For the last 3 months - starting November, last year, to be precise - we had a very peculiar situation here on Steemit: the "stable" currency of the platform, namely the Steem Blockchain Dollar, got pumped. The $1 peg was broken and the token traded at some point around $13k (and it's now hovering above $3).
This had a few consequences for the platform, with the most visible being a sharp increase on the rewards. I'm not getting into technical details, I will just say that the rewards are now "inflated" by this pump. I'm using the term "inflated" on purpose, because I don't consider this increase in rewards neither healthy, nor sustainable.
It's hard to know what exactly caused the pump, who did it, what are their reasons (one can only speculate about a pump and dump scheme) but the bottom line is that the current situation is not "natural". And by "natural" I mean "aligned with the long term goal of Steemit".
Don't worry, I still believe that markets are always right, and if the price of SBD is high, it means that somebody out there is willing to buy at this price. But while markets are always right, it doesn't mean the markets interest is aligned with my own personal interest or with the long term plan of this platform. In other words, markets may have a plan of their own, which may not be the one I'm willing to follow.
This relatively long introduction served a very simple purpose: to detail what the "long game" means for Steemit and what are the benefits - and drawbacks - of such a game.
The Quick Buck Mirage
Ever since November last year, the audience on Steemit changed drastically. There are a lot of people who are using it (almost) in a legit way, just because it pays back. They have no idea what's behind it, how posts are published, what is a witness, how the rewards pool is working and so on and so forth.
All they know is that they get a quick buck if somebody upvotes their posts.
There's nothing intrinsically wrong with getting paid, but when you get paid in the wrong way, you have to stop and ask yourself: "if this is not the right way to get paid and I'm still getting some money, how long this will last until it gets corrected?".
Because, you know, if the health of the platform is at stake, this current flow of money will dry up pretty fast. It's not that the platform will collapse, there is a hard core of people who will probably keep maintaining the nodes, but the value of the token will crash. Again, I'm not getting into technical details, but if a token is taken for a ride, meaning it's getting over-traded, artificially pumped and then dumped, the whole minting mechanism of that token will be affected.
I'm one of the people who got STEEM for their posts when it was worth just a little under 10 cents. Yes, 10 cents. And I still sustained a steady flow of posts, upvotes for other authors and comments. I maintained a witness node and I continued to build tools, like steem.supply.
I did this because I like to believe that I'm playing the Steemit "long game".
What Is The Long Game?
Let's get back to 2010. Just two years before 2010, a strange software project which aimed to create money out of thin air, with an even stranger community driven approach, in which you had to use your computer to solve meaningless mathematical problems to validate transactions, was launched. The name of the project: "Bitcoin".
Those who knew about it were mostly geeks and, to some extent, people in need for "alternative" money. It wasn't very popular, but it did have some traction in certain circles. The majority of people involved were considered creeps, though.
At that time, those who got Bitcoin were roughly split in two:
- those accumulating small amounts and keep playing the game by:
-- sustaining the network
-- educating friends and family about it
-- spreading the news
-- and many other ways
- and those who were relentlessly spending whatever coins they were making, because it was just a quick buck.
I think you now understand where I want to go with this.
But bear with me, there's more.
At some point, an interesting application was built on top of the Bitcoin blockchain. It was called "Satoshi Dice" and it worked pretty much like a lottery. A lot of people made quite a lot of money during that time. But the unexpected consequence of this application was that the network was almost clogged.
It took quite a bit of time for the Satoshi Dice phenomenon to fade out, and during that time, the hardcore adopters of the platform resisted the temptation to make a quick buck, and got involved instead in finding scaling solutions and keeping the initial purpose of the project: to create a decentralized currency.
The prospect of getting rich by pumping Satoshi Dice was real. And probably a few people made some decent money out of it.
But it wasn't the goal of the project. It wasn't aligned with the vision. It was cool to have it for a while, if you made some money out of it, but it wasn't the long game. It was some entertainment along the way.
Now, I will not even try to tell you where are the people who kept their Bitcoin and kept playing the long game, instead of immersing in the Satoshi Dice phenomenon.
They are the whales that are moving now a market worth almost $200 billion.
The SBD Detour
We're in a similar situation with the Satoshi Dice episode on Steemit, only our "fata morgana", our mirage, is the SBD pump and the unexpected increase in the rewards.
But here's what's going to happen if the SBD will keep growing. At some point, it will "eat out" the amount of circulating STEEM, in such a way that it will make it useless. Because SBD is just a debt-based instrument and it relies on STEEM, it's not backed by hard US cash and it's not the token created by the STEEM blockchain. It's just a smart contract eating out from the STEEM supply.
It seems so unlikely that SBD will erode the current STEEM supply, since the difference is so big: roughly 10 millions of circulating SBD, compared with more than 250 million STEEM tokens. But hey, we've seen even stranger things in the crypto universe, didn't we?
The long game for SBD is to stay stable. And for STEEM to go to the moon.
In this process, the rewards may take some hits.
And here's where the long game happens.
If you're worried that your rewards will get hit, you probably have no idea about STEEM's potential. You're "playing the Steem posting game" just like early Bitcoin adopters were playing the Satoshi Dice thing. Yes, you may make some money, but in 5 years you'll regret the shit out of this, when you'll see the value of the entire ecosystem.
So yes, while SBD will get back to $1, we may notice some painful reduction in rewards.
But in 5 years from now we'll be happy we took that hit.
I'm a serial entrepreneur, blogger and ultrarunner. You can find me mainly on my blog at Dragos Roua where I write about productivity, business, relationships and running. Here on Steemit you may stay updated by following me @dragosroua.
Wanna know when you're getting paid?
|I know the feeling. That's why I created steem.supply, an easy to use and accurate tool for calculating your Steemit rewards|