As a system engineer, I have been trained to analyse situations/things and break them down into constituent parts, mapping the processes involved completely and identifying strengths, weaknesses and other pertinent factors. So while I marvel at receiving money directly for creating internet content inside the genius system of Steem/Steemit, I am also wondering about the 'big picture' of the system as a whole and where it is going to be in a year or two from now.
As part of that I am naturally wondering about the future of the Steem currency and it's value - probably like most of you reading this who are getting paid here for posting and other interactions. As I thought about this I asked questions such as "What are the strengths and weaknesses of Steemit? What are the opportunities and threats?"
Some of my answers to these questions are interesting and definitely worth exploring in a post, so let's put on our detective hats here and see what we can learn about all this...
NOTE: While I am well used to working with systems, I will point out that I am not trained in economics and haven't really put much time into studying the mechanics of steem/steemit to the level of reading source code and reviewing technical documents - if they exist beyond the original white paper (which I haven't read in full either). Also note that this is just a quick thought exercise and not a full-on investigation at this point!
Strength/Weakness/Opportunities/Threats for Steemit
Strengths
Some of Steemit's many strengths could be said to be:
- Financial: Backed by it's own cryptocurrency, so it's success can come from two previously unrelated sources - both from success as a social network and financial success as a traded token and measure of wealth.
- Support: It's own users can be supported by it and thus have a motivation to support it - even with work - much like working for a corporation, but without any contracts or the associated stresses.
- People can be paid usable currency just for being creative and being themselves: Cutting out the middlemen and potentially increasing personal liberty in a tangible way for many people.
- An improvement over competing technologies: Transactions on the Steem blockchain are processed much faster than with Bitcoin and other competitors; plus, the social network aspect is decentralised and theoretically uncensored - thus is transparent in comparison to the existing, massive social networks that so many of us are using daily.
- Good Vibes/Atmosphere: Steemit rewards good ideas and promotes teamwork - which is inspiring and motivational for many creative people who might otherwise feel disempowered when using sites that do not reward them. The quality of interactions of may be higher on a site that rewards users since they are happier when using the site as a result of rewards.
Weaknesses
Some issues which need improvement:
- Terms of Service don't seem to count for much. The terms define certain behaviours on Steemit as being prohibited, but nothing is apparently done to enforce the terms, leaving aspects of doubt in some users as to the system's overall integrity.
- A mild form of censorship is built into the system in the form of downvotes and post hiding. I have made some suggestions for improvements here.
- The value of SBDs can fluctuate quite wildly when it is intended to remain fixed at being equal to $1USD.
- Posts and information can be difficult to locate via the existing interface at steemit.com.
- The financial rules of the system leave the door open to purely financially motivated voting and posting, resulting in an un-natural amount of low quality posts receiving large payouts and traffic/engagement.
- System Complexity: There are numerous aspects to Steem/Steemit that most new users are unfamiliar with and the learning curve can be quite steep for some - this could be improved by a detailed, high quality knowledgebase website to help users expand their understanding.
Opportunities
- Competing cryptocurrencies and social networks are currently lacking the edge that Steemit has, so Steem has a window within which to become the largest cryptocurrency on Earth and to lead the way into an entirely new economic and financial period in Earth's history.
- Should the value of Steem skyrocket, large levels of traffic and investment will be drawn to Steemit, further accelerating it's growth quickly.
- People are looking for ways to break free of censorship and online control, so truly delivering a reliable and robust technology to meet those needs will make big waves globally - also further accelerating steemit's growth.
- Lasting stability due to almost completely replacing significant aspects of the current economic paradigm - if the system evolves to meet it's challenges it will have little competition and great ongoing value/persistence due to it's uniqueness and capabilities.
Threats
- Existing social network operators could copy the idea of having their own cryptocurrency and rewarding their already massive userbases - capitalising on the power of their ability to retain their existing users due to the daunting thought of them having to move their data and relocate to a new site.
- The value of Steem could drop so low that the value added to the system by being paid using and interacting with the site would be minimised.
- The design of the Steemit service might not evolve in an agile enough way, resulting in stagnation.
- Technical failures or exploits may occur - which results in a loss of trust in the system.
- A significant negative shift in just one aspect of Steemit can cause a chain reaction which devalues or removes many of the other strengths of the system - for example, if the currency is greatly devalued or if freedom is limited in some way then the other aspects may be unable to maintain enough excitement in the userbase for them to continue to use the system.
- Operators of competing systems may actively use social or financial/economic means to imbalance and derail the system for their own reasons.
Interesting questions
- Is it possible for a competing group with large finances to ruin the steemit project due to it's dependence on Steem - using purely financial mechanisms?
Essentially, to do this requires devaluing the currency, which in turn requires an over abundance of the supply of the currency and/or a reduction in demand for the currency. A competitor or 'other opponent' could deliberately make the currency unstable by regularly heavily trading in it and adding to uncertainty in the market - this in turn could result in increased resistance to adoption of the currency and thus a reduction in the value of the currency overall.
The value of SBDs DOES fluctuate too, even though it is not meant to - so maybe this fluctuation could also be manipulated financially (or possibly even by malicious manipulation by corrupt witnesses - is that possible?).
I suspect there might be a limitation to the damage that can be done here, but the range of inventiveness among people when they stand to make huge sums of money should not be underestimated!
- Is it possible for competing groups to ruin the site by derailing it's community atmosphere and/or swamping it in commercial posts?
We can easily see from history how hugely wealthy interests have sought to control every media channel available both for their own financial benefit and for other forms of power gain, such as social control/engineering. The attraction of such a challenge of controlling an allegedly anarchistic system should not be underestimated and there have long been significant resources invested into developing techniques to derail and ruin online groups/community and movements.
The absence of rules in the system means that just as there is a wide variety of options for generating payment and success - so too is there a wide variety of options for malicious domination and subversion too. The fact that those with the most money in the system effectively have the most power and magnetic pull in the system, leaves the door open for the prevailing oligarchy of Earth to walk straight in and control the dynamics simply with their upvotes and DOWNVOTES (I recently wrote on the problems with the downvoting system and how to maybe improve it here).
- Will Steemit become such an influential platform in the future that the world's wealthiest people will be buying huge amounts of steem power to attempt to shape the thinking of steemit users to their preference - as they have essentially done with the mainstream media already? How would this hurt or benefit other users?
It has been common for wealthy groups to buy out mainstream media channels in order to spread their own agenda and influence public opinion on all manner of subjects. That possibility also exists to some extent on Steemit, simply by buying in directly by buying STEEM POWER and using it to influence votes. The important question here for the future of Steemit is whether or not such a situation can be withstood by the Steemit website without it's users becoming frustrated and leaving..
For example, will users want to continue using the site if they constantly see CNN and other questionable corporations making the posts with the highest payouts, regardless of how much anyone complains? Is the platform ready to provide users with a way to workaround such issues?
What do you think?
I could probably turn this post into a 100 page document without much difficulty, but I will stop here as that isn't my intention. Rather than completely answer all these questions myself, I thought it might be good to answer them collectively - so let's take this to the comments section below to see if we can figure out the right answers here. :)
Wishing you well,
Ura Soul
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