Are You Really Playing The Steem Long Game?

in #steemit6 years ago

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.


Dragos Roua


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

It's free to use, but if you think this is a useful addition, I'd appreciate your witness vote.

Thank you!

Psst: new to Steemit? Start Here

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SBD pump was ignited by an organic transactional demand. Voting bid-bots was on the rise. There are only 2M of SBD tokens in circulation and open bid-bot software was accepting them only. So the community was in need of roughly 20-30 mln of SBDs in circulation while having less than 2 and being too lazy to modify bidbot code to accept STEEM tokens. The pump was ignited by this demand and continued on exchanges which were far from rational on bitcoin all-time highs.

Flash-forward 5 months we are still in need of 20-30 mlns of transactional SBD mass but having not 2 but 9.5 millions of them. So the exchange rate is still far north of the peg. Right now SBD price continue quickly inflate at rate of 500k a week. In late summer we will reach the transactional demand and SBD price will hit 1 USD. All thing will return to normal.

What lesson should we learn? Simple and essential economics. If you want to peg something to USD you need to hold or be able to create token mass large enough to meet any demand.

The rational strategy for steemian right now.

  1. Exchange all SBD you have to STEEM asap.
  2. Buy some amount SBD once they hit 1 USD to meet possible increased deman in future.

The pain is that MANY new steemians get used to inflated rewards and probably will leave the platform as soon as the get back to normal.

Yeah i agree completely. I've been redeeming most of my SBD already and holding some just in case. I've been around long enough to see before the pump and new something was fucky. Your explanation clears most of it up!

Thanks for the clarifications, I agree with pretty much everything.

The pain is that MANY new steemians get used to inflated rewards and probably will leave the platform as soon as the get back to normal.

I don't know how "painful" this would be. And I refer to us, those who are hustling here since STEEM was 10 cents.

Do we really need "wow, nice post" comments to clog the blockchain just because we need "users"? I don't really think this is the kind of adoption that will push the platform up. On the contrary. With all due respect to the efforts of many of the newcomers, I would really think we would be better off in a smaller, but more articulated company.

I would really think we would be better off in a smaller, but more articulated company.

NO
Ten times NO.

We desperately need a simple quantity of user even if we sacrifice quality a bit. The sheer numbers is the power of any social media. Numbers drive adoption further and bring businesses into the network. Right now I prefer 1 million spammers to 10k genius-level crypto-folks. Because no single company will expand its social-media efforts into the space where are 10k active accounts.

I'd said no matter how much I love Steemit but if we won't reach 1 million active users this year I get my investments off the table.

chartoftheday_11882_number_of_subreddits_on_reddit_n.jpg
(from here)


Have a look at the first 4 years. reddit followed pretty much the same exclusivist / elitist community style steemit tries to implement. Also, this charts really shows what I understand by "long game'. The first 4 years on reddit were absolutely rubbish, I agree, because the community was so elitist. But that core of elitist members generated a stable-explosive growth once they got enough "weight".

Numbers never lie.

Of course, we can gently agree to disagree.

Nice chart. But steem has much less than 8 years to reach 1 Mil of users.

So are we on year 2 right now?

SBD pump and dump started happening every Saturday night through Sunday night since August.

But, I'm all for getting rid of voting bots and automated voting.

This is the time we sell our sbd for Steem while we can afford it soon enough we won’t even be able to buy it

I wish I could force my 1000+ users to read this and understand it.

I read it ... Thanks and I learned a lot. .... I will also Resteem. We will see how many of my 2000 followers read it and understand it.

I like what you said about the market being right. I agree.

For the life of me, I cannot figure out why someone would pay $3.50 for something worth $1 of STEEM but hey, I am not the one doing it so I dont have to understand.

I believe we just let it go. At some point, the amount of SBD out there will reach a point where the market crashes. I dont know what the point is, I just know it exists. Is it 15M? 20M? 40M? Whatever the number is, we will hit it.

The way I look at it is how much STEEM does it take to pay back the SBD.

When STEEM was $.80 and there were 3.5M SBD outstanding, it took 4,375,000 STEEM.

Today, with 10M SBD, STEEM at $3.20 requires 3,125,00 STEEM to clear out the SBD.

So the ecosystem's liability is actually less.

To me that is the important variable since this ecosystem prices all in STEEM.

How much further is debt is the ecosystem? In terms of STEEM, since November when STEEM was $.80, the debt load is actually less.

I believe we just let it go. At some point, the amount of SBD out there will reach a point where the market crashes. I dont know what the point is, I just know it exists. Is it 15M? 20M? 40M? Whatever the number is, we will hit it.

Out there?

The way I look at it is how much STEEM does it take to pay back the SBD.

Why?

How much further is debt is the ecosystem? In terms of STEEM, since November when STEEM was $.80, the debt load is actually less.

Debt to who? Who's debt and What for?

Suffice it to say I take it that you think that STEEM is some kind of "commodity" backed currency while SBD is some "debt/fiat" currency, why you think that those tokens are distinct as that boggles me because they are created by the same function, hence why wouldn't in essence and form be the same.

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I will give this post to my landlord. I'm she she will be happy to wait 5 years for the rent. Many thanks :)

Relying on Steemit - an experimental, beta stage product in the highly unstable field of cryptocurrencies - to pay your rent is like relying on lottery to pay your rent. The odds to predictably succeed at any of these two are equal, at this moment.

The only difference is that in Steemit, the longer your play the game, the higher the odds to get something in return, whereas in lottery the odds are always pretty much the same.

Calibrating your expectations would probably help. Also, not giving up your day job yet, or quickly finding one if you're out, will also help big time.

I'm still keeping my day job too, although I'm investing a solid 2-3 hours per day in this toy.

Welcome to my life of poverty since losing everything else when I lost "Half My Size" in in 2011. The fallout from my extreme weight loss has been even more extreme.

Friends, family, work, my home - it all disappeared when I lost weight yet somehow I still now do everything I can to help other obese people like me lose weight. I hope no one else has to go through what I went through, but the obesity stats tell a different story.

I moved to Thailand to cut expenses among other reasons. At least most of the people I encounter here are thin and healthy.

I am on many other platforms besides steemit. I have written books, coach online and in person, and get affiliate sales through my work. Every single month, my financial life is a struggle. Steemit has been a huge bright spot. I admit dropping balls to be more active here in the last months, but this has been a huge money maker in the scheme of things I do.

Through an author group, I found out why my books stopped selling in about October - they were all pirated like those of many of my friends. One book that used to sell 5-7 copies a month is now being downloaded for free on many sites - 100's of times each month. I looked into the process of trying to fix that just long enough to decide to try harder on steemit instead.

I am almost done and ready to publish my 5th book - but why should I do that if I can drip it out here - actually help real people who communicate with me - and make money at the same time?

There is no day job when you are an old crippled lady accountant. Especially not if you lost all your weight and all the other accountants are still obese. I could have gone on disability back in the states and chose not to go that route of govt handouts. So this is what I do.

I have been on 5 platforms that failed and disappeared during the years I have been doing this. I assure this is a worry for me with steemit as well. This is why I will not be an investor in the sense you mention in your post.

But right now - it's the best thing I have going and I promote the place everywhere I can so hopefully it will succeed. The vast majority of my content-creating friends are just like me - scrambling each month to keep going with our passions. If we come here and make money - then we keep trying - beta or no beta.

came to learn about crypto, peaked my interest with rewards, stayed for the content. simple, i believe in the platforms people, intent and incredible minds - the proof of brains here is REAL! :)

I was missing this kind of post friend... Hope it reaches the complete steemsphere.

I think as steem becomes more desirable there will more pumps by the people who slowly accumulate SBD and then pump its price to get cheap steem.

I want to use the platform to take Steem to low income communities in Romania, help others write quality content, support and curate them, and help them get to the rewards, while they could get their voices heard and for some of them it might even prove to be a way to get noticed and land a job or educate themselves. You know the state of the affairs in our country and how uneducated people are forgotten and manipulated into voting the wrong thing every single time. I feel that this would be the long game and the reduction in rewards would hinder it. I feel I am in the long game but for my project it's not that good of a news. Also, how do you think SMT will fit into all this? Thanks for supporting us and representing us in such a good way here :)

I feel that this would be the long game and the reduction in rewards would hinder it

Agree about the long game and I like your vision. Education is key. But I don't see how rewards reduction will hinder it.

Also, how do you think SMT will fit into all this?

In a way, SMT can play the role of SBD now. If a certain token issued on the STEEM blockchain wants to go to the moon, so be it. But SBD has a very special relationship with STEEM and too much of SBD and STEEM mingling is not good. SMT will be less "coupled" with STEEM, hence it will go as high as people will want to.

It's the human nature to balance work and rewards. My problems trying to push Steem into low income communities come from:

-distrust in general( of social networks, of the income source, of the technology and of cryptocurrency)
-basically they didn't even start to contribute and they are afraid that the bubble will implode with their future worth :)
-the possibility to cash out( they WILL cash out every single penny at least for the first couple of months, I am sure of it) They don't have access to crypto markets and just want an easy way to get that money out. Trying to convince them that crypto is the future is useless since they can't buy bread with crypto and switching their communities to crypto and changing the way they all think is a not a real option.

I will seek more answers, maybe we can try and help them somehow.

I am here for the long term...I am constantly powering up as I believe in steem...

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