Steem: Reddit Plus Cryptocurrency?

I’ll let the Ethereum/DAO catastrophe cook for a while, and look at the confusing new project, “Steem”.

These guys are experimenting with a sort of “Reddit with a Blockchain” idea. (The fact that such experiments are easy to do is a tribute to the accessibility of Internet and crypto software.)

I think that they are using a blockchain as a “decentralized database” (write once?), broadcasting links to posts. In addition, the internal cryptocoin, “Steem”, is used to “incentivize” and reward content contributors [1].

But it’s all so confusing, I’m not really sure what is going on.

Obviously, “tipping” platforms, that let you drop micropayments on content creators is scarcely a new idea. The Steem idea is to eliminate the explicit “tip” decision, and deliver the micropayments according to an algorithm based on “up votes” weighted by overall “Steem”. (I think.)

Essentially, people who contribute stuff that other people like have more votes.

They are taking a (naïve) stab at automatically tracking reputation. They seem to view a “reddit” model of “upvoting”, or Facebook “likes”, as a reasonable method for quality control. Indeed, they actually use the word “curation” for this process!

I do like that idea that they are trying to link the cryptotokens to something that people actually do to earn them, not just running a mining program. The idea is that all the acts that go into creating a “valuable” resource should automatically receive credit: contributing content, commenting on content, “curating” content. And they would like the rewards to reflect the value to the larger community, i.e., “good” content should get more points.

That is all good ideas, though the implementation is naïve: there are many different “kinds” of reputation, and the “up votes” need to be weighed by my own value of the voter, not by a single universal rating.

The story is further muddled because the Steem guys are fascinated by cryptocurrency, and so Steem is also available by mining, by trade, and for purchase at exchanges. Mysteriously, it is even pegged to the US Dollar (which is not easy to do).

Much of the documentation talks about the generic merits of any cryptocurrenty, and they express highly optimistic hopes that their cryptocurrency can solve all the problems of the world.. For example, they talk about how cryptocurrency can help serve “the unbanked” (though this has yet to be convincingly demonstrated by any cryptocurrency). What this has to do with paying people to yell at each other on Reddit, I don’t really see.

The specific benefits are described as pretty much the same as “reddit” plus a cryptodcurrency.

“The Steem community provides the following services to its members:

  1. A source of curated news and commentary.
  2. A means to get high quality answers to personalized questions.
  3. A stable cryptocurrency pegged to the U.S. dollar.
  4. Free payments.
  5. Jobs providing above services to other members.” ([1], p. 5)

Huh?

The “curated” content means a Reddit-like mess, with “upvotes”. The “high quality answers” seems to refer to crowdsourcing, which is available from many platforms. The “free payments” are supported by the rake offs behind the scenes. And the jobs are purely speculative and trivial. (Just how many posts/upvotes would you have to do to earn a decent living? A lot.)

Basically, this list is a bunch of hooey, in my view.

Some commentators have complained that, at this stage, this whole enterprise resembles a pump-and-dump confidence scheme. (All cryptocurrencies look like this at the beginning, some evolve further, some don’t.) My own view is that this is an honest, but deeply misguided effort.

I have been told that there are problems with gaming the system and flat out hacking. With Steem pegged to the dollar, the Steem that you earned from your posts is a tempting target for thieves. Also, I gather that there is some issue with people (or bots) reposting other people’s content to collect Steem. Tsk, tsk.

Wow!

So much confusion in such a tiny package!


  1. Daniel Larimer, Ned Scott, Valentine Zavgorodne, Benjamin Johnson, James Calfee, and Michael Vandeberg, Steem: An incentivized, blockchain-based social media platform., 2016. https://steem.io/SteemWhitePaper.pdf

 

Cryptocurrency Thursady

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