My wife and I were in an art gallery and found a painting with a sign that read, "pay what you think it is worth". I quite liked the painting, however my wife wasn't that keen on it. As we keep our money together for these kinds of things, we had 1000 dollars in our collective wallet. However, this wasn't the only thing we wanted to buy. So my wife and I started negotiating what we thought it was worth, with me thinking it was worth more than she did. I said I was willing to pay 800 dollars for it, she thought me crazy and said that it wasn't worth more than 100. So, I counter offered with 500 and again, she countered with 200. We settled on 250 and paid the attendant who transferred the money to the artist immediately, and we walked out with the painting.
Did the artist lose 550?
Of course not, because the artist never had the money to begin with. The value of the painting to the artist was only realized, once the money was in their account, right? However, had they been part of our negotiation process, they likely would have felt that because I believed the painting was worth 800, that it was. However, the value of the painting isn't dictated by me alone, because my wife has equal say over how we spend our money, so her opinion counts too. If we would have chosen not to buy the painting at all, the artist would have got nothing, and the painting would be unvalued.
Not undervalued. Unvalued.
However, the artist wouldn't feel that way, because they automatically judge it as having value, because it is theirs, their ideas, their work, their time, their effort. But, the marketplace doesn't care about how they value it, unless they are willing to pay for it themselves out of their own pocket, which essentially is meaningless. Unless, they were using the wallet owned by my wife and I, in which case, we would have a pretty interesting discussion about value, if the artist was using our shared wallet to pay themselves.
Just imagine that scenario, where for instance, my wife was the artist, would paint a picture, and then buy her own work from the wallet we shared. How much of the 1000 does she believe she has a right to and, what is the point of paying herself, since she already has the money in the wallet. She can paint for fun and have the same money in the wallet. But, if the artist first mentioned had access to the wallet and then just used it to pay themselves what they believed it was worth, my wife and I would have to disagree, because their opinion is taking away from our ability to buy other things that we want.
Now, you might have recognized, there are a few parables in this little story, because Hive has a shared wallet with the "content earning" portion distributed by staked HIVE. When a piece of content is added to the chain, a seven day window starts where just like my wife and I deciding on the value of the painting, the staked users will have an opportunity to discuss the value of the post. The "stake" is their ability to distribute the shared wallet of the distribution pool, and whatever is decided after seven days, the blockchain prints the tokens and transfers them into the wallet of the creator. This is similar to the attendant in the gallery making the transfer to the artist.
Another similarity is that the content that is created has no financial value until payout time, but it could have other values attached to it. People might get a good feeling out of it or learn something, but this doesn't mean they are willing to pay for it. And, staked users are paying for access to the shared wallet, because there is an opportunity cost in holding HIVE, rather than selling it.
One important factor to highlight, is that at the time a vote is cast, it isn't actually transferring anything to the creator, even though they see a number go up (or down), because that HIVE doesn't actually exist yet. The vote is a lien on the future distribution, once it is paid out in exactly seven days from the post. Just like the negotiation between my wife and I to settle on the value of the painting didn't take 550 from the artist, the negotiation on posts doesn't take anything away either.
However, there is a differentiation to make here, because the artist from the gallery scenario wasn't privy to the conversation my wife and I were having, so they never knew that I was willing to pay 800, nor that my wife was only willing to pay 100. If they had heard the conversation, rather than believing they lost 550, they could also consider that they gained an additional 150 through the negotiation, because I could have said to my wife, 100. Or, she could have vetoed it altogether, and then the artist would get nothing - from us at least. And perhaps I was the only one to be interested in the work at all.
Hive negotiations are transparent though and have to be, because all staked users have a stake-relative opportunity at directing distribution of the reward pool to and from content. It has to be transparent, otherwise people would just do stupid things like direct their potential to themselves, which happens anyway. But, because there are seven days to negotiate through downvoting, it doesn't happen nearly as much as it did earlier. Similarly, selling votes doesn't happen as much either, because the cost to buy votes is increased with the risk of getting downvoted, meaning that a person will end up paying more than they get upvoted.
While imperfect, Hive is far more clever than people seem to consider it and, because it is transparent, we can actually see what is happening across the ecosystem. Not all content is worthy of value, not all valuable content is going to get rewarded, but the potential is there for those who are willing to put in the effort and build their brand and network to attract supporters, like any artist would have to do, if they wanted to be paid for their creations. And even then, doing the work to build network doesn't do much, if what is created doesn't engage the audience.
What people who post to Hive should remember is that a reward is not a salary. No one is entitled to a payout seven days after they post content to the blockchain. Whatever is on the post at day one, day two, day five or 10 seconds before payout, does not belong to anyone at all, including the creator, because it doesn't exist. Once it is distributed into a private wallet however, it is safe behind personal keys - it is owned.
Similarly, people don't own the value of their upvotes either, nor their curation returns. Only at payout when the author gets their transfer, will the curators get theirs into their own wallets. It is only at that point that they have ownership. Everything before that point is a variable, which means it can change. Sometimes, it can change drastically.
The problem with Hive is, that the coded mechanics of the economy don't factor in the wide range of emotional skill users who participate have. For instance, when most people get downvoted, they do not feel it as a fair negotiation between the owners of a shared wallet, they feel it as a loss, or a theft, even though what they feel has been stolen, isn't theirs and doesn't even exist yet. But, most people also don't consider the feelings of the staked users either; who are people who are paying a price to have stake. For example, for me to have the stake I have, cost me about 500K dollars - the value of my holdings at the last high in price. That is two houses worth, yet people feel that they have the right to decide how I use my stake.
See the problem?
We are emotional animals and we feel loss heavily, but while some people feel the loss of a few dollars on the post, there are a lot of stakeholders who have lost the potential for hundreds, thousands and millions of dollars worth, so that they can participate here. And, having a high Hive stake, doesn't mean "being rich" in real life either.
It is all a risk.
And risk is an interesting way to look at stake and the distribution of HIVE, because where it goes changes the risk profile. Ideally, all the value would go perfectly to the most value-adding content, but that is impossible. However, holding Hive is always a risk, and in return for taking that risk, there are some HIVE earnings available. However, the percentage return has to compete with other possible investment opportunities, and ~11% isn't high - especially in crypto. So, the potential is that the value of HIVE goes up significantly enough, to increase the ROI for holding HIVE power to make it "worth" it.
What is the risk of posting?
To post costs nothing, which means that it is up to the creator what they are willing to put into, but they don't have to put any financial value into it at all. Like me here, they can put their time, effort, energy, feelings, and experience into the post, but I could have also sat in front of a screen and watched some reality television. We each decide how we value our energy, and how we spend it. But, we can't expect people to pay us for our time, who have no contract with us. We also can't expect people to not argue about the value that others give us, when that value is coming out of a shared wallet.
Every upvote affects the pool distribution, as does every downvote. But there is an important distinction to make, as that downvote to remove future value isn't lost, it goes back into the pool. The upvote once paid goes out to a private wallet however and becomes owned for the keyholder to do as they wish with. They can power it up, sell it, or let it sit. The downvote return to the pool however, gets spread to all other upvotes in the future, which means where the staked users have agreed will get value, will get a tiny, tiny fraction more.
As said, ideally, the most valuable content for the Hive ecosystem would be rewarded, and the harmful and neutral would get nothing at all. But, that just isn't the case and won't be, because not only is it humans doing the voting, it is also largely impossible to tell what is truly valuable content and activity for Hive. However, right or wrong, it is those with skin in the game who get to decide at the economic distribution, because they are the ones willing to risk their own value to do so. And if they get it wrong, they will pay the price out of their own wallet also.
Considering there are thousands of people sharing a wallet with value in it, each with different opinions about what is worthy, what is not and everything in between, who are spread across the globe, with most being strangers to each other - I think we are doing pretty well. But, a lot of people don't really think about how this all works throughout the ecosystem, all they think about is how they are affected personally - whatever side they happen to be on, based on whatever they believe to be true.
Taraz
[ Gen1: Hive ]
