Steem pyramid scheme revealed

[universe_]

So this is the first pyramid scheme that costs nothing to get in on.

coool

well it costs something if you want to invest into it and it actually might be a great designed pyramid scheme though i doubt there is enough clues

[lfo]

These are the reasons why crypto will never make it without real grownups steering the ship.

[iamnotback]

Steem goes Kaboom (well let's just say the rewards really need to be an onboarding gimmick and not the be-all and end-all of Steem):

https://steemit.com/steem/@anonymint/blog-rewards-can-t-be-widely-distributed

Hopefully this post will be one everyone can refer to when people complain about the distribution of rewards. (Assuming I haven't made any huge errors in my thought process)

I am not 100% sure this is kaboom for Steem, as indicated in the concluding section. It just sheds some light on the delusion that everything can be a perfect nirvana. There are apparently intractable tradeoffs in doing air drops this way.

In the comments, so far we are emphasizing the positive Tl;dr. I like that! Nice result so far to see people getting it and taking a positive realistic outlook.

[iamnotback]

Steem will implode on its own...

Let's see if he makes a profit on that blog post. I upvoted him. I presume the whales will also. I am front running the whales to increase my curation rewards.

How can you be so sure that he will give the prize by randomly picking up the winner and not claiming the giveaway by his own alt twitter accounts ? Unless there is a way to verify he is not cheating,the give-away is fake.

Of course it is scam. I was waiting to see who would realize it. And I am expecting some whales to upvote it because they are too rushed to be good curators.

And it is great it is turning Steem into a spammer. Soon everyone will become callous to the Steemit name and incessant spamming about getting paid to blog. Most people inherently know it is a scam. Nobody can pay the masses to blog. Steem is a lying system.

[serejandmyself]

The fud is all over the place (insert a puke smily face here)

[mtnsaa]

The whole thing is clearly a very elaborate scheme. There's no real demand to buy Steem from anyone if you think about it. Content creators and curators create their own and can cash out. But who buys Steem? Gullible people and speculators, that alone can't keep the price up forever.

Steem the currency has no value in my opinion, content may have value so one can argue SP itself has some value. However SP is basically the same as Steem, it just dilutes at a much slower pace. The site can work exactly the same without anyone buying Steem. And that's what really makes the wheel turn. If no one buys Steem anymore and goes back to 1 cent, the whole thing collapses, the big payouts stop and that's it.

They should've made a deal with some marketing company or other sponsors to keep the price of Steem stable every month, that would make more sense.

[MWD64]

The whole thing is clearly a very elaborate scheme. There's no real demand to buy Steem from anyone if you think about it. Content creators and curators create their own and can cash out. But who buys Steem? Gullible people and speculators, that alone can't keep the price up forever.

Steem the currency has no value in my opinion, content may have value so one can argue SP itself has some value. However SP is basically the same as Steem, it just dilutes at much slower pace. The site can work exactly the same without anyone buying Steem. And that's what really makes the wheel turn. If no one buys Steem anymore and goes back to 1 cent, the whole thing collapses, the big payouts stop and that's it.

They should've made a deal with some marketing company or other sponsors to keep the price of Steem stable every month, that would make more sense.

+100

[DecentralizeEconomics]

The whole thing is clearly a very elaborate scheme. There's no real demand to buy Steem from anyone if you think about it. Content creators and curators create their own and can cash out. But who buys Steem? Gullible people and speculators, that alone can't keep the price up forever.

Steem the currency has no value in my opinion, content may have value so one can argue SP itself has some value. However SP is basically the same as Steem, it just dilutes at a much slower pace. The site can work exactly the same without anyone buying Steem. And that's what really makes the wheel turn. If no one buys Steem anymore and goes back to 1 cent, the whole thing collapses, the big payouts stop and that's it.

They should've made a deal with some marketing company or other sponsors to keep the price of Steem stable every month, that would make more sense.

What are you trying to do?  STOP IT!  If people keep reading things like this then NOBODY will buy Steem and the Larimers and their Chinese Communist backers won't be able to make big monies pimping out their "Steem Girls".  This is totally not a pyramid scheme guise... srsly... this is going to revolutionize smut 2.0 blockchain technology everywhere.  I'm just going to say it... it's practically genius.  Creating a highly inflationary currency which you and your cohorts control 99.99%, and then you pay some bimbo trash in this currency to lure in suckers who you attempt to convince that it's highly valuable, while you are cashing out at every moment you can.  It's really crafty, because even though everyone has restrictions on selling, you own such a significant amount of Steem, that even if you manage to cash out a quarter of it, you've still made millions.  Who else besides the Larimers could think up such an ingenious plan?

[iamnotback]

@dantheman (Daniel Larimer) upvoted my blog post, but as expected no other whale did:

This is a very insightful piece and a quality discussion as erupted. We are well aware of the limits of the system and are actively working toward a solution that could completely revolutionize the effectiveness of award distribution while mitigating the impacts of misbehaving whales.

Apologies I didn't immediately see your comment. Ah I had just finished commenting that I was pleasantly surprised that you upvoted my blog post. I didn't expect any whale to upvote it.

It is great that you are open to constructive criticism. And that you recognize the value of the blog posts which erupt into discussion, because I believe the highest valued content are those that increase engagement and foment sub-communities.

My blog post is also trying to help people understand that the options available for the design are difficult. It is not any diabolical master plan. Since you and I used to debate long ago in 2013 at Bitcointalk.org, you've been trying to find a way to onboard the masses to crypto-currency. Now you have something which is sort of working and has made a big splash, but there are still big challenges remaining in order to make this scale and diversify out.

I am very active in thinking about possible design improvements and tweaks, as I am sure are all of you who are already developers for the Steem ecosystem.

[DecentralizeEconomics]

@dantheman (Daniel Larimer) upvoted my blog post, but as expected no other whale did:

This is a very insightful piece and a quality discussion as erupted. We are well aware of the limits of the system and are actively working toward a solution that could completely revolutionize the effectiveness of award distribution while mitigating the impacts of misbehaving whales.

Apologies I didn't immediately see your comment. Ah I had just finished commenting that I was pleasantly surprised that you upvoted my blog post. I didn't expect any whale to upvote it.

It is great that you are open to constructive criticism. And that you recognize the value of the blog posts which erupt into discussion, because I believe the highest valued content are those that increase engagement and foment sub-communities.

My blog post is also trying to help people understand that the options available for the design are difficult. It is not any diabolical master plan. Since you and I used to debate long ago in 2013 at Bitcointalk.org, you've been trying to find a way to onboard the masses to crypto-currency. Now you have something which is sort of working and has made a big splash, but there are still big challenges remaining in order to make this scale and diversify out.

I am very active in thinking about possible design improvements and tweaks, as I am sure are all of you who are already developers for the Steem ecosystem.

Yeah... he may have given you a consolatory upvote, but the real question is.... Has he stopped selling?

[iamnotback]

Stuck between a rock and a hard place. Damned if they do, and Dan'med if they don't:

This means that whales need to spread their votes across 1000 times as much content as normal users or refrain from voting all together.

Unfortunately, I think this suggestion will enable the vulnerability that allows pacts to form that can game the voting system.

Afaics, the design is stuck between a rock and a hard place. Damned if you do, and Dan'med if you don't. (Lol just humor, no offense)

The finite limits of whale attention limits the scalability of reward distribution.

And the finite cognitive bandwidth limit, as the diversity of communities outstrips a whales' engagement and understanding.

Some savvy whales, such as @smooth, are actively hiring people to process content and vote on their behalf.

I think that is a mistake, not only for the reason I stated above, but also because it places a slow-moving, rigid top-down mgmt structure on the spontaneous formation of new communities within the ecosystem. I've been having many discussions with @smooth and unfortunately I have observed that @smooth was the moderator (censor!) for the Monero Speculation thread on BCT and he seems to relish a role as a top-down censor. I hate censorship (meaning any top-down influence on content). I believe in self-forming coteries and the highest degrees-of-freedom.

The root of all authority must be derived from stakeholder Steem Power or Sybil attacks will quickly undermine the algorithm.

But can't stake be Sybil attacked by free signup "air drop" accounts?

you let each account link to other accounts that they trust to allocate funds and curate content then the result is a massively recursive delegated voting system. Allowing links to have positive and negative weights means that everyone has the power to contribute to filtering the “good” people from the “bad” people.

Yes a Web of Trust (WoT) is a self-forming coterie and is normally a solution, but the problem is you are taking the funding from the globalized debasement, thus the WoT can be gamed because that globalized resource will always be a winner-take-all power vacuum vulnerability. It appears to be fundamental, but I am open to hearing about novel solutions.

So long as there are many more “good” people than “bad” people, the bad actors are quickly neutralized by having more negative links than positive links.

Problem again is the air drops can be Sybil attacked. And even real people can enjoin pacts to achieve the winner-take-all because those who don't will be at a disadvantage. In a very abstract way it is analogous to selfish-mining.

Once we have limited the number of links it is simply a matter of spreading the calculation over time and prioritizing calculations that will effect the biggest changes. So long as the rate at which links can change is slower than the rate at which the algorithm can reach equilibrium then on average the network will remain close enough to equilibrium to accomplish the desired goal.

Perhaps use the Follows list. I am not disputing the power of a WoT, but that localization of discernment power is game theoretically subverted (destroyed) once you use it to award a redistibution from the collective. Essentially you are conflating popularity and local preferences.

[alpesvillage]

Steem is crashing nowadays, it is worthless at all. Many retarded use this system to cheat free money, shame on them, especially bts founder dan

There was just a weekly power down that occurred which makes ~1% of the SP liquid. So perhaps this is generating selling demand.

Does anyone know where the powered down SP goes? Into STEEM or STEEM DOLLARS?

Since you know there is selling demand, you should know that it is into STEEM, and the price shows the thing. 

[generalizethis]

Here's the value: for $49 you get the amazon experience, shop around and you get a decent pencil set + sketchbook for $20-$25...

https://steemit.com/life/@generalizethis/learning-to-draw

(bloggers are good at two things: making your life more interesting [that's very subjective] or more efficient (sometimes both)--this is a competition for Bloggers as brand)

[iamnotback]

This is what I've been trying to explain to @smooth:

Organic growth is essential. This means that the users come to the site for what drives a long-term growth of the value of the activity on the site.

Users are enticed to come to the site to figure out how to game it for money:

• Authors figuring out how to game the "circlejerk" groupthink that is created by the concentration of voting power (and this voting power is necessarily concentrated per the logic on my blog post).
• Curators figuring out to frontrun (game) the same groupthink.
• Looming prospect of pacts forming as it becomes evident that it is a "last man out the door" dilemma.

Afaics there is virtually no energy spent on actually trying to write for divergent communities (and if you do you are penalized), because there is no economic reward for doing so. I will probably only earn ~$250 for this blog post even though I've invested perhaps the most effort in it of all my blogs (note I wrote this blog not for earning but because I want to discuss this important issue), and some clickbait opportunist who messed up the math from my prior blog post earned $4000 (double what I earned in my correct blog post). So many examples where gaming the groupthink is transferring outsized rewards to content that doesn't really focus on any community strongly but is able to fool whales into thinking it has wide appeal. Wide appeal is not organic engagement!

The problem is the design did not incentivize organic growth of the activity of forming communities of like-minded interests. That was never contemplated in the design of the system as far as I can see from reading the white paper.

I also can't say I've seen the vulnerabilities in #2 manifest in terms of pacts amongst whales just yet. Of course it is possible. It certainly would be in tune with what happens in the rest of crypto.

When and if it becomes apparent that the option of whales working together to build something is not possible because of flaws in the design, then the first whale to defect and start paying kickbacks to slave authors in order to accelerate his cashout rate, will set off a monkey-see-monkey-must-copy effect, because nobody wants to be left holding the bag.

I don't know when or if that will happen, but it seems game theoretically inevitable unless some other factor overwhelms (or if I have a mistake in my understanding of the game theory).

However it would be so transparent and foolhardy, that I struggle to believe anyone can be that short-sighted, especially given the inroads Steemit is making into the social media space in such a short space of time.

I am also very excited and enthused to see so many people joining and especially the high proportion of females. But I also am fearful that this could be a big bust and perhaps even cause those females to (become wary and) run away from blockchain stuff in the future. We not only have a big opportunity but also a huge responsibility to not mess it up.

Females either come to build social experiences within their interests and memes (or they come to game the community of horny, adulating,  travelust nerds). If we inundate them with cryptospeak and cryptorollercoaster speculation, then they may come to form an opinion that crypto stuff is not their home. Btw, I highly commend @dan (@dantheman) on his solution of the crypto security issue. That is potentially a major innovation and could go a long way to helping the masses trust crypto blockchains.

You are arguing the Nash equilibrium which is that defection is not an ideal strategy. But I think that normally ignores opportunity cost. Nash equilibrium can sustain for a while when the upside appears to be very significant, but if upside slows down then opportunists get restless to seek out their opportunity cost.

I'm now convinced a blockchain based social media platform will take off. Steemit has first mover advantage.

I am not convinced although I am excited to try. The reason I am not convinced is because we don't know if we've proven a scalable incentive for blockchains. We are seeing some hype effect right now and everyone is patting each other on the back, but we haven't proven out the hard problem of scaling incentives and avoiding game theory debacles.

It doesn't need to be perfect (and isn't) it just needs to top Facebook etc., in terms of censorship and rewards to contributors, they can muddle their way through the rest.

I keep trying to point out the flaw in this pervasive argument to @smooth and others, but seems they strongly disagree with me (and probably think I am a jealous party pooper). You are are thinking that 1 + 1 = 2 and I am trying to point out that 1 + 1 can equal -1. This is because the economic incentives are driving the opposite of organic growth, so you end up having a negative scaling effect. Thus if my assumption is correct, then there is no muddle through and only disadvantages compared to Facebook. Balancing factors are the extreme hope and idealism that is in the crypto community which is what I think is currently sustaining this, but I am not sure.

[iamnotback]

Powered down SP goes to STEEM.

Then Steem has a bug. It lost my power down requests from last week. I did not receive any STEEM on this recent power down.

Where would I report such a problem?

I think VESTS are only created or destroyed by power up, power down, or rewards (that pay in SP/VESTS), unless I'm forgetting something.

If you sell SD on an exchange, literally nothing changes in terms of supply, just the owner of the existing token. That seems kind of obvious, no?

Yes changes in the price of STEEM (as reported by the oracles i.e. witnesses) between the time SD is created and when it is destroyed will influence the money supply (virtual supply; converted to real supply if and when the SD->STEEM conversion takes place). If I'm not mistaken that is covered in the white paper.

There is no special tagging of VESTS nor the STEEM/SP in the vesting fund.

I think the confusion was I thought commentators were stating that no liquid STEEM were in the vesting fund and I thought only VESTS would go into a "vesting fund". So I was confused as to where the liquid STEEM were accounted.

Now I think I've been told the VESTS are not in the vesting fund, so therefor liquid STEEM are accounted for in it, and the SP are accounted for in the VESTS. Is this correct? If not please provide some complete definitions. This is  getting ridiculous. How can anyone know WTF is going on if the damn terms and design isn't documented. I try to guess based on different statements which makes it look as though it is my error, but it is a failure of clear communication.

I'm not sure I'm following this but let me try to explain it clearly.

The vesting fund contains STEEM POWER. That STEEM POWER can only be converted to STEEM (1:1) according to the power down rules (1% per week, etc.). STEEM can be converted to STEEM POWER (1:1) by powering up.

The vesting fund can be denominated as VESTS, which represent shares of the vesting fund. VESTS are created and destroyed by:

1. Power ups (creates new VESTS)
2. Power downs (destroys VESTS)
3. Rewards paid in SP (creates new VESTS, and SP is added to the vesting fund so as to not dilute the vesting fund)

The exchange rate is the number of SP in the vesting fund divided by the number of VESTS. The exchange rate is modified whenever new SP are added to the vesting fund as anti-diluation payments. This increases the exchange rate per VESTS but does not change the number of VESTS.

What I understand now is that when we "Convert" our SBD, it retires them and converts to liquid STEEM. Whereas, when we choose "Buy or Sell", then we exchange the SBD for liquid STEEM and the SBD is not destroyed.

Correct.

Well someone over there mislead me by stating that when SBD are created, the VESTS are created to back it. Obviously that is incorrect, because you are confirming that only liquid STEEM are created to convert (retire) SBD.

Any thoughts on why people are so fucking confused in their explanations or WTF they are referring to?

[Noojna]

I find this currency hard to understand.

First there are Steem, then you have Steem Power, then you have Steem dollars, all separate entities with no direct link between each other.

[cheapcoin]

I find this currency hard to understand.

First there are Steem, then you have Steem Power, then you have Steem dollars, all separate entities with no direct link between each other.

Yes, the most complex one i have seen, i even can't find my tx in the block explorer, bac user experience.

[DecentralizeEconomics]

Everybody in this thread better start behaving or Stan's gonna take away all your brownie points.

[iamnotback]

Stan's gonna take away all your brownie

<humor>I don't like the marijuana he spikes them with, no worries if I don't get them.</humor>

[DecentralizeEconomics]

Stan's gonna take away all your brownie

<humor>I don't like the marijuana he spikes them with, no worries if I don't get them.</humor>

Stan's buddy Mark Lyford is the baker.