The argument that I am making today is that the natural equilibrium of the price of the Steem token is zero. Note that this piece serves as an alternative viewpoint and not as a piece of prophecy. As the title mentions, I would love to hear your counterarguments. What I'm tired of hiring is the premise that Steem is valuable because "the community". What I want to hear is economic projections and core social and mechanical reasons for believing those projections. This projection serves as an example and my current viewpoint. Feel free to change my mind.
This road allows the most transactions per second in the space!
So, what is the premise of the Steem blockchain? What is the ultimate goal of this piece of software? Let's refer to the good ol' whitepaper for reference:
Steem aims to support social media and online communities by returning much of its value to the people who provide valuable contributions by rewarding them with cryptocurrency, and through this process create a currency that is able to reach a broad market, including people who have yet to participate in any cryptocurrency economy.
So, to boil that down, the end goal of this blockchain is to support online communities by giving value to those that provide valuable contributions. Now, I think we all know that the current iteration of the blockchain works nothing like this. Maybe that viewpoint is a pipe dream. But let's reduce this idea into a core idea that progresses the blockchain towards this idealistic goal.
Any service or product needs to provide individuals and groups of individuals a reasonable incentive to invest their time, energy, and money in it.
Or to put this more succinctly, people need a reason to use something. What reasons are there to use Steem? The whitepaper does a good job of proposing some ideas:
- A source of curated news and commentary.
- A means of getting high quality answers to personalized questions.
- A stable cryptocurrency pegged to the US dollar.
- Free payments.
- Jobs providing the above services to other members.
We can group Items 1 & 2 into the more general category of quality content. Item 3 is more about SBDs which have been proven to not work very well. Item 4 is interesting in that money made out of thin air is worth something (not a good sign). I think "earned" payments is perhaps a better use. Note that there doesn't need to be any notion of "quality" in order for anyone to "earn" tokens. Item 5 is simply a derivative of the prior items and perhaps an admission that the blockchain doesn't do a good job in the first place at what it says it is going to do.
In terms of providing realistic reasons to use Steem, I propose a combination of 1, 2, & 4.
Content creators are incentivized to create interesting and meaningful content for content consumers by receiving Steem tokens that are worth value such that they provide a means of connecting consumers that they want to consume.
I emphasize consumption here three times as much as creation, because I believe it is orders of magnitude more important than creation. Attention (eyes) are what give media platforms their value. If you can get eyes and you have a token that has a positive correlation with getting eyes and then that token has value. If you fail to establish this correlation, then that token must obtain its value in some other way. Items 1 & 2 above are a means of attracting eyes.
Also note that I never mention investors. To be honest, I don't really see a good reason to include them in terms of creating or granting value to an object. That doesn't mean they can't facilitate that, but in terms of the core reasons to use the blockchain, they are relatively unimportant.
So, now I have laid the ground work for my argument. I seek to demonstrate two things:
- The current network fails to cater to the consumer in any way whatsoever, and thus not having any monetary value in this way.
- The current network doesn't even work correctly unless the the price of the token is zero.
So let's get started. As someone who consumes content more on Steem than they create content, the interface doesn't support connecting me with stuff I want to read. Which actually doesn't matter too much. What is more important is whether or not the token facilitates connecting me with content I want to read.
The answer is no. When I visit the front page, I am greeted by 100% promoted content. Promoted content. You know the stuff you ignore on your other social media feeds. This impedes my journey to interesting content as content that I probably don't care about and has no real quality control standards is put in my way.
This impediment however is created because of the token itself. Because of the current economics, it is more profitable to sell your vote to the highest bidder and vote on things with no care about how that stuff looks. The coin in this case works against the content consumer.
That's not to say that there aren't curators that provide decent streams of content to their followers. But the average user and first time visitor has some barrier of entry to getting to content that is worthy of their time. Most folks don't have the patience to have their time wasted and the token itself is the culprit for this. The token doesn't have a positive correlation with getting new eyes, it potentially has a negative one.
In any case, I don't think anyone would disagree that the Steem token doesn't really facilitate access to meaningful content for ordinary social media users looking for that stuff. Sure the dollar signs may temporarily attract creators, but not new eyes that would give those creators an audience to grow with. However, since the token fails to aid the consumer in finding content to consumer, it derives no value from the reason I would consider Steem to be the most useful to the common masses beyond that of a currency and token emitter.
In what case would the Steem token actually positively correlate with connecting users to relevant content? When the price of the token no longer creates an incentive to simply sell votes and to cast empty selfish votes for oneself. But given that vote granting takes no real work to perform (as you can automate this process), the equilibrium is naturally zero.
As long as the price of the Steem token remains above zero and the current economic incentive structure remains in place, there is nothing gained by users from not taking the easiest and more profitable route to generating tokens.
Now eventually, you would expect the vote-selling as a means of promotion to fail at same price above zero. But that doesn't detract from self-voting and vote farming via groups of accounts. It is still profitable to perform no useful work simply by voting than it is when the price is above zero.
However, what happens when the price reaches zero? The token loses any credibility as an instrument to generate money. The economic model changes and the system begins to work correctly. For the only people remaining are only maintaining the system for the hell of maintaining the system. The only people that remain won't view the token as a currency but as measure of social proof of worthiness (or are really desperate for the price to go up).
At some point these worthless tokens will move from the hands of apathetic voters to emphatic voters that genuinely care about using the system as a means of social accounting and granting valuable users more power over the system to shape it in a way they feel works best for their selfish needs while also contributing in a healthy environment that rewards those that contribute to the system with more attention and influence.
When the price is zero, these selfish needs will not be related to monetary gain, but to influence and rebuilding what little remains of the ecosystem at that point. And maybe with this absolute collapse of the token, a real "community" might form that cares about "the community" that uses "the community" as a means of pandering suckers into holding worthless bags.
Because I don't want to give people false hope. I want to them sell. I want everyone who is willing to ride the token to zero to sell. Not because I want all the tokens in the ecosystem. Not because I want more power or control. Not because I want to see Steem fail. Because I want to see Steem succeed.
But the price going up isn't going to solve our problems. It simply delays the inevitable. The price going lower makes us confront the problem. It makes people uncomfortable and it is only in such discomfort will people begin to accept there is a problem and that change is necessary.
I also want the price of Steem to go to zero because in the current economic model that when everything would start to work properly. What reason is there to vote for trash when that vote means nothing anymore? You only get useless tokens in return that gives your vote a little more weight. That system which may consider bleak to some, to me at this moment looks beautiful.
Whales, where you at? Your proof of stake system is falling apart. Aren't you supposed to be the gatekeepers of the system? It's your money that is evaporating. Or is the power down function not working quickly enough? The ball is in your court. You now know what I want and it's not very good for you guys (monetary speaking).
Some people claim they aren't in it for the money. If the above isn't enough proof, I don't know what is. Anyways you're always welcome to ride the train to zero with me. Or you can disagree with me. I would love for someone to demonstrate that the token has real value when it's monetary value is currently working against the reasons to use it in the first place.