🚨🚨🚨Steemit: One GIANT decentralized PONZI scheme🚨🚨🚨

in steemit •  11 months ago

Well, I thought about purchasing Steem, but there's no way I'm going to do it now. If there's API for voting - which allows autovoting - it will be abused if it's not already.

Why in the world would the founders/leadership have allowed this?

Call it what you want - naivety, shortsightedness, stupidity, dishonesty, deceitful, scam, ponzi scheme, fraudulent ....whatever word(s) you use, it's not good.

ponzi-bot-scheme.jpg

🚨Newbies, especially if you're not tech savvy, watch out! 🚨

I've only been here a day and I already see how the Ponzi Scheme is likely playing out:

  1. John Ponzi gets a few or many accounts approved.
  2. John Ponzi codes (or hires someone to code) a nice little app that makes the accounts auto-vote different posts.
  3. He focuses on already popular accounts. As soon as they post something, John Ponzi's accounts automatically vote. The auto-voting happens instantaneously. Or he can set it to whenever gets the most rewards or whenever doesn't make it plainly obvious to users. It depends on how sneaky John wants to be.
  4. John Ponzi gets rewarded by Steemit's algorithm because John's accounts voted for posts that became popular. But wait - there are thousands of posts a day, maybe tens of thousands - how did John know which became popular? Well, he just focused his voting on users that were already the most popular at Streemit and who were regularly publishing. They had the most followers and therefore the most likely to have their new posts be popular.
  5. John Ponzi goes to sleep each night while his bots earn him STEEM. They work 24/7 for him. He just has to double check the results and tweak a bit here and there.
  6. With his rewards from Steemit, he purchases STEEM Power and now earns even more rewards.
  7. Each day he's making more and more and his effort is having a multiplying effect.
  8. John Ponzi decides to purchase more accounts that he can use as bots.
  9. His empire is growing steadily

...but there's a cost (not to him but the rest of the community pays for it). As his bots gain $$$$$$$, that's money that the rest of the community should have gotten for manually voting on content. Furthermore, it inflates already popular content writers, while others that might have written the best posts don't get the extra votes.

And John Ponzi has added 0 value other than artificially propping up early adopters and Steemit network usage.

And it doesn't stop there. In comes Jane Ponzer. She independently realizes the flaw and also setups autobots. Soon more people realize it and enter the game.

Some of them realize at a tiny effort more, they can start CREATING content and have their bots auto-vote their OWN content. Now they get extra rewards for having "popular" posts. Soon more jump into this giant source of revenue and it increases their riches even more.

Before you know it, there's a small group competing with each other's bots and earning thousands, tens of thousands, hundreds of thousands, and growing their fortunes. An ecosystem of bots, autovoting services, etc, develops to milk the cash cow before it dies.

... all while proving next to no value while getting almost all the value ....

Where is their value coming from? It's coming from regular non-techy users...and lots of them. These people naively buy Steem and invest in Steemit. They spend their valuable time producing new posts and voting on others' posts. They get rewarded with a few pennies.

They think they must be doing something wrong. After-all, look, there are others earning hundreds, some thousands of dollars PER post. They decide they'll stick with it and continue investing, hoping it will pay off.

Most regular users join and convert their money to STEEM. The price of STEEM goes up. Yay for regular users.

The bot masters, on the other hand, are cashing out. As new suckers come in, the bot masters trade "value" for value.

At some point later down the road, new users stop coming at the rate required to feed the bot whales. At that point, the market makes a correction and users are left wondering what's happened. More and more people start cashing out what little is left before it all unravels.

Word finally spreads to the masses that the whole thing was one giant ponzi scheme with bots running off with the loot. At that point it's too late for the masses.

Is there any way to remove API for voting? Mitigate it?

If not, Steemit is doomed to death by spam.

There's so much potential for Steemit. I want to use it, but I can't compete against armies of 24/7 bots that provide next-to-no value yet get next-to-ALL rewards.

Or maybe I'm missing something?

Please let me know if I am. I'll edit the post if any information is inaccurate.

It doesn't appear that there's any transactional cost to mitigate vote spamming (like Ripple for example ). In fact, lack of trascactional cost appears to be a feature of Steem.

Is there a fork coming that will fix this? If so, when?

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Interesting point of view.
I have been trying to work out the relative advantages of the bot system myself too. Indeed a potential Ponzi scheme. Though I think it's addressed by vote weight being reduced with quantity, and the 30min reward percentage shift from authors to curators of new posts, which makes it harder to code for maximum profit.
Though I'm not sure I even like the concept of getting rewarded just for being among the first to jump on the 'valuable' bandwagon. I'm yet to decide if this platform is more for community or profit.

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Thanks for commenting!

Rules like vote-weight just move the goal. At 27 minutes, 10% of the reward goes to the author and 90% to the curator. That can be taken into consideration in the bot app.

But, it's still a bot ponzi scheme at the end of the day. Different rules - same players.

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Why isn't there more discussion on this. If the platform of steemit and all their existing sites didn't exists, then people are purchasing steem coins to get them locked up (power up) to earn compound interest. That's pretty much the definition of ponzi. However, what makes it interesting is that content is provided and work is paid by steem and steem dollars. I get a little confused myself.

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Unfortunately, the content that you see on the trending and hot tabs are mostly promoted by voting bots. This is discussed, but it doesn't make the homepage, because there is no value in voting bot owners to promote this type of content.

Too bad I found this now so I couldn’t resteem since it was found late but it’s a scam.

To be honest, like most other crypto coins and assets, if the system does not yield any inflow of cash other than newcomers can be a ponzi scheme. money has to paid somewhere and steem like other ponzi milks on newcomers and it requires newcomers to stay afloat. I don't know why people thinks voting=$ is a good idea. it makes totally zero economical sense. so the problem is not the bots, not the self voting, but rather its the system that's flaw.

Auto-voting should be void. It will be meaningless to write a good article or post since the author who have a better reputation and upvote by auto-voting always get a better payout even the article or post doesn't make any sense.

@run-to-win, don't worry about the reward pool abuse on Steemit. The new reward distribution formula takes care of what you have written here.

It is impossible to make extra money just by voting for your own post via your own account or via bots, because those extra Steems are just the dilution of existing Steems and 10% of that dilution is going to witnesses anyway.

That means anyone who involves in the type of abuse you explain here would lose money for sure. I explained this in detail in a post called Steemit Reward Pool Abuse, Myth or Fact.

If you have any questions about my explanation, I'd be glad to answer.

I used to think like you before, but then I learned that the reward distribution formula is already changed to take care of this. (That's why I deleted my previous comment on this post.)