Steemit how can this thing be workable long term?

[magicalacademy]

Unless I missed something, I'm surprised no one mentioned that every 32 million blocks, they do a "reverse split" where they convert 10 tokens back to 1.

Are you serious?  How do they do that ?

[bones261]

Unless I missed something, I'm surprised no one mentioned that every 32 million blocks, they do a "reverse split" where they convert 10 tokens back to 1.

Are you serious?  How do they do that ?

Coding magic I guess. Just like a lot of countries with hyperinflation converted their currency, Steem will do it every 3 years.  
I'm sure the developers will be long gone by then and the web page abandoned.

[iamnotback]

Unless I missed something, I'm surprised no one mentioned that every 32 million blocks, they do a "reverse split" where they convert 10 tokens back to 1.

Are you serious?  How do they do that ?

Coding magic I guess. Just like a lot of countries with hyperinflation converted their currency, Steem will do it every 3 years.  

My understanding is they print 9 SP for every STEEM token every time they mint new tokens in a block. Why do you say every 3 years?

So this means if you hold STEEM, you have no rep power (your votes don't count) and your STEEM tokens are debased by nearly 1% per week (although this won't matter to you if the price is rising more than 1% per week).

Yet if you hold SP, you are locked in and can't sell for 2 years (you may sell 1/104th of your SP every week).

[bones261]

Unless I missed something, I'm surprised no one mentioned that every 32 million blocks, they do a "reverse split" where they convert 10 tokens back to 1.

Are you serious?  How do they do that ?

Coding magic I guess. Just like a lot of countries with hyperinflation converted their currency, Steem will do it every 3 years. 

My understanding is they print 9 SP for every STEEM token every time they mint new tokens in a block. Why do you say every 3 years?

So this means if you hold STEEM, you have no rep power (your votes don't count) and your STEEM tokens are debased by nearly 1% per week (although this won't matter to you if the price is rising more than 1% per week).

Yet if you hold SP, you are locked in and can't sell for 2 years (you may sell 1/104th of your SP every week).

Here is the wording from the white paper.

In order to compensate for the ever increasing precision, the STEEM network performs a 10:1 “reverse split” every 32,000,000 blocks (about 3 years). At this point in time all balances of STEEM are divided by 10 and all prices are multiplied by 10. Cryptocurrency exchanges will have to suspend trading around this time and update the account balances and price history to reflect the “reverse split” before resuming trading.

All rounding errors will be in favor of the network. Every balance may lose up to 0.009 STEEM due to rounding, but this amount of STEEM should be economically insignificant. Collectively all holders of SP will lose at most 0.009 STEEM.

[magicalacademy]

Unless I missed something, I'm surprised no one mentioned that every 32 million blocks, they do a "reverse split" where they convert 10 tokens back to 1.

Are you serious?  How do they do that ?

Coding magic I guess. Just like a lot of countries with hyperinflation converted their currency, Steem will do it every 3 years.  
I'm sure the developers will be long gone by then and the web page abandoned.

Same as in Mr_Robot when they wipe all the debt monies off the face of the planet.

This is interesting tho, cuz you can't do this shit in real life with physical currencies. Actually it is illegal to do it. Code allows you to do some crazy things.

Just read their doc, apparently 1/10 of the coins will be wiped every time supply hits 5b. As time goes by, SP holders will hold a lot more coins than actually exist, in other words they won't be able to cash out.

[iamnotback]

Here is the wording from the white paper.

In order to compensate for the ever increasing precision, the STEEM network performs a 10:1 “reverse split” every 32,000,000 blocks (about 3 years). At this point in time all balances of STEEM are divided by 10 and all prices are multiplied by 10. Cryptocurrency exchanges will have to suspend trading around this time and update the account balances and price history to reflect the “reverse split” before resuming trading.

All rounding errors will be in favor of the network. Every balance may lose up to 0.009 STEEM due to rounding, but this amount of STEEM should be economically insignificant. Collectively all holders of SP will lose at most 0.009 STEEM.

Ah that is probably some bullshit from Dan trying to save a few bytes in each block chain transaction, so he doesn't have enough precision on the value and has to manually recalibrate precision.

What a fucktard designer of technology.

[iamnotback]

Is steem.it really profitable to Bloggers?  

From what i have seen so far, yes it is. Buying steem power tho could end up being a terrible idea, even more so if steem team has a fat steem stash that they could sell while you are left holding the bag with your steem power locked monies.

They are adding 3000 signups per day. These new bloggers dilute the available money for payout which is roughly 3.875% of the marketcap per year (actually less than that, was $2 million total recently). This 3.875% is shared amongst all bloggers, so as the number of bloggers increases, if the market cap doesn't increase proportionally, then the payouts decrease.

Also the payouts are mathematically structured such that the most popular get quadratically more payouts than the average ones. So there are some blog posts with $100s of payouts, but the average is only a few dollars each (many only $0 or pennies per blog). And these payouts will decline per the math I showed.

Eventually there will be many pissed off SP investors (who can't sell while the price is crashing) and many pissed off bloggers who don't earn what they expected to earn.

It is not suprising that 3000 bloggers per day are rushing to signup to get their free $10 of STEEM. Because blogging is not a very profitable job any more in the general case (posting photos yourself and your vacation, nobody gives a fuck to pay for that). So by showing these $100s payouts for the few most popular blog posts, Steemit is creating a false expectation of hype that blogging has suddenly become an easy profitable endeavor. This has implosion of the fantasy written all over its future.

Dan is going to destroy the image of crypto-currency is the minds of bloggers. Their first exposure to CC will be being sucked into a lie.

[smooth]

Smooth seems to have found a way to game the system

Look at his balance https://steemit.com/@smooth/transfers

He already owns $ 5 Millions at today's market price. Insane.

He acquired nearly 1% back during the "sneaky mine" phase. You can understand why he wasn't willing to attack this coin the way he normally attacks pump and dump scams. That $millions bought his "I am not omniscient about the potential future not being a disaster" attitude.

Btw, smooth is cashing out roughly $50,000 per week. (assuming your $5m valuation of his SP is correct)

Is that a meritocracy 

You can see why he would have an incentive to not speak about how it will be a disaster for those who invest in SP now (requires a 2 year lock up cashed out over 104 weeks), while he is cashing out every week. Chaching. Fools please buy Steemit and give your money to smooth.

I did not ever tell anyone to invest in Steem. I think the long term prospects for the value of the token are not great. I've told the developers of Steem that. I've told people on my crypto social circle that. I've posted that. I don't know what more I can do. I did not support the sneaky-mine and said at the time that I would not promote the coin to crypto speculators (although kind of an easy promise to make since I never promote any crypto coins -- my best guess is all going to zero, though at different rates). It was, however, far more transparent and than the Dash instamine or the Bytecoin hidden premine. For the record, when I first stated that opinion (after the initial mining) it was worth approximately nothing, so the the alleged current market value has changed nothing here.

That said, I also do not think it necessarily will with certainty go to zero, and people can do their own analysis and reach their own conclusions. Hell, even Auroracoin and other pure garbage (nothing person to Auroracoin devs) still has some value. Steem has more merit than that.

[iamnotback]

I did not ever tell anyone to invest in Steem. I think the long term prospects for the value of the token are not great. I've told the developers of Steem that. I've told people on my crypto social circle that. I've posted that. I don't know what more I can do.

I suppose reiterating here is good for disclosure, given you are somewhat a public figure.

I just wish you had made me aware of your open mind about profiting any way we want to, because I thought you were much more dogmatic in the past.

I am actually a free market anarchist, so I can't fault you for what you've done. Actually I must admire it. But I just feel you need to be consistent, so that we know how to interface with you.

Also I think you could help by speaking frankly about the meritocracy of the fact that you could get $50,000 a week for basically a very minimal effort. You could perhaps influence some speculators and newbies to think carefully about what types of projects they want to support. Without being too dogmatic, just about the value of meritocracy.

I did not support the sneaky-mine and said at the time that I would not promote the coin to crypto speculators (although kind of an easy promise to make since I never promote any crypto coins -- my best guess is all going to zero, though at different rates). It was, however, far more transparent and than the Dash instamine or the Bytecoin hidden premine. For the record, when I first stated that opinion (after the initial mining) it was worth approximately nothing, so the the alleged current market value has changed nothing here.

That said, I also do not think it necessarily will with certainty go to zero, and people can do their own analysis and reach their own conclusions. Hell, even Auroracoin and other pure garbage (nothing person to Auroracoin devs) still has some value. Steem has more merit than that.

What is the merit of Steem? It is a premeditated pyramid. Designed to be so. How can we reach an alternative conclusion? By what math and analysis? Dan et al are not dumb. They computed all this.

[magicalacademy]

Is steem.it really profitable to Bloggers?  

From what i have seen so far, yes it is. Buying steem power tho could end up being a terrible idea, even more so if steem team has a fat steem stash that they could sell while you are left holding the bag with your steem power locked monies.

They are adding 3000 signups per day. These new bloggers dilute the available money for payout which is roughly 3.875% of the marketcap per year (actually less than that, was $2 million total recently). This 3.875% is shared amongst all bloggers, so as the number of bloggers increases, if the market cap doesn't increase proportionally, then the payouts decrease.

Also the payouts are mathematically structured such that the most popular get quadratically more payouts than the average ones. So there are some blog posts with $100s of payouts, but the average is only a few dollars each (many only $0 or pennies per blog). And these payouts will decline per the math I showed.

Eventually there will be many pissed off SP investors (who can't sell while the price is crashing) and many pissed off bloggers who don't earn what they expected to earn.

It is not suprising that 3000 bloggers per day are rushing to signup to get their free $10 of STEEM. Because blogging is not a very profitable job any more in the general case (posting photos yourself and your vacation, nobody gives a fuck to pay for that). So by showing these $100s payouts for the few most popular blog posts, Steemit is creating a false expectation of hype that blogging has suddenly become an easy profitable endeavor. This has implosion of the fantasy written all over its future.

Dan is going to destroy the image of crypto-currency is the minds of bloggers. Their first exposure to CC will be being sucked into a lie.

Steemit's incentives creates a very unatural vibe, you end up with a situation where people will do anything for monies. Users don't speak their mind for fear of being downvoted but don't care about exposing their personal lives. Then you have ghost threads because there is no incentives to answer to it..users that otherwise would have helped their fellow human now won't bother wasting their time with a $0 thread.

 

[magicalacademy]

Smooth seems to have found a way to game the system

Look at his balance https://steemit.com/@smooth/transfers

He already owns $ 5 Millions at today's market price. Insane.

He acquired nearly 1% back during the "sneaky mine" phase. You can understand why he wasn't willing to attack this coin the way he normally attacks pump and dump scams. That $millions bought his "I am not omniscient about the potential future not being a disaster" attitude.

Btw, smooth is cashing out roughly $50,000 per week. (assuming your $5m valuation of his SP is correct)

Is that a meritocracy  

You can see why he would have an incentive to not speak about how it will be a disaster for those who invest in SP now (requires a 2 year lock up cashed out over 104 weeks), while he is cashing out every week. Chaching. Fools please buy Steemit and give your money to smooth.

I did not ever tell anyone to invest in Steem. I think the long term prospects for the value of the token are not great. I've told the developers of Steem that. I've told people on my crypto social circle that. I've posted that. I don't know what more I can do. I did not support the sneaky-mine and said at the time that I would not promote the coin to crypto speculators (although kind of an easy promise to make since I never promote any crypto coins -- my best guess is all going to zero, though at different rates). It was, however, far more transparent and than the Dash instamine or the Bytecoin hidden premine. For the record, when I first stated that opinion (after the initial mining) it was worth approximately nothing, so the the alleged current market value has changed nothing here.

That said, I also do not think it necessarily will with certainty go to zero, and people can do their own analysis and reach their own conclusions. Hell, even Auroracoin and other pure garbage (nothing person to Auroracoin devs) still has some value. Steem has more merit than that.

Hey dude! Why do you waste your time jutifying yourself to nerds on a crypto forum when you could be in your private yacht sipping mojitos with lots of bitches ! Tell us all to fuck off and go spend your millions! That's what i would do anyway.

[iamnotback]

Hey dude! Why do you waste your time jutifying yourself to nerds on a crypto forum when you could be in your private yacht sipping mojitos with lots of bitches ! Tell us all to fuck off and go spend your millions! That's what i would do anyway.

+1

Lol. I must agree. (as long as he is confident he has cleared any potential legality issues)

[smooth]

Also I think you could help by speaking frankly about the meritocracy of the fact that you could get $50,000 a week for basically a very minimal effort. You could perhaps influence some speculators and newbies to think carefully about what types of projects they want to support. Without being too dogmatic, just about the value of meritocracy.

The irony is, the more I would talk about this, the more harm it would do. Like pro ball players visiting schools and telling kids to study in school and not plan on being pro ball players. The effect is very likely the opposite. Yeah, I was clever and somewhat lucky (though the paper value of this asset doesn't really mean much, so I wouldn't overstate things). Doesn't mean others should try to do the same, but we all know they will.

I don't think it is entirely a premeditated pyramid, I think they actually believe they can establish a large network effect by bringing a very large number of people into the crypto ecosystem in a way that nothing else ever has (in fact it has already achieved a significant percentage of this, and reached demographics previously entirely unreached). The post rewards will likely fall, as we agreed earlier, but paying a fraction of the market cap as a pool for new content does indeed scale both up and down. If the rewards get too small and people stop posting then rewards per post will increase. It is self correcting, as long as there is enough network effect for people to want to remain  part of the system at all, thereby supporting the market cap, which is a very uncertain prospect, but not implausible.

Hey dude! Why do you waste your time jutifying yourself to nerds on a crypto forum when you could be in your private yacht sipping mojitos with lots of bitches ! Tell us all to fuck off and go spend your millions! That's what i would do anyway.

I'm pretty happy with my life, so I see not changing much, and that's assuming this were even real money and not some illiquid asset that is always a threat to quickly return to the value it came from.

[iamnotback]

Also I think you could help by speaking frankly about the meritocracy of the fact that you could get $50,000 a week for basically a very minimal effort. You could perhaps influence some speculators and newbies to think carefully about what types of projects they want to support. Without being too dogmatic, just about the value of meritocracy.

The irony is, the more I would talk about this, the more harm it would do. Like pro ball players visiting schools and telling kids to study in school and not plan on being pro ball players. The effect is very likely the opposite. Yeah, I was clever and somewhat lucky (though the paper value of this asset doesn't really mean much, so I wouldn't overstate things). Doesn't mean others should try to do the same, but we all know they will.

I don't think it is entirely a premeditated pyramid, I think they actually believe they can establish a large network effect by bringing a very large number of people into the crypto ecosystem in a way that nothing else ever has (in fact it has already achieved a significant percentage of this, and reached demographics previously entirely unreached). The post rewards will likely fall, as we agreed earlier, but paying a fraction of the market cap as a pool for new content does indeed scale both up and down. If the rewards get too small and people stop posting then rewards per post will increase. It is self correcting, as long as there is enough network effect for people to want to remain  part of the system at all, thereby supporting the market cap, which is a very uncertain prospect, but not implausible.

I had already argued to you (and CoinHoarder) in the other thread that the equilibrium is more likely to settle on those who are willing to blog for the least amount of $, i.e. on very low quality blogging. Or a few number of blog posts getting very high payouts and the rest getting nearly nothing. Either way a very low quality content site result.

One salient factor is there is no incentive to hold SP thus the few people with voting power will eventually get tired of curating. It is entirely the wrong economic model to disincentivize curating by forcing people to lockup their tokens for 2 years in order to participate in the very small curator rewards (up to 3.875% per annum of you SP holding on average).

Well I suppose Dan can hire curators and seed them with SP power. So he can just take over rewarding 3.875% of the market cap to pay for content and choose the content he likes.

But then why would investors want to hold it?

If there is no income model, there is no way to project a P/E. What is the valuation based on?

A business based on diluting the investors to pay people to blog is offering what profit model for investors?

[smooth]

Also I think you could help by speaking frankly about the meritocracy of the fact that you could get $50,000 a week for basically a very minimal effort. You could perhaps influence some speculators and newbies to think carefully about what types of projects they want to support. Without being too dogmatic, just about the value of meritocracy.

The irony is, the more I would talk about this, the more harm it would do. Like pro ball players visiting schools and telling kids to study in school and not plan on being pro ball players. The effect is very likely the opposite. Yeah, I was clever and somewhat lucky (though the paper value of this asset doesn't really mean much, so I wouldn't overstate things). Doesn't mean others should try to do the same, but we all know they will.

I don't think it is entirely a premeditated pyramid, I think they actually believe they can establish a large network effect by bringing a very large number of people into the crypto ecosystem in a way that nothing else ever has (in fact it has already achieved a significant percentage of this, and reached demographics previously entirely unreached). The post rewards will likely fall, as we agreed earlier, but paying a fraction of the market cap as a pool for new content does indeed scale both up and down. If the rewards get too small and people stop posting then rewards per post will increase. It is self correcting, as long as there is enough network effect for people to want to remain  part of the system at all, thereby supporting the market cap, which is a very uncertain prospect, but not implausible.

I had already argued to you (and CoinHoarder) in the other thread that the equilibrium is more likely to settle on those who are willing to blog for the least amount of $, i.e. on very low quality blogging. Or a few number of blog posts getting very high payouts and the rest getting nearly nothing. Either way a very low quality content site result.

One salient factor is there is no incentive to hold SP thus the few people with voting power will eventually get tired of curating. It is entirely the wrong economic model to disincentivize curating by forcing people to lockup their tokens for 2 years in order to participate in the very small curator rewards (up to 3.875% per annum of you SP holding on average).

I don't disagree there are issues with the model, even big ones, but that doesn't guarantee failure. The model can be changed. Other factors may turn out to me more important. The world doesn't work like, "Oh, found a flaw, it's over!"

The way I see it, all this is out in the open, no one is being misled. People can do their own analysis and reach their own conclusions.

[iamnotback]

I don't disagree there are issues with the model, even big ones, but that doesn't guarantee failure. The model can be changed. Other factors may turn out to me more important. The world doesn't work like, "Oh, found a flaw, it's over!"

The way I see it, all this is out in the open, no one is being misled. People can do their own analysis and reach their own conclusions.

I was adding to my prior post before you replied.

Every business is based on income - expenses = profit. What is the possible profit model of Steemit? We already showed that advertising funded can't even support paying the bloggers sufficiently, thus can't leave any profit for the investors.

People are not using Steemit because they love the site for some reason that has nothing to do with making money. They are using it because they love anything when they think they are making money doing something easy.

So where is this money going to come from to pay all the vested interests?

There is no business model here. Zilch.

You say they can maybe change to something else which is profitable. What could that be? If they knew what that was, then why they haven't mentioned it.

My guess is they want to try to get some fraction of these signups to try Peertracks. Perhaps they hope to create some relationship between artists and their fans. Last time I read about Peertracks it seemed to be talking about artists will sell shares to their fans. Fans become investors in musicians.

http://peertracks.com/

They want to turn musicians into corporations with public stock offering.

Problem is that I learned that the demographic overlap between disparate activities is very poor. So if that is their plan, it will fail very miserably. Most bloggers won't be interested.

Edit: but if per jeffthebaker's post below, Steemit is really just people gaming the system, not really bloggers per se, then perhaps Peertracks will be another pumping game fit to their interests.

[jeffthebaker]

I joined Steemit the very first day. I've used it a bit and checked back occassionally since. There are plenty of flaws with Steemit that goes beyond the obvious pumpNdump/pyramid/inflation/whatever you want to call it economic problems.

The problem with a platform like Steemit is it caters to the okayest and the most, not the best. What I mean by this is the way the voting/payment system works, everyone is looking for the most "good" content to upvote, because others will upvote it as well. Tits and walls of text are dominating trending day in and day out. You can read these posts, and many of them are riddled with errors and generally average quality. Why? Because everyone involved is there to make a profit (look at the dozens of monetization guides that get voted to the top). It's not about having something new, thought provoking, or different, it's about circlejerking anything and everything that the community can agree is worthy of votes.

The result is a feedback loop and a subsequent echochamber of the same recycled garbage over and over again under new names. Steemit claims to seek to provide a curated news source. That isn't going to happen because the only things getting votes will be in line with the community's opinions. FFS, look at how every other god damn post is an introduceyourself post. There is no value in this platform other than getting rich off of the efforts of others. It's a top heavy ecosystem and everyone disillusioned with the thought that they can make money are lining the pockets of the dev team and the top posters/botters.

[magicalacademy]

If 1/10 of the supply is being wiped every 3 years then we have a problem cuz SP tokens will only be backed by 0.1 steem.

[smooth]

My guess is they want to try to get some fraction of these signups to try Peertracks. Perhaps they hope to create some relationship between artists and their fans. Last time I read about Peertracks it seemed to be talking about artists will sell shares to their fans. Fans become investors in musicians.

http://peertracks.com/

Steemit has literally nothing to do with peertracks afaik. Different team, different code, different target market.

[iamnotback]

I joined Steemit the very first day. I've used it a bit and checked back occassionally since. There are plenty of flaws with Steemit that goes beyond the obvious pumpNdump/pyramid/inflation/whatever you want to call it economic problems.

The problem with a platform like Steemit is it caters to the okayest and the most, not the best. What I mean by this is the way the voting/payment system works, everyone is looking for the most "good" content to upvote, because others will upvote it as well. Tits and walls of text are dominating trending day in and day out. You can read these posts, and many of them are riddled with errors and generally average quality. Why? Because everyone involved is there to make a profit (look at the dozens of monetization guides that get voted to the top). It's not about having something new, thought provoking, or different, it's about circlejerking anything and everything that the community can agree is worthy of votes.

The result is a feedback loop and a subsequent echochamber of the same recycled garbage over and over again under new names. Steemit claims to seek to provide a curated news source. That isn't going to happen because the only things getting votes will be in line with the community's opinions. FFS, look at how every other god damn post is an introduceyourself post. There is no value in this platform other than getting rich off of the efforts of others. It's a top heavy ecosystem and everyone disillusioned with the thought that they can make money are lining the pockets of the dev team and the top posters/botters.

I should have realized that because the more high reputation votes on a post that one votes on, the more curation reward they receive. Thanks. That is the most astute post I've read. Thus as you say, it becomes all about the game and not some other quality of the content, thus the content will become dysfunctional w.r.t. (unrelated) to any criteria other than the game.

And this result will apply to their plans for Peertracks also. It won't be about the quality or social diverse matching of the music. It will be about driving pumps to shares.

Steemit has literally nothing to do with peertracks afaik. Different team, different code, different target market.

They used the Graphene block chain. I figured maybe the back dealings are closely affiliated. Maybe not.

The pumping shares of musicians had Dan's fingerprints on it. He always designs these weird Rube Goldberg machines that do strange economic incentives.

If this fails magnificently as it looks like it probably will, then should be Dan's final curtain call in crypto. This will pretty much firmly establish his reputation as a kook (which I already pretty much suspected based on some of his bizarre ideas and designs when we used to converse on this forum in 2013 ... which CoinHoarder thinks is me being jealous but rather it is just me evaluating if Dan is worth my attention or not...).

Obviously smooth was much more pragmatic (he could careless if Dan is a kook or not as it is irrelevant to what he extract from it) and just mined when he saw the opportunity to mine. I have never been a miner and not focused on looking for altcoins to mine.