That Steemit is essentially run as a ponzi scheme, since it is virtually impossible for the average member to make any money despite claims made that it pays curators for their upvotes. What Steemit does not clearly explain, is the fact that unless members invest in a significant amount of Steem in order to gain a lot of Steem Power, and on top of that, have a reasonably high reputation, they will receive virtually nothing from all their upvoting efforts. This is exactly what happened to me. I invested approximately 800 steem, and with over 1000+ upvotes, it netted me a grand total of less than 25 cents. Nowhere in any of Steemit's documentation does it state that the average member will receive nothing, despite their ongoing investments and efforts. Furthermore, when a member wants out, he has no facility to get his investment back, other than wait a ridiculous 13 weeks (1/4 of a year) for power down to take place. And those facts are where the crime is, and that is what will be investigated.
While I agree with most of your assessment, I'm not sure I would personally call steemit a "ponzi-scheme" (nobody promised you'd double or triple your money in a short span of time).
Steemit does seem unfair and misleading, but it's apparently no more unfair or misleading than the true scam we're all born into (fiat currency).
"I'm not sure I would personally call steemit a "ponzi-scheme""
A "ponzi scheme" is any scheme in which you invest money, and by its design, essentially provides no chance of ever making a return on that money, despite claims to the contrary. Steemit claims you can make money by curating posts, whereas in reality, the vast majority of Steemit members can not and will not do so.
"(nobody promised you'd double or triple your money in a short span of time)."
While it's true that nobody promised that you can double or triple your money, Steemit does claim that you can make money by curating other authors' posts. In reality however, that is simply not the case for most members. Steemit does not state anywhere that the chances of making any money at all, is fully dependent upon both making a significant investment, and on having a relatively high reputation rate. Those 2 facts will immediately eliminate the vast majority of Steemit members. Only a very small number will invest the amount necessary (if any), and gaining a high reputation is next to impossible when you have so many unethical members who are constantly downvoting members with lower reputations than themselves, for no reason at all in the vast majority of cases.
Actually, the definition of a Ponzi Scheme is a fraudulent venture that lures investors and pays profits to earlier investors with funds from more recent investors. If they were asking us to pay some sort of membership fee from which the senior members were getting their rewards - this would be a Ponzi scheme. But when steemers choose to purchase more steam power that doesn't directly benefit those who joined before them or those that referred them. It actually benefits the buyers whose vote now weighs much more than that of a user with mere 15SP.
The best comparison is the online game. Those that are serious about succeeding (or winning?) do spend some of their money buying weapons and armor or whatever other tools they need - even though these tools are virtual and are worth nothing in the real world. Same thing here - people may wish to purchase some virtual power with real money and they may not get any material benefits from it, but this doesn't make Steemit a Ponzi scheme.
The best comparison is the online game. Those that are serious about succeeding (or winning?) do spend some of their money buying weapons and armor or whatever other tools they need - even though these tools are virtual and are worth nothing in the real world. Same thing here - people may wish to purchase some virtual power with real money and they may not get any material benefits from it, but this doesn't make Steemit a Ponzi scheme.
"But when steemers choose to purchase more steam power that doesn't directly benefit those who joined before them or those that referred them."
Sure it does! The whales benefit (earn) from investments and curating by the minnows for which they (the minnows) get paid nothing. Without so many minnows, there would be no whales.
"Same thing here - people may wish to purchase some virtual power with real money and they may not get any material benefits from it, but this doesn't make Steemit a Ponzi scheme."
I do not agree! People invest in a game solely for the Entertainment value that it provides. There are no other claims. People invest in Steemit, on the other hand, as a result of Steemit's claims to reward curators, and in the belief that they will actually make money, whereas in reality, they do not, or at least the vast majority do not. And that is what makes Steemit a ponzi scheme.
If rewards were shared equally amount all curators, that would be a much different issue. Likewise, if those members with higher reputations did not have any more downvoting power than lower reputation members, that too would be a much different issue. Downvoting other members simply because you do not agree with what they have to say, has absolutely nothing to do with maintaining a quality forum. In fact, quite the opposite is true. The quality of the Steemit forum is extremely low for that exact reason, because serious social media people will have absolutely nothing to do with a platform such as Steemit.
If Steemit was designed properly, it would have perhaps 100+ million members by now, but as it is, it has only managed to attract a mere 1 million, with less than 5% of those still active.
If rewards were shared equally amount all curators, that would be a much different issue. Likewise, if those members with higher reputations did not have any more downvoting power than lower reputation members, that too would be a much different issue. Downvoting other members simply because you do not agree with what they have to say, has absolutely nothing to do with maintaining a quality forum. In fact, quite the opposite is true. The quality of the Steemit forum is extremely low for that exact reason, because serious social media people will have absolutely nothing to do with a platform such as Steemit.
If Steemit was designed properly, it would have perhaps 100+ million members by now, but as it is, it has only managed to attract a mere 1 million, with less than 5% of those still active.
Steemit does claim that you can make [fractions of fractions of pennies] money by curating other authors' posts. In reality however, that is simply not the case for most members.
Steem-power does pay out about 8% APR, + if you setup automatic voting to instantly band-wagon onto the top earners like gooddream and nonameslefttouse and steemcleaners, then you can even boost that up a bit.
It's not bad for a hobby, but almost nobody is "making a living" at this. I mean, last time I checked, gooddream was making about $500 a month in payouts (which is hardly lambo cash).
$500 is not a lot of money to make, but it would certainly not be bad for a small hobby. But let's be honest! What percentage of Steemit members make anywhere remotely close to that amount, and what percentage of Steemit members make nothing or close to it?
"The overwhelming majority make less-than-break-even for the electricity they pay to run their computer(s)."
Agreed! So what's the point? Is this whole Steemit thing really worth it, or are we all just wasting our time putting that $500 per month (or whatever) in the hands of those who really have no respect for the rest of us. Only a fool would do that. I think it's time to shut down Steemit for what it really is...a ponzi scheme.
"I'm just pointing out that even those at the TOP aren't exactly "rollin' in it"."
Point taken! But let's not forget that there are countries in the world where $500 a month would be considered a lot of money.
But regardless of how money is earned or allocated, one of the other main problems with Steemit is the fact that there is almost no original content posted. The vast majority of it is simply copied and pasted from somewhere else on the Internet.
...one of the other main problems with Steemit is the fact that there is almost no original content posted. The vast majority of it is simply copied and pasted from somewhere else on the Internet.
And I don't personally see a problem with that.
If people want to treat steemit as a sort of news aggregator, that seems perfectly reasonable to me.
Slashdot, FARK, GoogleNews, and actually most "news" sources don't post original content. They just regurgitate Reuters and the Associated Press.
Why do I care if it's "original" or not. I only care if it's interesting.
Although, I do find those on the almighty steemit "top trending" page to be pretty boring.
A "ponzi scheme" is any scheme in which you invest money, and by its design, essentially provides no chance of ever making a return on that money, despite claims to the contrary.
By that definition we'd have to include purchasing a home (most can't sell for a profit), paying for a college education (most never pay off their student loans), starting a small business (90% fail) and investing in the stock market (90% lose money).
No, that is not a correct analysis. First of all, no offer is made in any of the above scenarios that the purchaser will actually make money from their investment, and in all the above cases, the purchaser actually receives value for their investment.
Investing in Steemit on the other hand is made with the claim (assumption) that those investing will make money from their investment. Yet by the very design of Steemit, it ensures that the vast majority of investors will never make any money, with the bulk of the rewards going to only a very select members at the top. That makes Steemit a classic definition of a ponzi scheme.
Feel free to contact the FTC or the FBI and ask them. If you tell them the whole truth, they will tell you exactly as I have.
Well to be honest from quite a while back when I got really pissed off, it's been quite a while and I don't remember the name but he developed that parley site, but he wasn't the only one involved at the time there was someone else, I did file a complaint with the FTC and before you can file a complaint they ask you what your complaint involves as they aren't going to waste their time filing reports that have no merit...at the end of telling him what my complaint concerned he thought it justifiable enough to take it. I asked him what happens next and he said they get sent out to all the federal and state agencies where they sit until the pile gets big enough that someone finally takes notice and does something about it. In other words when they make a big enough mess on someone's desk who finally decides to pick them up and do something about it. It's been I think well over a year now and I haven't heard back but that doesn't mean that someday isn't coming. For everyone they piss off that pile gets bigger.
As for your argument that people buy non essential things to bolster their chances your point isn't worth holding. People invest in those non essentials to bolster they chances at succeeding. If they do everything right as depicted they should be able to succeed. Failing that success no matter what they do with all the right tools and time invested then that becomes concerning as to why. Nobody should be left holding a dead fish because a system is stacked against them, which we all know this system is. The plain matter of fact is that until Steemit is brought under the governing laws the system will always be stacked because people (higher ups) make their own rules to abide by. I can give you one simple example right here, that being that under federal tax code Steemit has to give the names of all the people they pay more than six hundred dollars a year out to along with those individuals social security numbers or relevant tax ID to the IRS. I know this to be fact because as a landlord if I use a self contractor (which people who participate on this site are doing, self contracting themselves out for a return on profit) and I pay that person more than six hundred dollars I am obligated to report that to the IRS. We all know Steemit doesn't do that. But that's just one example of running rough. The last hard folk they did runs much similar to the complaint I filed which if someday if it ever gets looked it will only bolster the case that the system is designed in favor of the upper tier. Think logically about what they are doing, someone invest time in a system that says you with this much invested you are worth this amount in a vote, then they come down and say now you are totally worthless after one has done invested an incredible amount of time to get to not only where they were promised they'd be at to start but take away any gains you made by slashing your worth and handing it to the upper tier. Now take that same scenario and apply it also to people who invested their money. It just don't add up. Part of the problem is also the fact that a lot of the people invested here are based in foreign countries who may not have the same laws so they feel empowered to just slap anybody around who complains as they are basically untouchable. So it's quite a mess but over all that though is the fact it is a US based company, someone owns it and it's their job to figure out the mess. Will they ever be forced to?...I guess that will all depend upon whoever that person is sitting behind a desk gets tired of seeing Steemit complaints flying across his desk. I mean I really, really like to invest in Steemit, wholeheartedly, but not when the game is stacked against me.
...has to give the names of all the people they pay more than six hundred dollars a year out to along with those individuals social security numbers or relevant tax ID to the IRS.
That would only apply to exchanges of legal-tender.
Crypto is basically "World of Warcraft gold" (which is also exchangeable for legal-tender).
AND, I believe KYC (know your customer) laws are blatant violations of personal-privacy.
"The kid paying hundreds of thousands of dollars for a college education has certainly been told they will be able to at least double their ROI."
Perhaps, but at least the kid got the education for his money. That has to be worth at least something, if not doubling their ROI.
"WTF is the FTC doing about that?!"
The main difference is that Steemit "is designed" to scam the vast majority of members by offering them something that Steemit does not or can not deliver on. That is different that a bank failing. The bank was not setup or designed to specifically scam its customers. Also, most banks have (or should have) deposit insurance which will compensate customers to certain limits, in the event of a bank failure. No one should ever put their money in any bank that does not have such insurance.
The bank was not setup or designed to specifically scam its customers.
You don't seem to understand how fractional-reserve-banking works.
It's the mother of all ponzi-schemes.
Click to watch 28 minutes (or just the first 5 minutes),
Also, most banks have (or should have) deposit insurance which will compensate customers to certain limits, in the event of a bank failure.
None of the customers of Washington Mutual Bank "lost their deposits", those were all transferred to the behemoth Chase Manhattan Bank.
It's the people who had their retirement funds and 401k heavily invested in WAMU STOCK who lost their shirts when it went to ZERO with basically no warning.
This is exactly the type of "investor protection" scenario the FTC uses to justify their existence (oh, we must have someone looking out for investors). AND they just stood by and did NOTHING.
That Steemit is essentially run as a ponzi scheme, since it is virtually impossible for the average member to make any money despite claims made that it pays curators for their upvotes. What Steemit does not clearly explain, is the fact that unless members invest in a significant amount of Steem in order to gain a lot of Steem Power, and on top of that, have a reasonably high reputation, they will receive virtually nothing from all their upvoting efforts. This is exactly what happened to me. I invested approximately 800 steem, and with over 1000+ upvotes, it netted me a grand total of less than 25 cents. Nowhere in any of Steemit's documentation does it state that the average member will receive nothing, despite their ongoing investments and efforts. Furthermore, when a member wants out, he has no facility to get his investment back, other than wait a ridiculous 13 weeks (1/4 of a year) for power down to take place. And those facts are where the crime is, and that is what will be investigated.
..
While I agree with most of your assessment, I'm not sure I would personally call steemit a "ponzi-scheme" (nobody promised you'd double or triple your money in a short span of time).
Steemit does seem unfair and misleading, but it's apparently no more unfair or misleading than the true scam we're all born into (fiat currency).
Thanks for your reply!
"I'm not sure I would personally call steemit a "ponzi-scheme""
A "ponzi scheme" is any scheme in which you invest money, and by its design, essentially provides no chance of ever making a return on that money, despite claims to the contrary. Steemit claims you can make money by curating posts, whereas in reality, the vast majority of Steemit members can not and will not do so.
"(nobody promised you'd double or triple your money in a short span of time)."
While it's true that nobody promised that you can double or triple your money, Steemit does claim that you can make money by curating other authors' posts. In reality however, that is simply not the case for most members. Steemit does not state anywhere that the chances of making any money at all, is fully dependent upon both making a significant investment, and on having a relatively high reputation rate. Those 2 facts will immediately eliminate the vast majority of Steemit members. Only a very small number will invest the amount necessary (if any), and gaining a high reputation is next to impossible when you have so many unethical members who are constantly downvoting members with lower reputations than themselves, for no reason at all in the vast majority of cases.
Actually, the definition of a Ponzi Scheme is a fraudulent venture that lures investors and pays profits to earlier investors with funds from more recent investors. If they were asking us to pay some sort of membership fee from which the senior members were getting their rewards - this would be a Ponzi scheme. But when steemers choose to purchase more steam power that doesn't directly benefit those who joined before them or those that referred them. It actually benefits the buyers whose vote now weighs much more than that of a user with mere 15SP.
The best comparison is the online game. Those that are serious about succeeding (or winning?) do spend some of their money buying weapons and armor or whatever other tools they need - even though these tools are virtual and are worth nothing in the real world. Same thing here - people may wish to purchase some virtual power with real money and they may not get any material benefits from it, but this doesn't make Steemit a Ponzi scheme.
Well stated.
"But when steemers choose to purchase more steam power that doesn't directly benefit those who joined before them or those that referred them."
Sure it does! The whales benefit (earn) from investments and curating by the minnows for which they (the minnows) get paid nothing. Without so many minnows, there would be no whales.
"Same thing here - people may wish to purchase some virtual power with real money and they may not get any material benefits from it, but this doesn't make Steemit a Ponzi scheme."
I do not agree! People invest in a game solely for the Entertainment value that it provides. There are no other claims. People invest in Steemit, on the other hand, as a result of Steemit's claims to reward curators, and in the belief that they will actually make money, whereas in reality, they do not, or at least the vast majority do not. And that is what makes Steemit a ponzi scheme.
If rewards were shared equally amount all curators, that would be a much different issue. Likewise, if those members with higher reputations did not have any more downvoting power than lower reputation members, that too would be a much different issue. Downvoting other members simply because you do not agree with what they have to say, has absolutely nothing to do with maintaining a quality forum. In fact, quite the opposite is true. The quality of the Steemit forum is extremely low for that exact reason, because serious social media people will have absolutely nothing to do with a platform such as Steemit.
If Steemit was designed properly, it would have perhaps 100+ million members by now, but as it is, it has only managed to attract a mere 1 million, with less than 5% of those still active.
I agree.
Steem-power does pay out about 8% APR, + if you setup automatic voting to instantly band-wagon onto the top earners like gooddream and nonameslefttouse and steemcleaners, then you can even boost that up a bit.
It's not bad for a hobby, but almost nobody is "making a living" at this. I mean, last time I checked, gooddream was making about $500 a month in payouts (which is hardly lambo cash).
$500 is not a lot of money to make, but it would certainly not be bad for a small hobby. But let's be honest! What percentage of Steemit members make anywhere remotely close to that amount, and what percentage of Steemit members make nothing or close to it?
The overwhelming majority make less-than-break-even for the electricity they pay to run their computer(s).
I'm just pointing out that even those at the TOP aren't exactly "rollin' in it".
"The overwhelming majority make less-than-break-even for the electricity they pay to run their computer(s)."
Agreed! So what's the point? Is this whole Steemit thing really worth it, or are we all just wasting our time putting that $500 per month (or whatever) in the hands of those who really have no respect for the rest of us. Only a fool would do that. I think it's time to shut down Steemit for what it really is...a ponzi scheme.
"I'm just pointing out that even those at the TOP aren't exactly "rollin' in it"."
Point taken! But let's not forget that there are countries in the world where $500 a month would be considered a lot of money.
But regardless of how money is earned or allocated, one of the other main problems with Steemit is the fact that there is almost no original content posted. The vast majority of it is simply copied and pasted from somewhere else on the Internet.
And that's probably where most of steem's potential growth lays.
And I don't personally see a problem with that.
If people want to treat steemit as a sort of news aggregator, that seems perfectly reasonable to me.
Slashdot, FARK, GoogleNews, and actually most "news" sources don't post original content. They just regurgitate Reuters and the Associated Press.
Why do I care if it's "original" or not. I only care if it's interesting.
Although, I do find those on the almighty steemit "top trending" page to be pretty boring.
By that definition we'd have to include purchasing a home (most can't sell for a profit), paying for a college education (most never pay off their student loans), starting a small business (90% fail) and investing in the stock market (90% lose money).
No, that is not a correct analysis. First of all, no offer is made in any of the above scenarios that the purchaser will actually make money from their investment, and in all the above cases, the purchaser actually receives value for their investment.
Investing in Steemit on the other hand is made with the claim (assumption) that those investing will make money from their investment. Yet by the very design of Steemit, it ensures that the vast majority of investors will never make any money, with the bulk of the rewards going to only a very select members at the top. That makes Steemit a classic definition of a ponzi scheme.
Feel free to contact the FTC or the FBI and ask them. If you tell them the whole truth, they will tell you exactly as I have.
The kid paying hundreds of thousands of dollars for a college education has certainly been told they will be able to at least double their ROI.
Ok, ok, I get that you're upset, but you should be able to get at least most of your "cash" investment back after the 13 week cool-down.
Maybe you lose 10%? It's no riskier than investing in stock-market-securities.
I know people who lost $30,000.00 (and more) when Washington Mutual Bank was dissolved.
WTF is the FTC doing about that?!
Well to be honest from quite a while back when I got really pissed off, it's been quite a while and I don't remember the name but he developed that parley site, but he wasn't the only one involved at the time there was someone else, I did file a complaint with the FTC and before you can file a complaint they ask you what your complaint involves as they aren't going to waste their time filing reports that have no merit...at the end of telling him what my complaint concerned he thought it justifiable enough to take it. I asked him what happens next and he said they get sent out to all the federal and state agencies where they sit until the pile gets big enough that someone finally takes notice and does something about it. In other words when they make a big enough mess on someone's desk who finally decides to pick them up and do something about it. It's been I think well over a year now and I haven't heard back but that doesn't mean that someday isn't coming. For everyone they piss off that pile gets bigger.
As for your argument that people buy non essential things to bolster their chances your point isn't worth holding. People invest in those non essentials to bolster they chances at succeeding. If they do everything right as depicted they should be able to succeed. Failing that success no matter what they do with all the right tools and time invested then that becomes concerning as to why. Nobody should be left holding a dead fish because a system is stacked against them, which we all know this system is. The plain matter of fact is that until Steemit is brought under the governing laws the system will always be stacked because people (higher ups) make their own rules to abide by. I can give you one simple example right here, that being that under federal tax code Steemit has to give the names of all the people they pay more than six hundred dollars a year out to along with those individuals social security numbers or relevant tax ID to the IRS. I know this to be fact because as a landlord if I use a self contractor (which people who participate on this site are doing, self contracting themselves out for a return on profit) and I pay that person more than six hundred dollars I am obligated to report that to the IRS. We all know Steemit doesn't do that. But that's just one example of running rough. The last hard folk they did runs much similar to the complaint I filed which if someday if it ever gets looked it will only bolster the case that the system is designed in favor of the upper tier. Think logically about what they are doing, someone invest time in a system that says you with this much invested you are worth this amount in a vote, then they come down and say now you are totally worthless after one has done invested an incredible amount of time to get to not only where they were promised they'd be at to start but take away any gains you made by slashing your worth and handing it to the upper tier. Now take that same scenario and apply it also to people who invested their money. It just don't add up. Part of the problem is also the fact that a lot of the people invested here are based in foreign countries who may not have the same laws so they feel empowered to just slap anybody around who complains as they are basically untouchable. So it's quite a mess but over all that though is the fact it is a US based company, someone owns it and it's their job to figure out the mess. Will they ever be forced to?...I guess that will all depend upon whoever that person is sitting behind a desk gets tired of seeing Steemit complaints flying across his desk. I mean I really, really like to invest in Steemit, wholeheartedly, but not when the game is stacked against me.
That would only apply to exchanges of legal-tender.
Crypto is basically "World of Warcraft gold" (which is also exchangeable for legal-tender).
AND, I believe KYC (know your customer) laws are blatant violations of personal-privacy.
I've found a better community here than anywhere else, and I really like the fact that nobody can get perma-banned by a rogue-mod.
Have you found a superior alternative?
Please be more specific.
"The kid paying hundreds of thousands of dollars for a college education has certainly been told they will be able to at least double their ROI."
Perhaps, but at least the kid got the education for his money. That has to be worth at least something, if not doubling their ROI.
"WTF is the FTC doing about that?!"
The main difference is that Steemit "is designed" to scam the vast majority of members by offering them something that Steemit does not or can not deliver on. That is different that a bank failing. The bank was not setup or designed to specifically scam its customers. Also, most banks have (or should have) deposit insurance which will compensate customers to certain limits, in the event of a bank failure. No one should ever put their money in any bank that does not have such insurance.
You don't seem to understand how fractional-reserve-banking works.
It's the mother of all ponzi-schemes.
Click to watch 28 minutes (or just the first 5 minutes),
None of the customers of Washington Mutual Bank "lost their deposits", those were all transferred to the behemoth Chase Manhattan Bank.
It's the people who had their retirement funds and 401k heavily invested in WAMU STOCK who lost their shirts when it went to ZERO with basically no warning.
This is exactly the type of "investor protection" scenario the FTC uses to justify their existence (oh, we must have someone looking out for investors). AND they just stood by and did NOTHING.
Don't even get me started on the lottery or casinos...