I am very thankful to have listened to Tone many times over. He has helped save me lots of money on various projects that have popped up, most recently with the DAO. The whole team at the The Bitcoin Group on the World Crypto Network is a huge asset for the Bitcoin and crypto community.
I am an amateur Bitcoin and crypto enthusiast. I also really like Steemit. There are a lot more qualified people to speak on these things than I am, but I found myself strongly disagreeing with The Bitcoin Group, particularly Tone Vays, in regards to his perspective on Steemit, and I felt compelled to share my thoughts.
Let’s first start off, by looking at this video here:
As you can see, they are all very pessimistic about it. Tone goes so far as to call it “nonsense..total scam...ponzi...like stealing bitcoin”. Let’s break down some of this.
Is Steemit a Ponzi?
Steem, Steem Dollars, and Steem all derive their value from the market. Of course, this can lead to big swings of valuation in either direction. With a high inflation rate, particularly in the short term, given the total coin supply, a general downtrend won’t be too surprising, even as we on-board more and more people.
However, this market doesn’t really effect Steemit content creators much, since if the market is depressed, their Steem Dollars earned can be converted to a dollar’s worth of Steem each through a one week process through Steemit, where it is averaged against the market price of a dollar's worth of steem. Content creators cashing out $5 today, will be able to do so a year from now, whether the market is bullish or bearish.
If the market is bullish for Steem Dollars, like we've occasionally seen, then they can be instantly converted to Bitcoin via Bittrex or Poloniex for sometimes over a dollar a piece. There are also arbitrage opportunities between Steem and Steem dollars, that help provide liquidity to these markets in the long run.
Like Stealing Bitcoin?
People do not have to invest anything. In fact, pretty much everyone I have gotten interested in this project never even cared what Bitcoin was. These people are joining, creating, and cashing out Steem Dollars for their first bitcoin. Whatever they do with it from there, is their business, but Steemit simply sparks a curiosity and fascination in crypto unlike anything I’ve seen in the space yet.
You can’t believe how many people are shocked about Steemit, then immediately become curious about Bitcoin, as I explain to them the pillar of our system. The value of this process can’t be overstated. I explain that Steemit is in beta, there may be temporary issues, it’s only three months old...who knows what will happen? But why not join, share your stories, and cash out your first Bitcoin and start getting passionate about that just as you become about Steemit?
People who do decide to speculate on the price, by buying Steem and Steem power, are doing just that. They think the price will be higher in the future. There’s nothing wrong with that. We live in the crypto world where every single coin, including Bitcoin, acts first and foremost as a unit of speculation. It's not unreasonable to see why a social media platform that incorporates crypto would be an attractive project to speculate on, given the rapid growth we've seen in other social media platforms.
Scams?
Paycoin, Onecoin, Auroracoin, yes, these were and are all clear scams. I am not invested in Bitshares, but that has been a relatively successful project to date, and these guys came from that, as you know. I am also not really invested in Steemit. What I am invested in is Bitcoin, and I continually look for opportunities to make that grow while simultaneously getting people into the same mindset. Steemit is the only vehicle in the space that I’ve seen yet capable of consistently getting people interested in Bitcoin. Not only that, but it gets them their first bitcoin without them spending a dime. How is that a scam?
Long Term?
“Broke!”
Ok, well, we of course saw this coming after hearing them talk about it. However, I believe that they are overlooking some key possibilities. If Steemit continues to gain traction, even with a falling price, it will eventually reach a critical mass of users that will attract advertisers and promoters. These people will be the first people to have a real, practical use case for Steem Power.
Tai Zen and Leon Fu do a fantastic job talking about this here:
Imagine 1,000,000 users on Steemit, and some big entity wants to create a presence. They use Coca-Cola as an example in the video. The smartest thing Coca-Cola could do is accumulate a ton of Steem Power and support people who help promote their product with quality content. They could encourage people to tag them, and content their team deemed commendable could get upvoted and that user would receive money. They could also create new ad campaigns and gauge interest from the Steemit community based on how much it gets upvoted. There are loads of possibilities for them.
If this happens, worries about the long term sustainability of the platform will basically boil down to potential legal problems in the future. I could see content on the blockchain that they will be legally forced to scrub. Who knows what else could come up?
Security issues could arise again. The price could absolutely tank. Or worst of all, people could just stop using the site altogether. But in the end, this doesn’t matter to people new to crypto joining the site. They are not buying Bitcoin to go invest in this site. They are just joining, creating, sharing, and getting a little payout in the process. This is not a bad thing for crypto or for Bitcoin, at all.
I love Steemit, I have a good amount of Steem Power, I am not powering down. I am here to stay, for better or worse. The money is a plus, but we're doing bigger things here. We are working with the best crypto on-boarding vehicle to date, and doing more to get people interested in Bitcoin than I think you realize.
Why don’t you come join us, Tone? Make your points, chat with @ned and @dan, and let's have an open discussion about it all. Simply cash out your bitcoin from your upvotes and then never come back if you feel as strongly about it all after that experience as you do in this video. But give it a chance and maybe see that even if you think the economics behind it are flawed, the potential for this whole idea is through the roof.
And thanks again for all the work you guys do, everyone from The Bitcoin Group, as well as Tai Zen and Leon Fu!