesses with which they need help. One example would be during the bootstrapping phase. During this time an entrepreneur is attempting to acquire sufficient resources to get their application off the ground and begin serving users. Because Steem is a pre-existing token, it can’t necessarily be used to serve this function.

This gap, along with a few others, led us to begin the thought-experiment of hosting multiple tokens on Steem. Because of Steem’s unique characteristics we didn’t have to limit ourselves to regular, run-of-the-mill Bitcoin-type cryptocurrencies, and could consider cryptocurrencies like STEEM, which has special properties like Proof-of-Brain (PoB).

With PoB, tokens are created at regular intervals and distributed to those who submit content to the blockchain, based on the stake-weighted upvotes of other users. Through this mechanism, the people casting votes are validating the value of that content by rewarding it with cryptocurrency.

This mutual exchange ensures that everyone within the ecosystem is happy. The creators of the content have been rewarded for their efforts, and the token holders are happy because they’re the ones who voted on the content in the first place with the impact of their vote being proportional to their skin-in-the-game (their stake). Finally, because the money comes out of the reward pool instead of anyone’s wallet and is released through a simple upvote, there is minimal cognitive load on the user.

All of this creates a positive feedback loop that leads to compounding network growth, as evidenced by Steem. Smart Media Tokens are really about giving new entrepreneurs the opportunity to do what our community has done with Steem, but with their very own cryptocurrency, all while feeding back into the Steem ecosystem.

Initial Coin Offerings

While bootstrapping is important, it doesn’t solve the problem of how an entrepreneur can build an application in the first place. For that they require funding, which is why the SMT protocol will launch with logic for performing Initial Coin Offerings (ICOs). This means that entrepreneurs will be able to offer batches of their currency for sale to the public in exchange for STEEM. These early adopters would then be guaranteed a number of those tokens when the currency goes live. A successful ICO would therefore enable the launcher of an SMT to acquire capital which they could use to build and sustain their enterprise.

Monetization

SMTs also enable the monetization of a web property through reward sharing. Reward sharing enables application developers to take a percentage of the STEEM that is being distributed by the Steem blockchain through PoB to the content creators, benefiting from the use of their application. DTube is one example of an application already taking advantage of this feature on Steem, and this same capability will exist within SMTs.

User Growth

Just like with STEEM, Proof-of-Brain within an SMT gives people an opportunity to join a community and be rewarded for the activities and energy that they bring to the community. This leads to the positive feedback loop mentioned before, which turbocharges growth.

SMTs are Business Oriented

SMTs are designed from the ground up to be business oriented. No matter what kind of internet project an entrepreneur is thinking about launching, SMTs will enable them to bolster their ability to fundraise, monetize their valuable community, and offer rewards that autonomously grow that community. These are the key concerns of every business operator and SMTs will offer solutions to them, with lower barriers to entry than ever before.

The Future

Ultimately I believe that Steem is still young and small, relative to where it will be in the future. Steemit and the Steem ecosystem are built on a number of new concepts that have the potential to explode across the internet. There are only a small number of bottlenecks to resolve before we as a community will have the opportunity to exploit the asymmetric growth opportunities that Communities and SMTs will bring.

At Steemit, we are committed to staying focused on eliminating those critical bottlenecks, continuing to hire A+ talent, and maintaining high standards. I believe that Steem is the next big thing on the internet, and I think we can all be really excited and proud of this very meaningful project in which we are all taking part.

Ned Scott, CEO of Steemit

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Its funny it really is something completely new to people, keeping it as user-friendly as possible will go a long way.

I feel like many of us who have spent a lot of time in the blockchain space and here on Steem already have gotten so used to it that they completely have forgotten how difficult it all seems in the eye of a newcomer. Steem is one of the few that makes it so much simpler for them to get into it.

Sure thing!
Easy to enter, hard to master usually is a recipe for a good technology.

Yes exactly. People are also very ignorant to new Tech. It takes weeks to learn how to drive a car. Learning all about Steemit is a way faster process and easier. People are entitled and take it for granted that Tech should be as easy as other stuff that they have become used to.

that is not the problem ... learning is learned ... the topic is what they already have very clear about what this platform is about and they give it a purpose different from that of its creation ... as for example the powerful ones dedicate to the sale of votes ... further increasing the bad distribution of wealth within steemit

No. This is capitalism. Also it creates new value that didn't exist before. Whoever takes advantage of capitalism by work harder and smarter will benefit.

I think the more correct term should be "bureaucratized capitalism" based upon a wealth distribution system that is monetarily politicized at it's best.

What? This was a very confusing comment, but I see you gave yourself a nice self upvote for it haha

There is nothing wrong with that! Especially since you don't seemingly participate with any rewards giving.

I do not agree ... capitalism seems perfect to me and I defend it ... another thing is to abuse the resources that the blockchain gives you ... in this way, if that does not change, and if a better distribution is not made of wealth steemit will end up dying ... in any case if you see it as capitalism is its bad part

It will not end up dying that is impossible. The whole world is looking for a service like this. STEEM will probably be worth $1500 a coin in the near future. No other service comes close right now. Surely no system is perfect but this works for now and it constantly is becoming better and more people are getting involved.

how many people does it involve? a few days ago the 1,000,000 account was created...Do you know how many are active? about 60,000...if a platform as spectacular as steemit is only little more than 5% is active is that something is wrong ... if only that amount is active is that 95% really does not trust ... and the main reason is the bad distribution of wealth ... and if above the most powerful are dedicated to sell votes will continue poorly...

Absolutely agree, I've been in the space just over a year and it took a second to get over the curve. Really happy to be with Appics as US Ambassador to make this learning curve practically gone. Soo much on the way. Happy to be part of the community.

Weldone sir

I actually do understand, well I don't know for others.... Some of use are so used to getting things the hard way that why no matter how tasky it is here some we just keep pushing but now that steemit is user-friendly we are grateful and hope we grow up like the big guys here even if not up to at least close to where we can stand on our own

Quite difficult in thr beginning but highly doable with time and dedication

That would explain the dismal retention rates ~13%.

1 million sign-ups doesn't mean much when you throw that into the mix, does it? I think its embarrassingly low. If I was a lead developer, I'd try to address that. But so far, I see a lot of talk and not a lot of action producing real results.

Prove me wrong, but I'm not holding my breath.

Imagine the retention rate of Bitcoiners in 2013 :)

That's a bizarre analogy. Bitcoin isn't a extremely-gated token that has a massive float like Steem.

It also doesn't have a parasitic ecosystem of voting/follow bots.

Steemit is doomed without some substantial changes, and the metrics out there show its absolutely horrible at doing what its defined to do -- get people interacting, and keeping them there.

totally agree ... it's good not to be the only one who thinks

Not really that bizarre considering the FUD and ignorance that existed at the time for Bitcoin and blockchain tech in general. I'm sure you agree many of the early adopters of Bitcoin were just as parasitic as those existing on Steem making it as unfair as possible.

Again, you missed the points in my prior post.

Perhaps re-read it, I don't have time to guide you through it again.

Sorry to waste your BCH FUD'ing time.

as a newcomer I have to say when you come here, you have to learn a lot about the upvote system, curation and author rewards, ranking, how everything is calculated, steem power, two kind of coins. I would compare Steem to some kind of Text RPG game where you have to learn a lot to be successful

Good point but like with any new business you have to learn something before you can expect to get paid.

To be candid, it is really amazing keeping 'User friendly'. Evidently, the intentions are genuine and it is truly decentralized

of course, it will.

May i say i simply just like your name? ;D

The first day I was here it felt like a time loop, as if I jumped several months, so quickly I familiarized with the way all works here.
Just recently I visited the Facebook interface once more, and I tell you, the energy felt sooo outdated and antediluvian. I immediately shut the website down so outdated it felt.

So in a way, the change from facebook to Steemit was a change from the majority to the minority, but once in, the minority feels like the majority, or should I say we are a conglomerate of powerful Souls which can literally move houses? ;)

I feel the same about opening up the Instagram app. You know that nothing exciting can happen after you post something. It's like a Sahara desert. It's not at the cutting edge anymore. No excitement. We are where the cool stuff is happening. Instagram is so 2012. Facebook is so 2010. YouTube is so 2009.

I feel the same way. It feels almost vestigial, I open Instagram out of habit, scroll a bit and then ask myself what the heck I'm doing. On behalf of the Steemit Team, thanks for your great comments!

For the Chinese version of this post,
https://steemit.com/cn-reader/@cn-reader/steem-steemit-smts
内德讲话: Steem, Steemit和 SMTs

I wish they were a little more open about expected timeline. The fact that they aren't makes me concerned that it isn't a pretty timeline, but it also could be that they want to be ready and then pounce from out of nowhere to cause an explosion of hype. I hope that is what is happening though; I'm hoping they are launched within Q3 2018.

GoPax, the Korean exchange, not to be confused with the thoroughly underrated Kevin Spacey/Jeff Bridges film, K-pax :)

At 5:02, why did you pay the bottom right node, even though they clearer weren't keeping up with the ledger. Who did they bribe to get a free pass??

Great post! I appreciate your efforts to ramp up the visibility of the Steem blockchain! Thanks for the detailed information! Resteem

The steem blockchain success will beat some of our wildest imaginations in no distant time from the look of things. The future we envisage might even be closer than we think.

With SMTs the value of steem will only increase the more because the demand for steem is gonna be sky high. I am quite positive and happy to be here. It is better late than never.

Another great speech from Ned, well done!)

The SMT protocol will launch with ICO capabilities?

How is this not going to bring the SEC to close down steemit?

Steemit has nothing to do with SMT's that decide to create ICO's, it's just a front-end to the blockchain.

Those creating the SMT's are the ones that need to make sure they are not creating securities and be prepared for the law.

uhuh. Sure, it has nothing to do with that.

Except to facilitate the ICO.

I'm sure the government will understand and not raid the company, shut it down or anything like that.

I sure hope that there is some strong explanation to people doing these ICO's on what their responsibilities are to the SEC.

Saying Steemit facilitates ICO's = The internet does as well. Look at ETH ever?

Steem the blockchain will facilitate them as far as I understand.

Nice upvote trail btw, its almost as if you want readers to believe that many users agree with you.

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