A couple days ago, Charles Bovaird published an article on CoinDesk. In this article there were numerous quotes which I feel should be addressed because they demonstrate the clear cognitive dissonance of many Bitcoin and/or Ethereum maximalists.
Skeptical About App Coins
. “I’m skeptical about 'appcoins'/'appchains,' and Steem is very much one,” stated algorithmic trader Jacob Eliosoff. …. Past that, he asked why the platform needs a new currency, instead of using an existing digital currency like bitcoin or ether.
The interesting thing about this “Doubt” is that he completely ignores the scalability issues associated with using existing platforms. Each day the Steem blockchain processes almost 125K transactions. The Bitcoin network is currently maxed out on transaction volume with a mere 200K transactions per day.
The dollar value of Bitcoin fees each day is around $35,000 which puts the average fee at $0.17 per transaction. It would cost the typical active Steem users several dollars per day just to pay transaction fees before even a single cent could be awarded to authors. Do you think any social network could grow with those kind of fees?
In short, it just isn’t practical nor possible to implement a social network that uses Bitcoin as a currency.
Looking at Ethereum you will see that the network can handle about 25 transactions per second (in extensive spam tests). The current Ethereum network is effectively limited to 9 transactions per second due to the current gas limit, transaction cost, and block interval. Steem is already averaging about 1.5 transactions per second and would quickly scale beyond the ability of Ethereum to keep up. At an average of 35K transactions per day, Ethereum currently has about 25% of the transaction volume of the Steem blockchain.
What we can conclude from this is that the use of an App Coin is a necessity because no other cryptocurrency is technologically capable of scaling their capacity. Even Steem with its Graphene technology, which has the publicly demonstrated the ability to handle 86 million transactions per day, will have difficulty keeping ahead of the growth curve of a viral social network.
Skeptical about Dollar Peg
"Real dollar pegs are very expensive," said Eliosoff, adding that "to my knowledge no (or next to no) cryptocoins have pulled one off."
It is true that no one has pulled this off at scale, but BitShares has had a relatively functional peg for years. Pulling it off doesn’t even need to be expensive in terms of real capital. Steem simply makes the Steem Dollars convertible to Steem at an average price feed. The implementation is simple, straight forward, and the economics are obvious. Aside from a catastrophic collapse of Steem’s market cap (which hasn’t happened to any major crypto) the Steem Dollar will hold. The Steem Dollar is easily converted to Steem by the printing press.
Overall the Steem Dollar keeps more people / capital on the platform which reduces sell pressure. Steem and Steem Power holders are effectively insuring Steem Dollar holders against the loss of value of the Steem token. They can do this so long as the Steem Dollar supply remains a relatively small percentage of the market cap. Currently Steem dollars make up less than 0.5% of the market cap. Worst case Steem Dollars are converted to Steem. This makes it no different than holding Bitcoin which could become worthless in the “worst case”.
Bitcoin Maximalists
Bitcoin and Ethereum maximalists will insist that using any other currency but their “blessed currency” is an unsustainable ponzi while completely ignoring the fact that their own currencies are “app coins” and depend upon new investors to buy in so that existing investors can cash out.
Steem is the first currency that allows anyone to work their way in (not just technologically savvy, capital intensive miners). It is the only currency that doesn’t ask people for money. People buy and sell all crypto-currencies for speculative reasons, but unlike other platforms, Steem doesn’t require people to buy in and actually gives people something of value (influence).
Using the Skeptic’s own reasoning, Steem is one of the only platforms that isn’t a Ponzi Scam. Their own favorites are much better fits for their own criticism.
Circular Logic of Skeptics
The Skeptics employ a kind of circular logic when they argue for Bitcoin and Ethereum while calling almost everything else a pump-and-dump scam. The only objective difference between Bitcoin and Ethereum is the market acceptance of the currency. The market is what gives a currency legitimacy. In principle any currency can be adopted by the market if enough people use it.
There comes a point in every currency’s life where it goes from being a “scam” to being a “legitimate currency” and that point has nothing to do with technology and everything to do with users. Does this mean that Bitcoin was a “scam” when it first launched, but now is “legitimate”?
The Real Scam
So the question remains, is “scam” an objective property intrinsic to a coin or is it something that is a property of someones opinion or statement?
scam: a dishonest scheme; a fraud
The property of a “scam” is not something intrinsic to a platform such as Bitcoin, Ethereum, or Steem. A platform is merely a set of software rules and a community of users who perceive value in those rules. Software keeps things honest.
Only people can be dishonest. Intentionally misrepresenting and slandering other platforms while spreading FUD is the biggest scam being perpetrated by in the cryptocurrency industry. It is time that people stop spreading fear, uncertainty, and doubt and instead stick to the facts and reason.
It is perfectly reasonable to speculate that the price will go up or down in the future. It is also reasonable to question the economic game theory and stability behind a platform. What is not reasonable is to speculate on the intentions of others or to imply that there is something dishonest or fraudulent when everything is open and transparent
Steem is a Social Networking Game
Steem is just a points system like those used in many games (Second Life, World of Warcraft, etc). These points may or many not have value depending upon whether market participants are willing to buy and sell them. Everyone must make their own decision and ultimately the market will decide.
I understand you addressing these concerns completely from the view of crypto land. Isn't Steemit far more than crypto land? It almost feels like you've been backed into a corner.
The implications of a stable currency, the implications of mass adoption, the implications of building a community that entirely focuses on adding value to one another. You've addressed the concerns of an article but I almost feel like you've failed to mention what your solutions to those concerns really mean.
With a stable currency people use, you can potentially replace existing economic systems with crypto currencies first and then in the fiat world.
With mass adoption... through something as trivial as a 'social network' Steemit has the ability to potentially gain enough traction to replace the current economic models of capitalism, socialism etc... with some kind of virtual social capitalism.
When people continually look to add value to each other we start to see the 'reverse crab analogy' where the more we help others the better we do, @rok-sivante has expressed this point brilliantly in a few articles recently. Notably where he describes his transition from a 'scrooge' to a 'value servant'.
So... well… screw crypto land... if I'm not just being brainwashed into the validation of an up vote that's worth money, then what I'm seeing is the potential to truly change the world for the better.
I definitely agree with you. Because of Steemit's upvote system, we are developing a mindset to add value to each other in this community and stop crab mentality.
Any thoughts on this? https://steemit.com/steemit/@timcliff/steemit-lifetime-recruitment-bonus-how-rewarding-recruitment-can-help-grow-the-steemit-community
This is actually a good idea, but either way, I think Steemit is going to the same direction even without the recruitment incentive bonus.
Yes, I agree :)
That would make Steemit grow exponential but if it's already growing like that then why rush that?
Most likely if they did decide to implement this, it would not be something that would happen right away. It would probably take 6 months to a year for them to develop/implement. It is a well known goal that the community wants this to take off and become the next Facebook, reddit, etc. The current growth is amazing as it is, but something like this would help take it to the next level.
I totally agree :) I wanted to write something similar, but you did it better!
Thank you @dan Thank you @wingz
I really enjoyed your post @dan ! It's awesome!
And in the article, I want to know why they think it's illegal. They give no explanation to their opinion.
Great post !
When scalability is ignored.
Nice picture!😄
That's what you call upsetting the donkey cart lol I think that article did @dan
@inertia
or
The scam is in the eye of the beholder :)
The criticism regarding the peg is purely based on lack of knowledge by the critic.
As stated in the whitepaper I believe, all Steem does is take a tried and proven technique from the finance/start up world - convertible Notes - and codes it into a blockchain. The simplicity of it all is genius. No need to reinvent the wheel here. In fact, its a simplified version of the Convertible Note since their aren't any discount rates, valuation caps, etc.
https://www.seedinvest.com/blog/startup-investing/how-convertible-notes-work
Also, as far as maintaining the peg with the USD, the fact that Steem doesn't have transaction fees will help immensely in that endeavor.
I can remember a time when ethereum was considered vaporware because it took them so long to launch after the crowdsale. The same circular logic FUD was spread and its "sole purpose" was to make its devs rich.
Then it did come out, dApps were created, and it shot up to $20 a coin. Silenced many critics.
Skeptics come and go, and as you said, the free market will decide. Steem will keep doing its thing, and hopefully give some folks more things to consider. People like to oversimplify and fear what they don't understand completely at first.
Totally agree, people tend to fear something that is unfamiliar to them. Instead of doing some research about how things work, they tend to criticize it first. Anyway, as @dan said, "ultimately the market will decide." if this will be a pump and dump system
Long story short, Steem needs a someone, or company to step up and setup Steem/USD conversion. Steem needs another gateway to get off the Bitcoin teet! If this happens... I'll be the FIRST to do this....
People have been saying that since protoshares...
I can't disagree with your statement. Here's hoping Steem changes that paradigm!
You mean the ability to buy steem with PayPal or credit card?
Damn straight. I think it already is deciding... in real time. How many new users are joining each day? :)
#RealAdoption
Where to see the actual number of users, and active users ?
Edit: Found https://steemd.com/distribution
The other day @stellabelle linked to your blog in a comment, and I looked through the recommended reading section. Some very good, familiar titles and authors. If those are the inputs you're operating under, I have a high level of confidence in the future of this platform. This reply is no different. Well done sir. Thank you for building something amazing we all get to share in.
Dear @dan
@steemdrive stands behind your public statement; this kind of negative media will fade but more may sprout up again, unfortunately that is the nature of things to come as Steemit garners more attention.
What the crypto community fails to understand is it that if one major project suffers, they all suffer and the only thing their FUD media would have achieved is delayed public adoption of blockchain initiatives in general.
Take for example the DOA saga, the Ethereum index prices took a tumble and so did bitcoin and a few others to the best of my knowledge. I know that in the realm of fiat, when there is alarming news about a particular emerging market country, all other emerging market currency indices suffer as a result of them being classified in a similar risk category.
The top Digital Assets shouldn't be competing with one another, but rather jointly spreading the message of blockchain and supporting each other to achieve greatness and increased public adoption.
Rest assured @steemdrive is in support of you and Steemit, we have created a private "war room" channel in Slack dedicated to planning and brainstorming positive, mass visibility projects for Steemit.com which will help negate the negative media.
We already have liaison operatives willing to commence the campaign in countries such as New Zealand, Portugal, Netherlands and the US states of Alabama, Chicago, Michigan and Virginia, to name a few. An official list will be compiled in the days to follow.
I will now vote for your public address post with all the posting keys I hold and will vote with @steemdrive at the end of my campaign when its voting power would have increased.
"Amandla! Ngawethu!" .... "The Power! Is ours!"
@steemdrive DOA?? Typo or Freudian slip? Inquiring minds want to know :D
Best name EVAR!
Actually I can't remember but I like the way it turned out!:) DOA is epic name!
Sorry thecryptodrive is my main account, im on my mobile now.
We're allowed to have alts? I've avoided it thinking it was against the rules. Come to think of it, other than the whitepaper are there any official rules anywhere?
This response has also cleared my doubts. :)
dan is a beast! you need to make something so the steem dollars and steem should be reinvested back in bitshares not only in steem power :)
Yeah, like BROWNIEPOINTS.
oh ya, I have a ton of those from way back :)
Like a Marketplace...
Just a quick thought snippet on software development:
Money can buy software development, but you shouldn't confuse that with
"Money buys software development"
In my experience software development is usually only bought through extraordinary effort. What's my point? Don't just offer to buy the software, offer to help make it!
This site makes me want to find a way how to do that
Great post. I've also been hearing from a lot of bitcoin maximalists - "why do you need to create a new coin?" The answer is that we've seen social networks try to use BTC-based incentive systems already and it hasn't worked (Zapchain, Changetip). These didn't even face the scalability problem because they didn't get enough traction - the bigger problem is bootsrapping the network. Someone has to pay to incentivize content creators! Users don't want to (mental txn costs) and startups don't have the capital .
Paying content creators directly from the blockchain is a very clever way to bootstrap the network, and you need a new token for that.
The best answer to such a question is this:
"Piling every proof-of-work quorum system in the world into one
dataset doesn't scale." - Satoshi
Bitcoin wasn't meant to be a social network / content network database.
Great article @dan! I read the Coindesk Article when it came out and was surprised, it sounded so negative, great to set the record straight here!
Also right out of your post I quote: "It is time that people stop spreading fear, uncertainty, and doubt and instead stick to the facts and reason."
That also applies to the current political situation we're in right now!
Well said.
Steem is not the only currency that doesn’t ask people for money. There are others where you can change your intellectual property for cryptocurrency, like Artbyte.
But I agree that the skeptics do not know about scalability issues, by the way I loved the observation of the circular logic, nice to read.
When I read the coindesk article, I had a feeling they haven't read the whitepaper ( especially the steem dollar part). All of the points comes from people with little or no knowledge of how steem works.
It is great reading a post from you dan about steem. I am saving all my steem power and hope to be like you when I grow up!
Great post man!
i don't believe this is a scam, Because of this kind transparency i believe in the future of Steem and Steemit....
When everything's a scam, nothing is!
Interesting article with some very valid points. It learned some things that I wasn't aware of. You will always have critics. But I wouldn't even waste my time on them. Just keep focusing on your project and make it thrive. I also had to deal with these negative people that said I would never achieve certain things. Well, guess what ? I proved them wrong. And so will Steemit !!!
Read this one @dan
Kind of thought the same thing about the article - it was #bias
Nice=upvote
I bet none will dare click on that little flag cuase the whale will eat you. Lol plus its really freaking well written and its easy to follow and i actually read it all.
We should be open mind let it the open market take it courses.
Good point. I'm think you're right about it.
I'm the one who invest to hashocean... get scammed :)
you're not the only one
When Dan drops the truth bomb like he owns it
ha ha
???
https://steemle.com/
some cool charts
This will be the key to its success. When you exclude people to your party by only making wealthy investors win, or technologically adapt programmers earn their way in, you exclude everyone else and will never get the network effect you need.
One of the reasons Bitcoin isn't more common place, is that society in general has no reason to want to use it.
Steemit on the other hand, is doing incredible things, for incredible people who have been shunned by traditional economic systems. These same people have a financial incentive to learn how Bitcoin works, or what cryptocurrency is, after they've had a taste of steemit rewards.
The only way go from this point onward, is up.
good points
i totally agree, and the inflation powered redistribution also is key here.
@intelliguy , you are correct. That is why I am reading this article and other articles for that matter that relate to bitcoin and cryptocurrencies in general because as a musician and writer I would not have a reason to get involved in these things. I never before even had an interest in looking into bitcoin even though I had heard of it through "the grapevine." It wasn't until I heard about Steemit in the "Choose Yourself" group on my Facebook and gave Steemit a try that I now find myself intriqued by this idea of cryptocurrencies."
> Steem is one of the only platforms that isn’t a Ponzi Scam
Adding to that quote:
posting Quality content on steemit.com is just as real as the electricity bill bitcoin miners get every month; if not more because everyone can see it not just the miner.
Another interesting thing is that last week the total number of steemit users was 30,000 with 30% inactive. What happens when that is millions? The ability of the underlying crypto currency and block chain to scale with that kind of volume is critical. You were absolutely correct.
In addition, Ponzi schemes ask you to spend money, and promise big rewards. I've made money on steemit without spending a dime. If it is a Ponzi scheme they are doing it wrong. laugh
I agree with you on that.
I don't agree with people saying that Steemit is a Ponzi scheme or some sort. Their trading system/mining or whatever you call it is just different from other Cryptocurrencies out there.
Where did you get this number from ? It look like only a third of the total users were active the last 7 days.
https://steemd.com/distribution
It was a post last week. And yeah I was going off total users period. Dan or some developer posted something. Might be able to find it using steemshovel.com Just thinking of keywords
maybe users and inactive?
EDIT: This is not the one I remember seeing.... but I did find one post on steemshovel.com (I believe it is not done indexing posts) I am friends with the guy that made it and it only started indexing last night. https://steemit.com/steem/@whatissteem/how-many-users-come-back-to-steem-a-numbers-analysis
Are you only rebutting here, or have you asked Coindesk to let you publish this there? I know they might write selectivity about your rebuttal, but now is the time to control the narrative "in your own words" on this influential site.
or do like Elon Musk does, and take to twitter, correcting the media fools.
Precisely. The crypto crowd who might dislike steem WILL benefit from steem indirectly, because the cryptosphere is expanding, the network effect is growing and consequently the price rises for bitcoins and altcoins. New people enter and since they are paid in cryptocurrency, they are "forced" to get acquainted with it through incentive. They blog, they get paid, and then they learn how crypto operates. In a sense, it is in the best interest of the whole ecosystem for steem to be successful as it will have a positive effect on crypto-demographics.
As I see it, it is actually the only application that is running right now that can do that. ETH may have 1+ bn marketcap yet smart contract use cases are too few and too problematic for the average user.
Blogging/posting is an entirely different issue altogether because it is extremely accessible. This has a multi-million user potential, smart-contracts not so much. We could be writing our lines right now in the "killer-app" that brought crypto to the masses in a very legitimate way and not "dark-web'ish" type of way.
A very valid point alexgr. I certainly wasn't a stranger to cryptocurrency before joining Steemit, but I'm more much engaged with it now. It also comes up in discussion with friends who 2 weeks ago didn't know what cryptocurrency was!
The bitcoin maximalist are the model t owners in crypto. Sure you bolt a rocket on a model t and make it go faster, but i still rather drive a ferari any day.
Dan,
I am so glad you addressed the absurd, fact-deprived opinions of the so-called experts. I had read that article just yesterday and I felt unsettled by it. I had a suspicion that the claims of Steemit being a "scam" were unfounded, but I needed to hear some solid facts to dismantle their ill-formed opinions. I too wish the media and those involved in creating content would research thoroughly before stating opinions. It's perhaps one of the most tragic things that our culture does and it sets a bad example for everyone else down the food chain.
I think this was a strong point you made:
"There comes a point in every currency’s life where it goes from being a “scam” to being a “legitimate currency” and that point has nothing to do with technology and everything to do with users. Does this mean that Bitcoin was a “scam” when it first launched, but now is “legitimate”?"
I agree with you completely.
Steemit is really showing me who has good faith in systems, people and the future and who is using faulty value systems to form their opinions. I trust those who can see a positive future for humanity. It's that simple. You see a positive future for humans, as I do too, so I tend to follow that lightness in a sea of dark characters.
Following fear only leads to one way: the dark past.
Thanks for your post! We've missed hearing your wise thoughts.
I love this cat! :)
Firstly you need a degree or 5 to understand if all yeah I'm a newbie and haven't got a clue at the minute I'm studying hard to find out what it all means and if I have a chance of doing well here, time will tell
I shared this post on facebook because I got to level the feeling of steem, I wonder if this could become something of a scam or legit, I am still just a lurker and don't want to doubt steemit. But I am curious how it all works.
@dan had this come from anyone else I would be yelling scam from the rafters. But you guys have been called out as a scammers a dozen times over the years and all it's ever done is make bitshares and now steemit that much more popular when it's proven the pundits have no clue.
The way bitUSD & SBD are pegged is genius. It's the only crypto I trust with large amounts of money for long periods of time. Because shock it's worth a dollar and I don't have to trust you to have funds in a bank account somewhere in order to maintain the peg.
Uhh incidently @dan @dan-the-man any idea why @ned downvoted this topic?
I'm writing a bot to stalk people that flag stuff that isn't spam or abuse because of the steamitisnotacasino group that has decided to start flagging anything on the front page out of jealousy. To see @ned flag something is a bit confusing.
If peg is working could someone please explain me then why i can buy a Steem dollars for 0.85 cents in Bittrex?
Because the peg is not instantaneous and doesn't try to be, that would be foolish. According to Steemdollar.com the price of a Steem Dollar is currently $0.90. What you will notice is that buying low (below $1.00) and selling high (above $1.00) is easy money. While you hold you also get interest.
Steem is volatile, market makers haven't fully engaged. The profits for market making are high right now.
We created a comic strip where @dan becomes the grammar man to Charles Bovaid :) he brings up an interesting point where bitcoin is an appcoin too.
Downvoted to limit the high drain on the reward pool. The post itself is good and relevant.
Ahh shit, ok that explains @ned doing it too then.
Can you add a tag when you do that, something like #shavethewhales or something so my karma bot will take that into consideration. Trying to counter groups like steamitisnotacasino that are just flagging anything on the front page out of jealousy.
Hi @smooth, where on Steemit or in the White Paper can I find an explanation of what you mean by downvoting "to limit the high drain on the reward pool"? Is it your own reward pool you speak of.....? I'm trying to understand the details of how all the up and down votes work as far how it affects my own account and others for whom I vote as well for whom I vote as to whether or not they hold a lot of Steem or not. :) Thanks. P.S. I know not to vote at all now on posts that are older than 30 days but I do find myself reading some of them as they sometimes answer questions I have from time to time. :)
The reward pool is shared, so it is mine, yours, and everyone else's. The white paper does discuss people downvoting to reduce rewards when they feel it is appropriate.
Thanks smooth! :)
I have voted on many stories that have made it big, yet still no curation rewards. Is my account messed up?
There is a point where your account is just so small that your rewards would "round to zero".
I am glad to see you started blogging. You will get votes.
In addition to what dan said, the biggest rewards go to those that vote early but not not too early. There are a few posts that discuss the exactly mechanism, but the take away is that just because you vote on a post that makes it big doesn't mean that you will get a big cut. Even with my high SP I have voted late on some of the biggest payouts (>$10K) and still gotten almost nothing. Vote timing is critical.
First of all, great post and an awesome analysis and response to that article. I didn't even know that Steem could handle so much more than the Ethereum or Bitcoin Blockchain! That's impressive!
"There comes a point in every currency’s life where it goes from being a “scam” to being a “legitimate currency” and that point has nothing to do with technology and everything to do with users"
this statement is ON POINT.
The fear of scammers in the cryptocurrency community is absolutely ridiculous. Yes, I get that people are afraid to lose money because everything is anonymous, but whenever ANYTHING new launches, they always call it a scam first. It could be a new coin, a bitcoin miner producer or a platform like steem - everything is being criticized and hated on from the very beginning. I love cryptocurrency but this is really something that I hate about this community, all this skepticism - you always have to defend yourself! So I 100% agree with you that scam is just something that depends on the people.
As you proved in this post, there are still many major differences in opinions from Bitcoin/ethereum and Steem supporters. And while it's okay to have your own opinion, I'm starting to question if the steem-haters are actually just people who are broke and don't begrudge someone getting paid "just" for writing an article. This is pure hate/jealousy and not even something that you have to defend yourself against, it would just be a waste because thon't ears won't understand what you're saying - even after listening 10 times.
Interesting post. I think that you are right. To make steem valuable we have to produce a functional equity. That equity in a social network would be through participation and a longevity point of view. If the content is worth participating people will come, post, comment, and invest. https://steemit.com/steemit/@iamwne/persistence-approach-to-steemit-a-practical-guide
Could this app-coin be connected with steem? Or does it have to be built completely separate from it?
Unlike most cryptos, Steem was built with a current real world usage. This gives it an automatic value that is associated with the task it accomplishes... Since billions are being made from the unknowing masses in this arena, Steem has a chance to take a major market share of the future of marketing (which is really what this is)!
Scam and Ponzi scheme allegations really piss me off. One thing is to voice concerns about some supposed projected long-term obstacles, another thing is to claim dishonesty.
The truth is, steemit gave me and I will try to give back. I won't get into any games or responses obviously, but I will counter this with class, and more importantly: Truth.
Then I'll buy the ads and get more reach, and market to at the best of ability. Quite frankly, I don't know why I didn't do it before.
This is the least I can do. Somebody comes along and changes the lives of many people for the better, and you want to tag them as evil and dishonest. Sad.
Infovore was living on tiny salary and now he stands a chance. And I'm really, really happy for him. These are the things that matter.
Don't let these things slow you down, and know that there are many of us behind you. And I've said this before: Thank you.
Some of us may not agree on everything that goes on in the platform, but we all see (well most of us...I think) that steemit is much more than a cryptocurrency. What ever bugs there are they will be sorted out by the collective effort of the community.
dude 13 mins and $950 on this post...... this has to be a new record of some sort...?!
People are forced to do scam or mosheynichestvo. And the most important mosheyniki sit and brazenly deceiving us, lie and humiliate these are people for whom we are voting for ...