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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This post received a 3.7% upvote from @randowhale thanks to @ura-soul! For more information, click here!
Excellent and important post @ura-soul. I do hope the upper echelons of steemit read this. [resteemed to get the message out there a bit further]
I am sure (hope) they are aware of the threats you mention and already in discussion to fend off some of the coming challenges to the platform.
I do believe the biggest threat to steemit is 'corporate invasion'.
In another part of my life I have worked as a consultant for various large marketing groups in the tourism sector advising them how to make the most of various social media platforms.
Even though I have only been on steemit for a couple of months I believe from what I have learnt already I could write for those clients a very effective one page brief on how to assert significant influence, and become a dominant brand, on steemit. And the money they would need to achieve that would be pocket change for their marketing budgets.
And I am sure the older hands of steemit could provide an even smarter plan of action to achieve those ends than I can so far.
I fear there are not sufficient 'defence mechanisms' on steemit to prevent this. Of course some on steemit might say we do not need these defence mechanisms as we do not need to keep the 'corporates / influencers' out...
[PS I am not planning to write that brief for any of my clients, and besides everybody likes a holiday in the sun, don't they 😉]
Yes, I do like a holiday in the sun - thanks for your offer of buying me one! ;)
I imagine that if corporations attempt to dominate here then people will just create new apps with different rules and people will migrate to those apps, so if Steemit is going to prosper as truly a service for 'the people' then , yes, consideration needs to be given to this threat.
very insightful. thanks for sharing. The questions you have posed are very interesting and thought provoking. I have resteemed
Thanks for your support!
Thank you for this analysis @ura-soul. You've given me much food for thought.
One question I've had since I signed up just a few weeks ago is 'Why doesn't steemit have a filter for the lengths of posts in terms of written content?' like a word count filter.
It's disheartening to spend a few hours writing and then see the post being drowned out by fifty 2 liner posts within seconds. Makes one (me) think that there's no point in putting my heart into something nobody will see, let alone comment and upvote on unless I stick around for a long time 'hoping' to gain some traction. I don't want to become a 2 liner meme-muppet, but my rational mind is telling me to do so if I can 'benefit' equally, and I kinda have been leaning that way in last few days tbh. Of course, I understand everyone and anyone can pretty much post whatever they like, but I'd also like to be able to 'find' stuff I like too, without scouring through the resteems of people whose content I value. I hope this didn't sound negative, 'cause I love the general idea behind this and am hoping it does succeed and not become drowned out in one way or another. Dunno.
One way around the problem is to split your post into a series, which will give you a greater potential for people to see your posts. Just make sure to maintain an index in your posts - as I do in my ongoing, popular Whistleblower series.
Thanks for the tip. Will do from now on, and 'try' to enjoy the process, let go of expectations etc. Thank you for your service to this community :)
You are welcome - injoy!
Awesome to see someone addressing the real concerns and threats to the steemit platform. I go back and forth on how much I believe in the future of this project. I'm considering an investment on the next large pullback, but don't know how long term it will be due to the considerable risks outlined here. Personally, Steemit can be enjoyable, but just seems to be more luck based and self-serving oriented than I had previously thought. It's become increasingly more difficult to put hours of thoughtful research into something that may net me a few bucks when I could use that time researching stocks, coins and reading useful information. Either way it's a fun idea and I can see why others do get so fired up about it. I just feel like the problems that do need fixing might not get addressed. Who knows though, hopefully, I'm wrong and all the spam and exclusive self-voting gets cleaned up.
You missed a few threats:
User adoption falls off as new users realize probability of reward very little without powering up for a significant investment (4 to 5 figures).
User attrition accelerates as Steemians who have been here 2-3 months see their rewards dried up.
HF20 doesn't address the self-voting problem, where all accounts of medium to whale level SP are incentivized to click on their own posts, or their own circle of friends, and the average user needs incredible luck to see any rewards.
Whales start powering down and crashes the price (you had price crash in there but didn't mention how)
Copyright infringement risks causes Steemit to have to devote excessive resources to edit posts / deal with takedown notices
Copyright infrignment liability if sued by major publisher will create a lot of uncertainty and doubt in Steemit's future. For exampe, see https://steemit.com/steemit/@tommymindtrick/the-steemit-sandbox-puts-us-all-at-risk-due-to-ewhoring
Thanks - yes, there are potentially many other points I didn't touch on.
I'm not sure I agree with your first point since I've been getting decent payouts since I only had a few hundred steem and I didn't buy any of it. The site is intended to reward quality content and for solving problems - I think if users actually do that then they can thrive. It's a good challenge and inspiration to be able to test your ideas against a captive audience of readers and thinkers in this way.
I have seen that some of the whales have been powering down for a while, but I'm not sure that has effected the price of steem to a problematic level or not - I appreciate they could all pull out at any moment, but that would equal a general catastrophic loss of confidence in Steemit for some reason that would probably have a different ultimate cause than just their own personal need for cash.
I agree about Copyright and general legal issues - my exploration of this theme so far has only led me to the answer that 'the founders don't really care about the law'. lol.
Great literature for newbees. Thanks for the tutorial
You are welcome!
Good post. Great thought put into that!
Thanks!
Great post, I don't even know where to begin. Let me just say this, we have the edge and we need to take Steemit to the top! Thanks for putting this great detailed post together and bringing more awareness on these subjects to the community.
Thanks - You are welcome!
A lot to think about for sure and being new here I don't have a ready answer, I would hope the community would come together.. Shared..
That's ok - thanks for your support :)
This post has received a 11.15 % upvote from @booster thanks to: @ura-soul.
Good post.. very interesting...
Good post, but frankly I'm more worried about what will happen in the short term, in a years time Steemit will either be here or it won't, if it is, I plan to be writing always, so I will every week have more SP, this SP will be giving me interests so in one year I will have a nice amount, if Steem price sky rockets I will have some good money if it doesn't I won't. These are imponderables so I don't worry about them, now what happens in 1 or 2 weeks yes, because if I need money in 2 weeks I would like Steem to be valued as high as possible. So I really am not the type of person that thinks that far ahead, I find it too complicated.