Why Flagging Is Bringing Down The Value of Steem, As A Currency
Flagging has definitely been the number one issue during the last couple of months in Steemit. It came in many flavors:
- whales flagging content they deemed “undeserving” (didn’t agree with the payout, “too much money for this post” - @nextgencrypto/@berniesanders, @smooth)
- whales flagging content which looked “shady” (potentially gaming the platform for the benefit of a small group - @dan versus @ozchartart)
- dolphins and minnows creating voting guilds to counter act these whales by combining their voting power (@steemvoter “stealing” the voting power of its clients to counteract a flagging campaign)
- random flagging to each and every account on Steemit because reasons (the infamous @iloveupvotes and @asshole)
There was a lot of bandwidth filled only with flagging related posts and I’m sure many of my fellow Steeming are fed up with the topic.
So why opening it again?
Well, because I think flagging is the number one reason of Steem going down, as a currency. During the last two months, Steem lost about 50% of its value. Even in crypto terms, where volatility is high, this number is significant.
Let me explain.
How Value Distribution Works In Steemit
Each day, because of inflation, the Steemit reward pool is filled with about 43000 Steem. This Steem is then redistributed via voting.
When you upvote a post, you redirect a certain amount of the reward pool, based on a specific algorithm. The most important part is that you direct a part from the reward pool proportional to the amount of Steem Power you own. That means someone holding a large amount of Steem Power can move a large amount of the reward pool. That part is “allocated” to the post and stays there until the earnings are distributed, when it moves to the author account. A post may earn reward only during this period: between publishing and earnings distribution, which is roughly 24 hours.
What Happens When You Flag/Downvote
I’m using the terms “flag” and “downvote” alternatively because their action is similar.
When you flag a post, you take out from the portion already allocated from the reward pool for that specific post, by the previous votes. The part you take out is also proportional to the amount of SP you own. That means someone holding a large amount of Steem Power will take out a significant amount from the portion already allocated to that post.
Now, here is where it gets interesting.
If you downvote, you breach a contract between two parties which didn’t give you explicit permission. You take out the reward that somebody else considered ok for that post, without asking for his or her permission. You literally “steal” from the potential winnings of an author, without any consequence.
Every bilateral contract should be inviolable by a third party. If A gives to B, by upvoting, a certain amount of the reward pool, then C cannot interfere in this process, unless A and B gave express permission to C to do it. This “explicit” permission doesn’t exist in Steemit. It’s implicitly stated at the voting mechanism level.
Strictly in legal terms, you are not allowed to do this. You can’t intervene in a transaction between two parties, unless you were given this role in a previous contract between those parties. Usually this role is called “arbitrage”.
In this case, this role is not clearly set, not in the TOS, nor in the UI. There’s nobody telling you upfront, very clearly, you can get “robbed” of your potential money, if somebody else decides to do so.
I'm using the terms "stealing" and "robbing" in a metaphorical way, not in a legally binding way.
An Even Simpler Example
Let’s say I’m a coach and I deliver a coaching session to a group of clients. This thing happens in a building with many rooms, each room hosting a separate coaching session. Each day there is a certain amount of money in the building, money that should be disbursed to the coaches, by midnight, using atomic, individual transactions between attendees and coaches.
So, if the attendees in my room find the session useful, they pay me. Some decide not to pay me.
But other people, just by looking at the transcript of the session I gave, and at the transcript of my earnings, decide I got too much money.
Stop for a moment and look at that: I got too much money from the money I already received, from other people. And they take out a certain amount of money out of that, proportional to their influence in the building.
Would you be a coach in such a system? How predictable is your activity there? How can you increase its predictability?
If there is no other rule, the only obvious way is to create partnerships with influencers. Or with people who proved they can hurt your earnings if you don’t conform with their requirements.
In some countries, this is called a protection tax. In other, it is called “mafia”.
These types of structures appear when the governance is either too weak, either too difficult to enforce. If a system is left unorganized, it will self-organize around power people, or those who can guarantee survival (in this case, who can guarantee your revenue won’t be hurt).
On the other hand, if a governance mechanism is too regulated, it becomes a burden and value can't move freely.
Steemit doesn’t even have a governance mechanism in place. There are a few witnesses required to run the hardware layer of the platform (and I'm happy to be one of them for a few months now), but there is nothing clear about what they can or cannot vote / downvote. There is no Steemit Constitution, there are no rules other than the plain old: “I’m the powerful guy and you’re weaker than me so if I don’t like what you say I’m exerting this power to rebalance things according to my own views, not to yours”.
It’s Human Nature, Not Steemit
The bad news is that this thing is not specific to Steemit (unfortunately, there is no good news).
Greed, pride, jealousy, these are not invented by Steemit. They were around since humans are on this Earth. They are dragging down the entire world, not only Steemit.
So it’s not the algorithm, it’s not the code, it’s not the UI, it’s not the marketing, it’s the people. It’s their engrained greed and pride and jealousy which are pushing towards a society in which the only rule is brute force (or the force of the wealthiest). Again, this is not invented by Bitshares or Graphene or Steemit. It has nothing to do with it.
It’s just how we, humans, are wired. We’re stupid.
Who wants to live in a country where people are constantly fighting with each other? How many Syrians are leaving their country specifically because people are fighting a war, this time with real weapons?
How many of you want to move to Syria right now? Come on, folks, how many? Raise your hand, I want to see you.
Huh.
Nobody?
Why? Because it’s unpredictable? Because your life is modified without you giving explicit permission? Because there’s no rule, other than the one with the biggest weapon?
If you replace "weapon" with Steem Power, how different is that place from Steemit now?
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
I love being on Steemit and I love the posts from @dragosroua because they make me think and learn.
Greed, pride, jealousy, these are not invented by Steemit. They are human feelings and so is happy, contentment or the "fact" that I love Steemit.
Downvote is feeling bad about something or it can be help, if you write in a comment why you downvote.
Upvote is feeling great about something.
People will come back to Steemit again and again if they feel great about being here.
I will leave Steemit the day I can not find good feelings anymore.
I do not think this will happen §;-)
Thanks for finally speaking up on the issue. I appreciate it. Resteemed.
Thanks. I have an idea for a new voting algorithm that may alleviate parts of these problems. I'm still doing some simulations. If it's proven worthy, I'll publish a blog post tomorrow, I'd be interested in your opinion.
Great. Do you understand the centralization of power as the root causal factor for many issues, that have been recognized months back, even before I got here? This can change while everyone keep their STEEM and makes money when the token rises by the community leading the community, upvoting each other, with no power players deciding who gets what. People curate on real social networking sites, without curation rewards. Those who create lasting value will get rewarded according to the community, not the power players. Those who want to be part of the community will create the community and make it prosper. Decentralization of power in the community is the answer. SCD #7 - Working Towards a Decentralized Self-Governance of the Steemit Community
Centralization of power is not bad per se, IMHO.
It's the fact that the current system allows people to use power in order to arbitrarily invalidate other people actions, without any penalty (or, to put it mildly, without any consequence). If a system allows that, the inherent human nature, plagued by greed, pride and jealousy, will start manifesting.
Nah, it's not right that certain power players get to choose who get. 20-50 ppl choose what goes on around here. The bots that aren't even real people who engage int h community allocate their power to votes without even reading it. Sock puppet accounts. It can all be resolved if people get on board to empower themselves and set things right.
Rewards are not finalized until the payout is approved by stakeholders. All stakeholders get to have a say in that process, including the ones who oppose the payout. They are not an independent third party, they are directly party to the contract as stakeholders of Steem.
Downvoting is a necessary part of the system. I do agree though that it is doing harm though, despite being necessary. I wrote some posts which propose a system to minimize the need for flagging by making votes which contain greater information from the stakeholders.
Loss Aversion on Steemit
Up and Down Votes Are A Big Part of the Problem on Steemit
Rewards are finalized at the end of the day, there is no specific transaction on the blockchain that says: ApproveAllRewardsForTodayDate that gets signed by ALL stakeholders.
For the time window allocated - which is 24 hours now, subject to change to 7 days in HF 17 - the stakeholders are voting and when the time window expires, whatever has left in the post "account" is transferred to the author account. That's how things are working right now, according to the code I read on github. If there's something I missed, please let me know.
The fact that the rewards are not finalized is not colliding with the individual contract between two entities. The reward pool is neutral, or agnostic. Theoretically, if nobody votes, the reward pool vanishes at the end of the day, it doesn't redistribute equally to all the stakeholders (which would be also bad).
It becomes valuable, or active, when someone casts a vote. From that moment, the person casting a vote has a "contract" with the receiver, in which the part from the rewards pool he dislocated, is directed to the author.
Now, if another person comes and take out a certain percentage from the post account, he literally breaches the previous contracts between all the previous voters and the author of the posts.
The precedence of a vote is irrelevant in the current system. All it counts is the weight, in SP, of the voter. This leads to arbitrary results which are increasing entropy and are discouraging users for contributing to the platform.
I'm not making any moral or ethical statement, it's just a theoretical comment about how "consensus" or the lack of it, is reached right now in the Steemit ecosystem. Strictly the part about rewards, not the block signing consensus, etc.
You seem to be missing, despite clearly being aware of, the facility written into the system which allows any stakeholder to apply negative r-shares to a payout proposal.
The contract is between the payout recipient and the stakeholders. Some stakeholders apply positive r-shares to the payout. Others apply negative r-shares to the payout. The result depends upon the culmative amount, not just the positive. This is the contract which allows all stakeholders to have their say, if they so choose.
I don't believe this is true. As far as my understanding goes, the reward pool continues to exist indefinitely and will be allocated when a payout happens, as long as that takes.
I'm aware of that. What I'm saying is that the negative payout is breaching a previous contract between the recipient and all the stakeholders who voted until the downvote moment. The downvoter applies negative r-shares to a sum to which he personally didn't contribute. He has a say in something that wasn't part of. That's the part that, in my opinion, increases entropy.
The only contract is the smart contract written into the code which facilitates the payout system. That contract makes all stakeholders a party, as it is their stake which is diluted by the same mechanism. They get to decide how it is allocated, and the system allows for both support and opposition.
With all due respect, I think we're talking about different things here.
Thanks for your message which I consider very important!
That was one of the key sentences to me:
It´s neither the system nor the arm that change a person´s behavior. People act driven by their established value systems and their beliefs. And they tend to follow the most powerful. To stick with your example: if flagging is shown as a valid instrument to express power by the most powerful, others - with less power - will use it as well. Flagging has become kind of trendy on steemit.
Even in a decentralized eco-system you need some alpha-males as role models that live the values which will sustain the system in the long run. Just believe in a friends party. Nobody will start dancing until one conquers the dancefloor and animates others to join. Any community needs powerful, positive, progressive and inspiring leaders - people others can look up to - that love to push forward the whole thing. They are all here, just have been a bit quiet lately...:)
I am absolutey convinced that steemit - and steem - has everything that it needs to become an attractive investment again. In my opinion it just has to be woken up again... Maybe some of these dancefloor conquerers are listening right now :)
On Steemit, there are two types of leaders: "dancefloor conquerers" and "no governments, no rules, no violences". The last one has power.
Alan Turing ("Imitation game") had the power of cryptography but did not have the psychological and social skills to manage a company or organization.
A good leader has both - or at least a team of executives that compensate missing abilities. But then he still executes both.
Where is this leader? Who is he?
CEOSteemIT I suppose everyone has had their turn already :D Ned was the face for a moment and Dan was the brain, now It looks like nobody knows and I don't know why, apart from the daily updates and their posts being once every month
Nice metaphor, I like it. Let's see what kind of dancefloor conquerors we still have around here.
I don't quite agree that flagging is the biggest issue afecting the steem price,but I agree that it's the biggest problem to solve.It scares people away,and gives Steemit a bad reputation.
Upvoted and resteemed.
Thanks for the upvote and resteem. Also, we don't have to agree on anything. I can agree to disagree with you. :)
This is why we need tip based community.
Yes!!! Your perspective on downvoting is the most profound argument I've heard so far! Very well put! It does infringe on the rights of "fans" to reward content from authors they like and it is a personal affirmation that should remain inviolable!
They don't understand the dynamic, because they are an unconscious part of it.
A better platform should be along any day.
I really like Steemit, and can only hope that what we're experiencing here falls under the broader heading of "growing pains."
For me, the most important thing to remember-- and to keep stressing-- is that communities are built by people, not by technology or scripts or bots. And so, when we look at these issues now surfacing, they are ultimately "people issues" not technology issues... which seems to be your undertone, as well.
Maybe it would behoove everyone to look outside Steemit and look at the broader dynamics of startups. There tends to be a core group of early adapters who end up as significant stakeholders because they took the risk of getting involved early. They end up as "micro-millionaires" on the back of... well, very little but good timing and good fortune.
Nothing wrong with that... but their simply human attachments subtly shifts from having a vision of the project going forward to "preserving my pile of gold." And it's just human nature at work... not evil intent. You look at people who invested in a private offering in a company, and they start wholesale dumping their stake immediately as the IPO goes out... "holding onto the gold." At which point the long term stakeholders jump in and make long term investments.
How does this relate to the flagging and related? Well, it's a sort of battle of "the old, let's not change anything" vs. longer term community members. The inherent fear of "I'll get LESS, if I allow things to change." Of course, few will fess up to that in public, but the underlying psychology is there.
So what truly FUELS Steemit, going forward? Houston, we have a problem. Or at least a conundrum... this bills itself as a "social" site, yet it seems rather dominated by bots, scripts and technology. Well "rewarded" content can have 300 upvotes but has been READ 25 times? That makes little sense... especially if you're a content creator trying to make the decision "Should I set up shop here?"
I don't know about anyone else, but I like to collect readers not bot-pings." If I'm an artist, and I post pictures of my art and link to my web site? I'm pretty sure those bots aren't going to go to my web site and order a piece of art!
Whereas I can see your point about "breach of contract," I can also wrap myself around viewing the first 24 hours more as a curation process, a period during which the "score" for my content is determined, through some form of community consensus. Not everyone is going to like what I created. Such is art, writing, photography, protests, politics and what have you.
So I'm really OK with someone casting a "minus vote" for not liking the content-- not so much with casting a minus vote as a protest against others liking the content... which seems like what we're dealing with.
From where I am sitting, it's not the flagging-- itself-- that's hurting the price of Steem, but the relative arbitrariness of that flagging... which creates unrest, instability and division in the community. And an unstable community is not an attractive investment...
https://steemit.com/life/@j3dy/water-and-light-d4-challenge30-play-2
https://steemit.com/story/@j3dy/having-fun-on-steemit-c30-d3-week-recap-work
You are welcome to read my posts :) made in more peaceful times :D when the challenge30 was active :)
Those would be the most concerning community. Other material I have on the topic is from comments and no where near as coherent. I would like to hear your thoughts :)
Thank you for actually taking the time :) I saw an upvote so I suppose that's a check mark :D
@j3dy, I really enjoyed the posts-- sadly, they are evidently "too old" to allow new comments, so I couldn't leave anything. Not the first time I have encountered this... but it does beg the question of why readers would not be able to leave a comment after a certain time.
I know I have felt the same way multiple times, since I tend to dig around and find some gems here and there, normally I link back, try to find the people involved and spark that topic again in one of their newer posts, I've always thought the way Steemit is built is just flawed, people should be able to receive rewards whenever somebody finds that content meaningful and with the current state of affairs nobody is up for that, ned and dan even believe that all the votes for a piece are cast within the first day, without taking into account the system design MADE to push people to promote and create new and new posts/blog/interactions each and every day, with the "creme of the top" being what is rewarded/trended/read/bot whatever. The fact is that most people care for rewards, most authors care for rewards and that is no way to build anything sustainable and long term, much less creative.
I would love to see somebody address these topics but I'm sure I'm not the first to do so, the posts probably received their minor payouts with a moderate conversation and were quickly forgotten with the majority of people here having a memory of either memes(how cool I am ME ME) or fishes with a 2 second attention span :|
Waaay to promote steemit, your posts are forgotten after the payout, :D
And way to go me ranting on people's heads all day :D
But yeah its 80% a game for me while I try my best to take the good and learn as much as I can, the rewards are already passed around anyways and playing or likely preying on people's emotions doesn't fit with my "morality"
The platform has so many possibilities and could be worth so much for people in general and rather than making something meaningful, people are debating: game theory, bullshit, saying that's the human nature and we are mostly stuck on that downward spiral, because nobody can catch up to reality and stop their madness, I suppose that is what you get when you leave monkeys pushing buttons(Upvote/flag and repeat)
Some extra ranting for the benefit of having it out there, btw having this information is a gem in its own right, we can revisit the comments maybe even years from now.
A lively platform would be great, buuut we have this daily grind.
Sure beats playing any web-based game tho :|