The Fundamental Currency of Steemit Is Not Steem
Anyone checking Steemit for the first time thinks the currency behind this project is Steem. After all, it’s described in the White Paper and written clearly in your Wallet page: “Steem: tradeable tokens that may be transferred anywhere at anytime”.
Steem, a token for measuring reputation (coming from the word esteem). I thought myself the same thing for a couple of months.
But recently, I came to realize this is not true. The real currency of Steemit is not Steem.
The real currency of Steemit is attention.
Whales, Dolphins, Minnows and The Race for Attention
In Steemit lingo, a whale is a user having a very large amount of Steem (more than 500.000, let’s say). A dolphin is someone with at least 10.000. And a minnow is just someone striving to put together his first couple of thousands.
But there is another way to look at it, from the attention perspective. A whale gets a lot of attention. Steemians know that being upvoted by a whale can increase their payouts dramatically. So some of them even are going “whale hunting”. Engaging in some sort of pursuit to reverse engineer a whale's tastes, reading habits or voting preferences. There’s a lot of attention spent in this stalking, don’t you think?
And dolphins, they’re also spending a lot of attention on each other, by creating guilds or curation trails. Or just setting up partnerships.
Minnows have the smallest amount of attention, equal to the amount of Steem they own. They barely write, if they have time, and they check their accounts every few days.
What makes the world of Steemit turn is not the currency, but the attention.
How Facebook Does This
This is somehow similar with other social networks, like Facebook. In Facebook people are spending attention, but what they really look for is validation. They participate in the discussion in order to reinforce their social status, their self-esteem, their influence, or their biases, their preconceptions, their political preferences.
This process in which people are building secure social cubicles, requires a lot of technological power, social engineering, but, most of all, it requires attention. That’s the fundamental fuel of the whole mechanism. Without attention, Facebook will be just a ledger of useless photos, empty remarks about empty lives. Everything that’s in Facebook lives for as long as it gets attention.
The trick with Facebook is that it packages the attention and re-sells it to advertisers. Facebookers are lured into consuming the platform by getting back validation, in exchange of their attention. That’s a pretty neat scheme. And it’s not even revolutionary, you know, before Facebook there was MySpace and before MySpace there was Hi5.
Here Comes Steemit
Steemit - and some other blockchain based projects - is functioning on the same fuel but it doesn’t packages the attention and re-sells it. Instead, it tries to create an attention marketplace. Instead of being the middleman, like Facebook, Steemit is just the place. Now the owner of the attention and the potential buyer can negotiate directly.
That’s revolutionary. Compared to Hi5, MySpace or Facebook, that’s truly something new. But new means also unknown. It means not all the mechanisms are already working or even invented. It took years to Facebook to discover how to throttle access to Pages or Groups in order to create demand. So it takes time.
And new is also scary. Like I already said it in another article (5 Natural Causes for Negative Sentiment About Steemit) we, humans, are not functioning well with the new and the unusual. We want certainty.
I truly think that this is the main reason behind the somehow slow adoption of Steemit. It’s not that the mechanism is fundamentally flawed, it’s just that it’s very new.
As the project unfolds, new mechanisms for negotiating attention are being discovered and tested. One of the most interesting is about curation guilds. I already stated my point of view about curations bots in another article (The Useful and Unfair - The Rise of Bots on Steemit). Basically, I think it's similar, as technological advance, to the plough in the agricultural revolution. For people who are manually curating, there's just a limited amount of voting crops they can get. But a bot can boost the voting crops just like a plough was boosting the real crops back in the dawn of agriculture.
But there are many other mechanisms for negotiating and spending attention on Steemit.
The next part of this article will talk about attention from a financial point of view, trying to underline some of its fundamental characteristics.
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.
https://steemit.com/~witnesses
A new environment a new approach. Presumably "Whales" earned their position from paying attention to worthy and interesting articles. I have already seen people trying to game the system by interchanging votes with others, but such a process will cancel itself out if the operating mechanism as described in the Steemit White Paper plays out correctly. As more people join the platform we should see a balancing out of influence.
Yes, it's very interesting to see how new patterns and processes are unfolding. It's also exciting to be part of something so new :)
Good post.
"Now the owner of the attention and the potential buyer can negotiate directly."
Not really. Clarification. In reality (not Steemit) there is a free market, and that requires putting something up to get something back, risk-reward, buy-sell. Steemit, you join, get free token, then you can keep going, for free, and not have to "buy" anything at all, ever. The proper term would be vying (competing) for attention to get part of daily rewards, not buying it.
Thanks for the comment, @krnel, but I don't agree.
I wouldn't mistake the free tokens you get right now in order to join Steemit for a lifelong support income. Those free tokens are what it's called in marketing "cost of acquisition". That's the cost Steemit pays in order to attract users in the platform. Even if you add up inflation for 2-3 years, you end up with no more than $6-$7/user in 2-3 years. In the gaming industry, for instance, users are bought for $60-$100/apiece.
I am more than 100% sure this bonus will disappear once there will be enough people here. Even more, I am sure there will be a fee for getting into Steemit as well and it may start as high as $10. We'll see.
I gave a clear example of someone joining, who paid nothing, and pays nothing, to get or give attention. You aren't buying anything if you're not paying. I made that specific example for a reason, to show how they, themselves, aren't buying anything, no matter what the "cost" is overall, for the platform, they don't see it or care. It's not part of their costs.
Behind the scenes, yes there is a cost, that affects new users, ant he growth and the value of Steem/Steemit. True. And there is a cost in society for doing things, even if you don't buy anything with money. But that's not what this means: "Now the owner of the attention and the potential buyer can negotiate directly."
That is making an analogy to real world, buying and selling, where there is a risk of purchasing something because you have to actually give something of your own in order to get it. Steemit does not work this way for most people, unless you invested some actual real money you worked to get before coming into Steemit, then you're not even spending any money of your own. You're spending a "currency", yes, time, attention, we spend time and pay attention, but lets make the distinction between actual currency and symbolic money/currency. It's not comparable to say people who spend time or pay attention are "buying" other people's content or something related to buying when there is no actual buying with their own risk.
Only those who actually invested something from what they previously had, would be part of the losing in terms of risk-rewards for real market exchange. When you don't have a real risk for what you symbolically "buy" with your attention towards others and reward them for "buying" it, then there is a lack of responsibility on the part of being a buyer.
You have nothing to lose, so why not, if you don't really care about what you are valuing, what you want t promote more of, what success you want to create, etc. Some people just want the short term gains, free rewards, 0 risk, and that's not a real free market buying-selling risk-reward. It's something new. There is no loss risk aversion psychological factor playing in to honestly evaluate and weigh decision making in a broader understanding.
I disagree. This philosophy would perhaps be true to one who considers monetary currency to be more valuable than time. But, to someone who considers time to be of more value, then there is risk involved with devoting a lot of time to something without getting something in return-- especially if you were anticipating something in return, such as money or social connections.
I agree, I do value m time more than money. But I can't buy an apple with my time. So when talking about buying things in reality, we aren't simply equating it with the relative time someone is paid for a task. Some people get paid way more for their time. But $1 is still $1 no matter who makes the dollar. The buying of an apple is done with $ for everyone universally, not time. The time cost is subjective. So I'm looking at it that way ;)
Steemit is a gamble-luck overall, in getting rewarded for putting in time, energy, effort of relative degrees for each poster, and it's not universally valued for each person to buy equally like an apple, as I see it. The time and attention cost isn't the same as the cost of an apple everyone pays the same to get. Know what I mean? That's my gripe on that distinction. Thanks! :)
Hmmm, you seem to overlook the core meaning of my post (or maybe I wasn't clear enough).
My point is that what's bargained in Steemit is attention. Period. Steem, as a currency, is just a symbol mirroring attention. Every time you spend attention in something there is a cost, called "cost of opportunity". You could have spend your attention on something else, allegedly more profitable. Facebook, for instance. With Steem, the currency, you have a way measure this cost, but the "transaction" isn't done necessarily at the currency level.
It's ok to focus on Steem, the currency, but in that case you are simply positioning yourself as a buyer, because that token allows you to buy more attention.
In my opinion, Steemit is not a Steem marketplace, it's an attention marketplace. Hopefully, the tomorrow's article, about attention's characteristics from a currency perspective, will make things clearer.
And I agree, it's time spent and attention paid that is "supposed" to value things. Thumbs up lol. But we know that's not how autovoting and bots work. Consciousness is required for salience, valuation, and weighing importance.
I'm not paying attention to your comment. See? Got it now? :)))
Resteemed your post, I agree with most of it overall ;)
LOL, yeah essentially how a bot works. It doesn't see anything. They don't see and evaluate what to upvote, it's blind. Not looking. i.e. not paying attention. Just programmed to do certain functions, regardless of what is there, no actual vision of the content.
We'll talk tomorrow about bots. They do work, but in an infinitesimal way, it's actually delegated attention. For certain atomic tasks, attention can be delegated and it's perfectly ok to do it. We do it all the way, when we take for granted our spouse for picking up groceries or the movie we're going to watch, for instance. But the value you get by delegating your attention is way smaller than if you were there, with all your consciousness.
I still see a false analogy, to delegate your attention to a non-consciousness program, vs. to trust and delegate to someone else, a consciousness, to do something for you, like groceries. The analogy does not float for me. ;)
You delegate your attention to your alarm clock, to wake you up in the morning. Last time I checked, alarm clocks are non-conscious. :))
LMAO, you keep coming up with these distinctions that only apply to robotics. Programmed, repetitive, non judgment functions. I made the point last time, and mentioned it before that, of the consciousness factor. You can keep trying to equate them analogously in terms of delegation, but its not the same type of delegation, You used the delegation argument in response to my initial mentioning of consciousness. No matter how many analogies you bring it won't change the pont I was making about consciousness for valuation. Delegate or not, doesn't matter, a bot is not a consciousness for valuation of content. They don't see, they don't value. It's blind. Keep doing the same thing, until I say not to. Keep voting for someone until I wakeup, look around, and realize I've been upvoting shit blindly... oops... LOL. 1 example. A human can actually make judgments and be like... hmmm... well Even if they like this person and though they would keep posting material they wanted, I can see that they don't post that way anymore, so I'm not going to upvote this even though my friend thinks their content is trustworthy no matter what they post...
Analogies between delegating groceries and bots to upvote, are not comparable in the context of what we are talking about in terms of valuation. The issues are being convoluted and mixed together which is creating semantic misunderstanding.
We can agree to disagree, I have no problem with that. I don't think in terms of robotics or I don't know what. I think in terms of attention, delegation and trust. You can delegate attention and you do this all the time in the real world (the most extreme case is, for instance, a blind man who relies on a companion attention to get around). In Steemit, you have a few options to delegate your attention, but it takes the form of a smart tool, if you want and only for a limited set of activities, which are usually extremely atomic, like voting. You "lease" your vote to somebody else (being it a human or an algorithm you designed yourself or somebody else).
Again, I hope the tomorrow's article, which tries to describe attention's characteristics as a currency, will shed more light on this.
Either way, I enjoyed the debate.
Good Read! Everyone needs to be more Positive instead of complaining so much! Yes uncertainty is there because Money is involved! What is certain is that Steemit has got my attention! For once my say has actual financial value! Not like how Facebook get's away with free user generated content!
What's certain is that we are in uncharted territory. We'll see how this plays out. Steemit got my attention too, obviously. :)
It's not different from the "real world". People tend to admire the ones who have a lot of money. They secretly hope that if they will have a closer relationship to that kind of individuals, they will get closer to the wealth they desire, too.
Exactly. Only here the relationship between money and attention is much clearer.
Interesting I think you are right on the mark , everything you have said here mirrors on me , I would be a minnow , that doesnt have the time to post (actually for me there are a few things adding up to that) and is being drained by other social media, (YouTube primarely ) , although I can see how addicting facebook and twitter are , last time i was on twitter i spent 3 hours looking into the Aleppo controversy and although I don't use facebook because it feels empty to me , almost all the young people are walking , sitting , eating , lying with their phones scrolling the posts , chatting and commenting , so i feel like your findings relate to the internet at large as well :) , Cheers :) !
I agree with the OP, however I do see @krnel's point about the manor buyers and sellers of attention are matched in that it isn't as direct as the OP stated.
Opportunity costs are the risk, as well as any time devoted to posts, curation and comments contributed. I am a perfect example of a steemian who has only invested his time to gain what I have here. I am fortunate enough that I've had friends "from a past life" that are whales here who have found value in my contributions and signified that with their attention.
This platform is an experiment. Whether my choice to participate in it will pay off better than other opportunities I might have invested my time in remains to be seen, but I am optimistic and still here because I believe in the hypothesis the experiment is based on and the integrity of those conducting it.
Unlike a scientific experiment however there are no well defined controls and rigid metrics. It is in actually more of a data gathering exercise where various hypotheses are evaluated and further hypotheses and conclusions are drawn as data is gathered. The conclusion, if there is one, might be characterized by answering the question, "Is the steemit project successful?", and even that is not an objective metric.
The whitepaper is not a contract with rigid terms and conditions. How close is the steemit implementation currently to what is contained there? Has the project adhered to the roadmap? Were the milestones stated in the roadmap adequate to measure the progress of the project while staying true to the fundamental principles expressed in the whitepaper? Have the project's creators communicated the lessons learned and conclusions drawn to the community?
Yes, there are many potential benefits which are not guaranteed. That is the "cost of opportunity". You may choose to invest your attention in Facebook, in Twitter, in time spent with your friends, or you may choose to invest in Steemit. It may or it may not pay you a dividend.
Great article but, I'd have to disagree with something.
I'm no doubt a minnow as my upvote is unable to provide even $0.01 to the posts which I want to reward. I check my Steemit very often and write a very, very large amount. Between essay length comments, articles, my novel and my short stories that I have been sharing, I'd be surprised if there is a whale on this site who writes as much as I do in a week.
I feel a vast number of minnows do this also. So, I'd say that you have it slightly backwards for that one remark. Being a minnow doesn't mean that you are providing little attention. Only that you are not receiving much at all, or at least not from those whom possess the influence to reward them for their efforts.
Still a very insightful piece. Thanks for sharing. +1 upvote and follow
Really enjoyed your perspective here, I think there's a lot of sense to what you're saying.
However I would say that I think that attention is only part of the equation, and important part, but just part. The data itself is very valuable and on Steem thankfully (for the moment) it is not directly bought and sold. This is not the case on Facebook, as they do indeed sell attention of users in placed ads, but also the data of users to external sources. So
is a bit incomplete, but you're not wrong at all. I guess I just wanted to highlight this as it's once of my main concerns these days, the collection and loss of control of one's personal data.
Thanks! 😄
Yeap, I completely forgot about that, but you're right, personal data may also be sold in various forms in traditional social media platforms. But keep in mind that, on a blockchain based platform, your data is not sold, but it's completely public (unless the frontend of the platform doesn't perform some encryption, which, AFAIK, doesn't happen in Steemit).
Won't be posting my question after FYI, tucked away on the second last page of the Steem White Paper is the answer, though the interaction with Steemit, Inc. complexifys it a bit!
It is a bit different on Steemit, I'm currently researching it actually, it's not completely clear to me (like most things here!) but it looks like the content blockchain may actually be owned by Steemit, Inc. Not to mention the provisions in the Privacy Policy allowing basically the same kind of allowance to monitize posted content via ad networks.
I could be way off the on blockchain ownership and I'm actually just about to post a public question about it to help me research for my next article. But in practical terms, there's nothing to stop anyone reselling the blockchain data in repackaged form. It's a kind of new area I guess!
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Awesome post