Many would say we already live in a plutocracy.
Anyone who believes in the deep-state believes that it is the billionaires that already control the world. Rule by the wealthy, indeed. Actually, if you dig deep on a lot of those conspiracy theories you'll actually find that what they really think, but don't often talk about, is that it's "The Jews" that control everything.
The Goyim Know, shut it down.
I was actually supposed to do a meta-post on conspiracy theory, and I found this badass chart that made me laugh. So good.
https://www.conspiracychart.com/
The anti-Semitic point of no return.
I love that.
Very true-ish.
But let's assume that we just think it's rich people and not a certain class of rich people.
So in my last post I called Hive a Plutocracy, but it is really so much more than that. There are multiple themes of governance on Hive, and I figured I needed to explore them further in a new post.
For example: Hive is a democracy.
Anyone with powered up Hive can vote on witnesses and how to allocate the dev fund. And that's only the beginning. Anyone can program any kind of voting structure they want on Hive. We could do one-to-one voting; nothing is stopping us from doing that. The problem with one-to-one voting is the implied KYC and the fact that one-to-one voting isn't that great because we'd be giving people votes who aren't making informed decisions. Still, we could do it. Pretty easily.
But privacy though.
This is another big problem with voting. Voting is supposed to be private, because public voting can lead to coercion and other forms of corruption. This is why voting with our money is such a good idea. Money can be shuffled around. Money is private. Anyone can boot up an anonymous account on Hive, pump a bunch of money into it, and vote on whatever they want without being called out. It is known.
On a game-theory level it sounds like A REALLY REALLY REALLY bad idea to create a governance structure that revolves around rich people controlling everything. How is that a good system? I would argue that, like all things crypto, it is not a good system; it only has to be good enough.
So if we already believe that billionaires control the world today, how is Hive plutocracy better than that? A lot of it has to do with cutting out the middle man. How many billions of dollars get pumped into manipulating public opinion and hacking one-to-one "democracy"? The allocation of all those resources is a complete waste of money. Hive easily avoids this problem by allowing people to vote directly with stake in the network.
This also has other huge benefits, such as:
- Voting becomes unhackable and enforced by encryption.
- There are no voting machines to hack.
- Voting is something that can be done for any topic 24/7 worldwide.
- We are not constrained by borders or time limitations.
- It is unlikely that a big stake holder would vote against their own self interest.
- Unless you're an idiot billionaire who thinks you can buy a community.
- Thanks for the free money.
- Unless you're an idiot billionaire who thinks you can buy a community.
Also, who controls the money?
Billionaires might control the world, but who controls the billionaires? There are so many things to unpack here. First of all billionaires aren't even billionaires, are they? We calculate a billionaire's wealth by using the market cap of all their assets added up in USD form and assuming liquidity is infinite (it is not). They don't actually control a billion dollars (because holding fiat is stupid). Rather they control stocks, bonds, real-estate, commodities, and other non-fungible assets (aka property).
So who is in control? No one is in control. It's a free-for-all bloodbath out there. Those who delve into these games of power rather than just simplifying it into oblivion and saying things like "printer go brrrr" and "the Jews control everything" will find that the world is a bit more complicated than that. So complicated in fact that we see exactly why so many people need to dumb it down into something more easily digestible.
Even the FED, the most powerful central bank in the world, doesn't actually print money like people think they do. The FED doesn't control USD, and in this regard USD is a decentralized system (not a very good one, but still).
So how can "billionaires" control the world if they don't control the money that their wealth is measured in? How they can they control the government if the government can barely control itself or the underlying population? The answers to these questions belong in a full length novel, not a blog post. It is not so simple as "rich people can just do whatever they want". That is a gross oversimplification that has no merit in reality.
So who controls the money on Hive?
Everyone does, and no one does. This is another thing that really muddies the waters when it comes to trying to classify Hive's DPOS governance structure. Hive is a central bank, but then that central banks turns around and delegates power to every single community member that powers up Hive. How weird is that?
If Hive is a Plutocracy then surely the witnesses must control everything, right? Wrong again. Many people look at Hive's governance structure on a game-theory level and say,
"Look at this garbage, these 20 people can get together and freeze or steal anyone's money; this is not decentralized."
In theory this is true; in practice is it not.
If we look back to actual events like the Steem hostile takeover, we see that it is nearly impossible for our witnesses to freeze accounts or steal funds. Only in the most dire of cases where the network was under imminent and mortal danger was this allowed to occur, and even then people were pissed and voicing their uninformed opinion on that matter.
Idealism in crypto runs deep, and narrative/politics matter. The layer zero of Hive will not allow the witnesses to, "Do whatever they want." It doesn't matter that they can do what ever they want on paper. The theory is not reality, and we've seen that proven in the field.
Speaking of practice.
What do we see on Bitcoin? A handful of mining pools that, once again, everyone delegates their hashpower to. Again DPOS automates out this natural centralization of power and leans into it rather than trying to be idealist about everything. DPOS is a real solution that solves real problems, not some idealist wet-dream utopia that will never materialize.
To recap, Hive is:
- A plutocracy; rule by the wealthy.
- A direct democracy, everyone gets a vote.
- A republic in which we elect our representatives.
- A central bank that delegates power back to all citizens.
- A socialist digital nation that allocates subsidies with the dev fund.
- A communist nation that distributes the means of production back to the people.
- A permissionless protocol that anyone can build on (anarchy).
Hm, yeah... so Hive is like... all things.
Pretty weird, eh?
Such is the nature of flat-architecture.
We are testing every door, and spilling into every direction.
Like ya do.
Circle voting leads to centralization.
This is another false narrative that many opponents of DPOS subscribe to. We saw this one a lot in 2018 when whales were making a lot of money and the price just kept bleeding again and again. Someone needs to be blamed for this! We certainly aren't going to blame ourselves!
On a mathematical level, this theory is objectively false.
It has often been said that the rich on Hive just upvotes themselves, and thus this leads to centralization. Make it make sense, because this is nonsense. If I have 1M Hive powered up and I upvote myself for $100, and then someone else has 1000 Hive powered up and they upvote themselves for 10 cents, has centralization occurred?
Those who are delusional and jealous of other people's stacks claim yes, but both parties still own exactly the same percentage of the network as they did before voting. Again, this is why democracy is idiotic: Because the mob believes idiotic things and then they act on those idiotic beliefs. Math doesn't lie. People do. We aren't going to make any progress by acting on irrational emotions that aren't grounded in reality.
Spoiler alert!
I'm one of the highest rewarded authors on Hive (#blessed). Go look at who votes for me. It's not even possible for this to be a "circle jerk" situation because my biggest upvotes come from accounts that don't even write blog posts. Again, make it make sense.
Also, it took me a full year of blogging before I had any kind of support whatsoever (two years for full support). That's just how blogging works. People want to jump in on the scene and instantly start making a living wage without crawling through any of the muck it takes to get there? Please. I mean I'm all for providing real jobs with non-subjective wages based on merit, but we just aren't there yet. All in good time.
Thus, anytime someone with a lot of stake upvotes someone with not as much stake, decentralization occurs on Hive, without fail. Does this happen? Yes, we can see that it happens all the time all day every day. Hive is becoming more and more decentralized over time. Even more importantly, the accounts scooping up massive amounts of Hive are non-toxic good-actors, which is even more important than decentralization.
What really matters is trust; we need more money in the hands of trustworthy people; doesn't matter if the distribution is centralized if we have trust (the theory behind decentralization is simply that it is statistically more trustworthy than not). This is very important, because wealth distribution is obviously Hive's biggest attack vector (if the hostile takeover didn't give that away).
Hive is so far ahead of most networks in terms of token distribution, and while the whole "proof-of-brain" fantasy is not perfect and a very ugly way of doing things, it actually is working better than what every other network is doing (surprisingly). Give yourselves a pat on the back, fam. We're doing it. Progress is slow, but progress is progress.
Conclusion
Hive employs many forms of governance and cannot be classified by traditional means. Ironically, the best part about Hive governance is the anarchy aspect. Anyone can build anything here, and the network will not say no or play favorites. Pay the 'fee', have your data stored for all time. It's that simple. Anarchists unite!
Anarchists unite?
What a weird oxymoron.
Such is crypto.
Great post, though I will say I know and have known a lot of wealthy people so when you say
this is both true and false.
Take Elon Musk, people say "he isn't actually a billionaire, he doesn't have that money to spend it is all locked up in Tesla blah blah".
It's a misunderstanding of how wealth works at that level.
If I have a million dollars value in Tesla stock I could go to my bank and ask for a $600,000 loan at very favorable terms, easily - and with a better relationship yada yada, a much more favorable deal than that.
"Buh Buh debt is bad!?" no it isn't, bad debt is bad.
Now Mr Stock holder has the stocks AND liquid cash.
And it is tax-free.
Unlike if he sold those stocks to get liquidity, where tax is owed. Loans are tax-free and the repayments are deductible.
So the actual wealthy control assets using corporations OR they own assets paid for by earnings from their investments and spend against them, not with them.
That is how the rich get richer and pay fewer, and lower taxes.
Very accurate analysis.
By using collateral to secure debt, billionaires can leverage their worth into tax-free loans and use those loans to build even more value that remains untaxable until they actually sell it. Buy why sell it when you can just put it up for collateral and take out another favorable loan?
It's one of those "got to know the rules to win the game" things that most of us never even think about :)
Another is getting taxed and then spending whatever is left, versus spending / investing then paying taxes on the remainder ... if at all ...
Plus the banks fall over themselves to lend out this money because of how 'guaranteed' they perceive the return on their investment to be. Like private consultations, free drinks, free meals, being treated like royalty so their bank can be the one to earn the $10,000+ interest on one of their large loans.
Yep, as the saying goes, owe the bank $100, your problem, owe them $1,000,000,000, and it’s their problem
I think I was checking on CTT and the Hivers I follow when I stumbled with the posts of at least three people saying that Hive is doomèd because things stay the same. The only thing that changed is that Justin Sun has been replaced by blocktrades and his men. For a more or less 6 month old Hiver, reading stuff like that is somewhat disappointing and some may even fall to just one side of the story. Though I know only a little information about this issue, but listening to both sides, I sense that someone is envious of the size of others' stakes. .
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try to keep up with everything happening on hive. no way to do that. you could make it a full time job and still not be able to do it.
i am here for 4 years and i am active and still are surprised with "damn this is around for a year and i am only now seeing it" things.
I agree. Just the data from one account that has been accumulated for years is already challenging to read. How much more complicated it is to know 10 or more accounts, which is just a tiny portion of the whole community.
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Pretty 'interesting' claim.
To say that an ever-evolving network that's only two years old has "stayed the same",
and thus is doomed to fail.
Hardfork25 was massive.
RC pools and Hive Application Framework will be even bigger advancements.
Justin Sun has done zero development for Steem.
To compare these things is a fool's errand.
LEO doesnt directly influence governance on Hive yet it does use the same model in terms of the POB distribution. For that reason, each upvote given to a smaller account using Hive will enhance the value of that person's position on the blockchain.
Over time, we do see things spreading out.
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That is true. There are people who have been attacking it for years, regardless of who is "in charge". The reality is that, while have has it flaws, it is far from doomed. Many are simply out that making claims without any evidence.
Look at all that is being build. Each day, this place gets stronger.
Each HIVE that is powered up in your account helps to distribute the power. Over time, it is spreading. Look at the reports produced by @arcange and how things are spreading out over time.
The key is for newer people to keep growing their accounts. On a percentage basis, you can grow it a great deal being new.
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This is post is so meaningful and explain alot About things that bothering me. Although I see hive as most token distribution platform not govern by anyone.
As at late week I ask @emeka4 what will really happen if this hive blockchain endup like steemit, how will people withdraw their tokens. But today I found answers to my questions through this post.
Thanks @edicted
As long as development is taking place, there is no way Hive ends up like Steem.
There are plenty of people running nodes, not tied to each other. If some of the top 20 left, it would open up slots for others to take over.
We also have core developers who are bringing more additions to the base layer. Couple that with Layer 2 development and there is no way the chain is going to stop. Someone will step up and run it (actually lots of someones).
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Oh I love this great platform, thanks for enlighten me more on this
I love it too.
It offers so much and just keeps growing. I marvel at where it will be in a year or two.
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STEEMit is a bit different, because Justin Sun bought STEEM and tried to take over in a hostile way, that basically killed the project (though it is still around, just not very popular anymore, mostly only Koreans use it now). HIVE has a ton of community support. The HIVE community reminds me somewhat of the LBRY community, both are independent, censorship resistant, and have extremely loyal followings.
Thanks for explaining much about it
No problem, glad it was informative to you.
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It's interesting. I find the "plutocracy" of HIVE are the same folks who are expanding HIVE's adoption, use-cases, and dapp ecosystem. I say let them rule.
Isnt that interesting?
Seems like the ones who are in that category are the one's doing a great deal of the heavy lifting.
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Very interesting post as always.
I know it doesnt go into direct governance but you didnt even touch upon the layer 2 applications, many of which are starting to gain some value. That is how impact (directly) upon the distribution of Hive yet it does equate to spreading out the Wealth distribution. This means there are more players on Hive with access to resources, if need be.
To me, this is a vital component.
As for the circle jerking, it is amazing how so many overlook the fact that smaller accounts can radically improve their influence, as a percentage of the whole.
Take an account with 100 HP. If that person gets to 500HP, that is roughly a 5X in influence. Imagine Dan or Blocktrades (another Dan) doing that. It would take a lot of money to accomplish.
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Another thing I forgot to mention is that if you are a minnow (~500 HP), your vote on Hive is worth about a quarter millionth of the entire network. Even at those levels, your vote is worth much more than say your vote for POTUS. Pretty mindblowing, especially considering this level of stake used to be only worth $50 (and now $500).
The layer 2 applications are all part of Hive anarchy, but within that anarchy, new rules and communities are forged.
Pretty crazy stuff when we try to parse it all.
It is amazing to sit back and watch the complex system in action.
Isnt it funny how people think it is controlled, yet others feel it is chaotic and we "need to get our message straight"? How can it be both.
Yep, that is what complex systems are. It seems like it is chaotic and going nowhere (because it is going everywhere) but that is the beauty of it.
And we are still early on. To think that we controlled things for less than 2 years. Before that, we were at the mercy of STINC.
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Finally I learned a lot about Hive that I didn't know. There was gossip and politics and words I didn't understand, and I have a better grasp on the totality of things now.
I totally agree in this because this still have to deal with personal investment where the aim is to make profit from the investment and not be questioned how he does his thing with his money.
Very interesting post. I love your analysis of the current system and the impact/situation on Hive.
I think one of our great strengths is the incentive system to upvote based on your staked Hive. People can get rewarded for creating content and consuming content equally. Just that depending on their stake they have to rely more on creating content and receive the attention of bigger curating initiatives that make sure the quality criteria are met if they have a low stake.
That was the twist, hive is plutocracy, hive is democracy...
Hive is everything truly.
We all control hive but those with bigger stake control a whole lot.
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Nice analysis.. The DPOS model is a great one and I love it.
It stands second to none in my opinion.
Anyways, somehow the billionaire still rule the hive ecosystem in my opinion.
The billionaires gonna rule the hive ecosystem when the total market cap is currently $400M?
Seems thin, but ya never know.
But it raises the question: who will the "billionaires" be?
And will that be a bad thing?
The ones who invest a large stake into the system and those that grind harder.
Not necessarily
So not the people that build the most value?
In my opinion money that comes in from the outside will be ultimately dwarfed by value that is built from within by a huge margin. It is the value we build from within that entices value from the outside to enter the system.
I totally agree
I also support dpos and pos like osmosis and atom
That first part of the post.
I think we're actually going to see a big shake-up in witness votes in June when legacy votes from accounts that are no longer active expire.
We might even get a full blown election campaign as they realise they need to get people to renew their votes!
A lot to unpack there. Ultimately though, things are only worth something as long as we all agree that they are worth an amount. Hive is weird and I have been exploring many aspects of it and your article helped clarify a point of two. Thanks!
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Fucking Grade-A writing on this one.
A lot of the complaining comes from the younger users, many of whom are being raised to believe that the system is not "fair", and that the bigger earners OWE them part of their earnings, because, you know, its only "fair", right? It appears that they have not yet learned the life lesson that there is no such thing as fair when it comes to money, for the simple reason that nobody owes anyone anything, neither money nor labor or time. The sooner they learn this painful reality, the better.
HIVE does centralize money to some extent, yes, but that happens in any money system eventually, it is unavoidable. Though admittedly the difference here is that those with lots of HIVE can generate new HIVE for themselves with very little effort even if they are no longer posting quality content anymore, so that is indeed a downside, but even so I think it is worthwhile to keep the MERIT system in place that rewards quality posts for the most part. There is no perfect system, and there is in fact no system without glaring flaws. These are simply some of our system's flaws, but I will accept these flaws in exchange for a system that rewards good content and does not reward spam and low quality content at its core.
It's kind of weird how Hive is a bit of everything but I do think that it is getting more decentralized over time. I am glad the code itself is not playing favorites with anyone.
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I keep thinking back to you talking about the way that the top HIVE hodlers (and the influence that they have over governance), is changing over time.
For example, a lot of the top witnesses selling their rewards, hence slowly losing influence.
Then what just 1 successful Hive community bringing value from outside in, and turning that value back into HIVE stake.
You're a prime example of this happening on a small scale during the first LEO pump.
It's likely we will see this shift on a much larger scale during the next.
Exciting!
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You are going to put me to study, there are too many high points in this article. There is something that caught my attention in the last lines: "Anyone can build here" that is totally true, but they can also destroy, without notice, or possibility of complaint. That would be good to review. I sent a letter to a community and they never gave me an answer. These are things that I think can be improved, if you want to be democratic.
Billionaires only "rule" if they have created value. Yes, they can influence decisions (and governments through their expensive lobbying efforts) but in the end, if all they create is hot air, they will not be billionaires for long.
It is up to us non-billionaires to help them (or others, new ones) create more value.
I'm all in!
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Agreed. If the people in a position to make real changes have everyone's best interest at heart, there's a much better chance that Hive and everyone here will thrive. It mostly comes down to responsible curation and voting, doesn't it?
The wealthy rules everywhere because money gives some level of power. Hive is no different, those with huge stakes are those majority respond to. There are the curators and the upvote whoever they choose to.
However, it's thrilling that Hive doesn't have just one governance structure. On the whole, the platform is more decentralized that centralized in architecture.
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The hive ecosystem will continue to do the very most when it comes architecture, administration and governance. Still can’t believe a decentralized system as this breaks and nullifies the saw , “you can’t eat your cake and have it” ; hive gives us the opportunity to bake two.
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I think there is no existing label to this phenomenon. Hive takes a little from everywhere( I hope the best) We are more close to a technocracy, sometimes it get a little difficult hahaha. Great post
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This is an awesome post.
That's exactly how I see it and try to put out to people I know and they seem to not see it.
Often because they are so focused on idealistic view of world where system solves everything for them, not realizing they are the system in fact.
HIVE ON!
The role the hive play in our society today is very great. Hive is a good example of democracy.
Excellent post, although I'm little bit wary of using labels, especially in these days, when they lost much of their meaning and when many people who call someone of something Nazi, Communist, Fascist, authoritarian etc. don't have a clue of what they are actually talking about.
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