Steem integration, transaction demand and bitcoin shorts

Lately, I've been expressing some concern about Steemit, and how it has fallen in popularity. In particular, I was concerned about the bots and the automatic curation that is prevalent on Steemit. I have also had some concern with how the price of Steem seems to rise and fall with the price of bitcoin.

I believe that we can address the apparent link between the price of Steem and the price of bitcoin by creating transaction demand. I see that members of the community have been building applications to run on top of the Steem blockchain. And I also see that there is plenty of room to grow that demand since we're only using a fraction of the available capacity on the blockchain and witness servers.

I wrote an article about the link between bitcoin and all other currencies here. I also wrote an article to point out that manual curation is working well on Medium.com, and that is here. I received some great comments to the latter article and the comments have made some great points.

One comment I received stated that paid votes are rampant across the internet. I don't really get why a writer would have to pay someone else to get votes, but I do think that "money != merit". The idea that money is equal to merit is based on an assumption that doesn't embrace all other forms of value, including intangible value.

More to the point, there is a give and take in developing any skill. If one depends on money to bring in the votes then he relinquishes the opportunity to build a writing skill or muscle, to write articles that stand on their own merit. Long term, paying people to vote for one's work will cause one to develop the skill of using bots or paying for votes instead of the skill of writing.

Second, that article compared Medium.com to Steemit, and both have large differences in philosophy, revenue models and payments. Curation is not rewarded on Medium.com as it is on Steemit. People pay money to become members on Medium ($5 a month) and Steemit is free. Steemit uses blockchain and cryptocurrencies to reward users, Medium does not. Medium is much better established than Steemit, too, having been around a few more years.

Third, which I don't think was stated in the comments, is that Steemit is just one front end to an ecosystem whereas Medium is just one website run by one company, using dollars to reward people. There is no long term commitment built into the Medium infrastructure, like Steemit has with Steem Power. I think that Steem Power is a meaningful part of why people stick with Steemit. The community is the other very meaningful part.

But in the last few days, two authors on Steemit brought up some very significant assets that Medium.com doesn't have. First, there is @taskmaster4450, who points out in this article, that the community is learning to regulate itself. For every bad actor on Steemit, there is a good actor rising up to mitigate the harm done. For every algorithm doing harm to Steemit, another entity writes an algorithm to mitigate and even neutralize harm done. Automation is a double edged sword.

Then there is this article by @cryptoctopus. Therein, he points out that Steemit is just one interface and that many people are building business applications that run on top of the Steem blockchain. This by itself is interesting because if you want to earn Steem, or Steem Based Dollars, you can do more than just write. You can post audio, video and photos. You can hunt for new products, play games and even get paid to help the community.

But here is the kicker from @cryptoctopus: The interface to the Steem blockchain can be built into anything that runs on a computer. He imagines a world where every comment, every like, every post, can be rewarded with a token, and that token is Steem or SBD. This programming can be built into websites or built into a plugin for your browser. However it's done, it's going to happen.

This worldwide web integration with Steem (and any other currency for that matter) is how Steem can grow the next 100 million users. Not only that, but Steem has the capacity to handle enormous transaction loads. Very few other currencies can do what Steem can do. Not bitcoin, not Litecoin (a virtual clone of bitcoin), not Ethereum or any other of the top ten coins can handle VISA/Mastercard transaction loads save for EOS.

Why is transaction capacity so important? Because bitcoin has a long tail. When bitcoin rises, so does nearly every other coin. When bitcoin takes a dump, it dumps on every other coin. This is why I have little appreciation for bitcoin dominance.

You may have noticed that for months now, bitcoin has been trading in a relatively narrow range between $6-7k. This trading range has been observed since early this year, and I think, as several very experienced observers have noted, including the United States Federal Reserve Bank, the trading range of bitcoin is limited by the futures markets created for it. The futures markets are limiting the price of bitcoin by shorting it. This is speculative demand.

To overcome this limit imposed by bitcoin, we must create transaction demand. Given the tiny capacity of bitcoin, there is no way that it can create enough transaction demand to overcome the short-seller, speculative demand imposed by the futures markets.

Steem has the capacity to handle the transaction demand required to break free of dependence upon bitcoin for price support. Worldwide integration of the Steem blockchain everywhere will create the transaction demand required to break free of the hold that bitcoin has on every other coin.

Once social media in general figures out that they can actually pay people to participate and still make money, they may create their own coins (Facebook has muttered something about doing just that), or they can use something that is already there. All they have to do is read the documentation for the API for the blockchain and build an interface that works on their websites.

And it won't be just Steem. There will competition, and it would not surprise me if all social media outlets give us a choice.

To give you an idea of how this could be done, take Disqus as an example. I've seen many sites that use Disqus to manage their comments so that they don't have to build and maintain another database for comments. I'm on Disqus myself and can use the same user account to comment on multiple sites. They're purpose built for comments and building a loyal audience. The attention economy appears again.

Now imagine how the same thing could be done for Steem, or any other coin you choose to use. Once one website finds that they can attract users to a comment system that pays them, others will want to join in. And it won't matter if they manage their own comment system or not. If there is a will, they will find a way to make it happen for fear of missing out.

Like many coins right now, Steem is dependent on bitcoin for price support. To break free of that price support, there must be enough transaction demand to overcome any dependence on bitcoin. Worldwide, ubiquitous web integration of the Steem blockchain is the most likely solution to creating the necessary transaction demand to break free. This is how we tokenize everything.

Write on.

Slogan by @tecnosgirl

Other articles you might enjoy by @digitalfirehose:


Plan B for Humanity

A basic guaranteed income in the context of Maslow's Hierarchy of Needs

A sort of political movie review: Star Wars: Rogue One

Happiness isn't getting everything you want - happiness is a skill

The opposite of love is not hate, it is apathy

Fate, impunity and altruism

A short but growing list of people I admire, who have helped me, and/or influenced me, my thinking and/or my posts:

• @taskmaster4450 - The Age of Abundance is here
• @scottsantens - The Age of Universal Basic Income is here
• @gric - A very cool artist with some interesting perspectives
• @gringalicious - great writing, cooking and photography
• @luzcypher - for teaching me about how gift economies work