Steem as a Digital Currency
I have been privileged enough to have acquired a diversified portfolio of coins and digital assets, like Ethereum, Dash, Monero, Maidsafe, Steem, Bitshares and many others.
While performing analysis of my digital portfolio, I realized I had strongly underperformed Bitcoin. Had I simply bought and held Bitcoins in the past year, I would have had 270% gain in the dollar terms, however I came short of that by a hefty margin. What gives?
After some investigation, I've noticed that most of the top coins from a year ago have underperformed Bitcoin. The two notable exceptions are Dash and Monero, which have outperformed Bitcoin.
The core competencies of the fastest growing coins seem to be revolving around utility of payments.
As a thought experiment, lets imagine Steem was just a very practical and widely used digital currency.
8 reasons why STEEM is the best digital currency
- Its blazing fast. 3 second block times, with guaranteed confirmation in under 45s. That beats Bitcoins 3600s confirmation time, or sometimes, when blocks are full or paid fee is too low, much longer.
- Its FREE. Seriously, 0% transaction fees. Bitcoiners core marketing message was that you can send money to everyone for next to nothing, which is not true anymore.
- Its super convenient. (I can send money to @ned with 2 clicks, unlike BTC where I need to ask him for his long hard to remember, easy to mess up hexadecimal address or have to scan some silly QR code or something)
- It comes with a STABLE coin pegged to USD, which is great for merchants or people whom do not want market volatility exposure
- It has balanced safety and convenience. You can store your money in a savings wallet, which will notify you when withdrawal is initiated. Withdrawal takes 3 days, during which time you can cancel it and change your keys or even restore your account if it gets hacked (good luck getting a billion+ USD of stolen bitcoin back). You can do all of this in an web-app, with 0 technical skills.
- It comes with built in escrow. Seriously, if you don't trust someone to do their part (ie. in a mercantile exchange), just escrow the transaction with a trusted 3rd party.
- It is efficient. Steem can process a couple of orders of magnitude more transactions than Bitcoin. Bitcoin side effects on the world are catastrophic - PoW consumes massive amounts of electricity that could be used to power big cities, and turns it into heat, creates thousands of tons of CO2 daily, fills our landfills with toxic electronics (mining equipment), destroys millions of hours of human productivity and all this, just to run a stupid bruteforcing program with no useful side effects other than powering measly few transactions per second.
- Its censorship resistant. Unlike centralized digital cash, like that of PayPal or your online bank, Steem transactions cannot be censored, and no funds can be witheld from you by some government or corporation. You should be free to do with your money whatever you please, because you are free as in freedom.
I have always enjoyed the payment properties of Steem, however it never occurred to me that this is actually Steem killer feature, a gem hiding in the plain sight.
I think too much time has been spent on the blogging aspect of the platform, and some of us forgot how good is the payment side of things.
Questions
How cool would it be to have a Xapo like debit card, that is funded with STEEM/SBD, and acts as a bridge between digital and legacy real world?
What if we could pay for more things and services online with STEEM/SBD?
Can we think of any applications, other than blogging, that would tie in nicely with STEEM as transfer of value?
Present Issues with STEEM/SBD as a currency
SBD
SBD is being removed from circulation, for financial reasons I wont go into for now. But basically, as the value of STEEM is USD terms drops, the USD pegged SBD needs to be destroyed to eliminate the risk of systemic failure.
Lowering the monetary base of the currency also lowers its liquidity on external exchanges, and the monetary velocity drops as less and less people have and use the currency.
STEEM
And as for STEEM...who in the world would want to hold a currency that keeps losing its value? How do we course-correct, and stabilize the price?
Questions
What are some practical things we could do now, to reverse the price trend, and allow people to save in Steem and sleep well at night?
Would a long period of price stability, coupled with growing usage and utility of the network be sufficient to kickstart Steem onto a path of becoming a major digital currency? How do we introduce what we have to the world?
Good post! Steemit is very blog/ social media focused. I think it would be good to have an app that is payment focused. A pure online wallet. With address book feature etc. Stripped on social media/ blogging features.
With the option to lock up STEEM in SP being seen as a saving vehicle. And locking up SP into "Curation Fund(s)" seen as an investment option that pays dividends.
I'm sure there are some users would love STEEMs payment opinions (alongside dividends paid from SP/ Curation), whilst keeping arms length from the nitty gritty of reading blogs and social media.
As more apps are built on the STEEM blockchain, users can decide how best to allocate their SP (via Proxies) in order to maximise returns.
Another factor which has made Monero and Dash successful is the anonymity. If there was a way to make transactions from a STEEM wallet app even pseudo-anonymous, that would again give wider appeal.
You mean something like SteemBux?
https://steemit.com/steemit/@williambanks/steembux-is-now-officially-open-source
Which reminds me, I need to get that into the app store when I get a chance to catch my breath.
That is a great idea about an app that is payment focused. That seems like the next logical step! Steem certainly does have several distinct advantages over some other cryptocurrencies, most of which are mentioned here. If we could just figure out how to stabilize the price I would think there would be a lot of demand for other use cases...
I agree. Anonymity is crucial. Another reason DASH has been successful is how heavily marketed it is. DASH is marketed in a very inorganic way, where there central team promotes the currency through posts and videos in a way other cryptos have not. In the short term this method seems to be very effective, over the long term I am not so sure. My point is Steemit & STEEM could possibly benefit from a more organized marketing campaign. I am considering doing a post about that when I get the time.
I'm not sure how crucial anonimity is in a world where *99% of digital money transactions (by numbers, not volume) are not anonymous.
I do agree however that marketing is key here.
*I made that number up.
Digital money transactions have not been anonymous because the average person hasn't had the ability to transact anonymously. Crypto currency changes that. There is now a new benchmark that has been set, now that other cryptos offer the function of anonymity, why would you choose something that doesn't give you that ability. That is just my opinion, I am not sure if people who know less about crypto would even care, but within the community it seems to be very important.
Agreed on all points. Anonymity is key.
Yeah, anonymity is very much needed. Not everybody is willing to show to the whole world what they are buying and selling.
Just an FYI, we can do that right now. TradeQwik just treats SBD as USD at a rate of 1:1 we don't even have an SBD market, you deposit SBD and you're credited with a face value amount of USD.
You can withdraw to your card existing card, or we can issue you a card once we get enough orders to make it viable to order a batch.
We also run ATMs (albeit in Mexico) where you can buy and sell SBD, we may expand that network soon.
Sorry not trying to take over your thread with an ad, but everything you're talking about, are things we're working on right now. Follow @tradeqwik and @vivacoin for more details.
Reduce power down period to one week . This should be in hard fork 17 imo. The sooner the better
The faster steem is tranfered from weak to strong hands the faster the price can start to go back up. Sure the price might go down to 1 cent but that's exactly what we want so people can sell their share for pennies and get out fast.
Locking people's coin for 3 months doesn't prevent people from selling, it just slows down the price discovery process. This feature looks scammy from the outside, people don't like being locked they want control over their money. You are not going to get any investment from people if you remove them ability to withdraw their fund at any time.
The lack of liquidity is also a killer for speculators and also the uncertainity coming from constantly moving liquid supply.
edit: the best solution would be to remove steem power and let steem be votable after 7 days held in an account
it would remove complexity created by having steem power ( power up/down, coins locked,etc..)
I think you have a very good point here.
I think maybe the rationale for 3 months is as a form of safety mechanism, if there is a sheep-mentality event (ie. everyone panics), the damage is contained, and there is time for people to cool-off.
Also, it may be to prevent people from voting multiple times with transferred stake. If with a 30 day payout period 3 months was necessary, surely with HF17 and 7 day payout the power down time should come down to 3 weeks. I agree with @snowflake, a lock-in period of any kind is bad PR.
None of the top cryptocurrencies have any lock-in, yet they are successful and relatively a lot more stable than Steem.
The main rationale is to prevent multiple voting attacks (vote, transfer coins to another account, vote again). If somehow the voting issues are separated from the currency issues (or the voting issues addressed another way) there isn't a need for it.
The proposal to have one 7-day voting period (instead of the current 24 hours + 30 days) cmeans power down could be reduced, probably to about 3 weeks, without being any more vulnerable to multiple voting.
1 week and 1 minute would be enough to prevent double voting if voting period is 1 week.
Why 3 weeks?
[Nesting limit] I totally agree - that makes a lot of sense. I had written about eliminating Steem Power and just having Steem a long time ago. Waiting one week before it counts as influence is an elegant enough solution. That'll do away with any lock-in period, make the system much simpler and more accessible to users and open up the currency to investors.
Good to hear man! I agree it would be a more elegant solution. Hopefully we can get the devs on board :)
assuming the payout is exactly 7 days then yes. i assume it would have the usual extended period as now so you can't snipe vote at the very end. that means someone who votes and then initiates a power down would get their first 1/3 before the post is over, allowing a partial double vote, which is the same as now.
I see what you mean, you want 3 weeks so someone is only able to partially double vote right? 1 week would allow someone to double vote with all stake..
I think it would be best to completely remove steem power and allow users to vote with steem that has been in their wallet for more than 7days.
Say I have 100 steem in my wallet and I just sent myself an extra 50 steem , my upvote would be worth 100 steem until 11th of march ( 1 week from now) , after 11th my vote would be worth 150 steem.
if I vote for something with 100 steem then decide to send those 100 steem to another account to upvote the same content, the other account will have to wait 1 week for the 100 steem to be included in the upvote, so it would be too late to upvote for the same content. This design seem like it would be more secure and not interfere with user experience, also would remove complexity of having 3 currencies.
I could start a power down with account @david on Sunday, make a post on Tuesday, upvote it on Wednesday, get my SP liquidated to Steem on Sunday. Power up the Steem to @goliath, vote on second Monday. The payout happens on second Tuesday, with effectively two votes for the same SP holding.
That said, this could be probably be prevented by disabling voting for the stake powering down. So if you power down 75% of your SP holding, it'll all be liquidated in one week, but for that week you would only be voting with the remaining 25% of your SP.
The idea of disabling voting on powering down stake was previously brought up, but the problem is due to the long drawn schedule it never made sense. However, if someone wants to liquidate their SP holding anyway, I don't think anyone would mind not voting for 1 week.
[Edit - snowflake has a better solution. Just do away with Steem Power, and let Steem be votable after 7 days held in an account]
Doesn't the SP delegation feature have something similar, the reverse way? I.e. when a delegation is canceled, it'll be one week before the delegator can vote again.
I'd definitely like to see this implemented. A 1 week power down period sounds much better.
Check my answer to smooth above. A system where steem power is removed and where only the steem that has been in an account for 1 week can upvote would also solve the problem you mentionned.
This is anti free market. In such event you need to let the market play out, risky periods is actually when traders make the most money.
The 3 months lock period is an unnecessary barrier to entry. It prevents a lot of people from investing and playing the curation game. Nobody want their money locked, even a week is too long but it is required to prevent double voting. A week is enough to contain damage anyway, you don't need 3 months for that.
I was just trying to play devils advocate. I think the arguments you've laid out for 1 week are very appealing, I would love to hear @dantheman's take on it.
At that point one might ask what the purpose is of having a power down period at all? Perhaps it would be better to just allow people to vote according to the weight of the liquid Steem in their account?
You need a locking period to prevent someone from transfering his stake to another account and vote multiple times on the same stuff.
But you make a great point, and I have been discussing this with the busy team recently and they also seem to agree that SP could be removed too and that 3 currencies is confusing for people but we would need a mecanism to prevent double voting with liquid steem.
Of course and I think it was mentioned in the white paper too. Not sure what other mechanism could do that though.
@fabien said something like, if the payout period is 7 days then only the steem that has been in the wallet for more than 7days can upvote. I havn't thought about all the details but i think it could work.
I will need to think about it but it might.
Someone who wants to get out quickly could just sell his account.
Should we draw any conclusions from bitshares with is now at a third of a cent? How low can it go?
The answer lies inside this video:
Notice how the workers are constantly trying to rebuild, but cannot because they do not possess the power. See how this power imbalance affects the entire ecosystem and makes it dysfunctional. The answer lies in there.
@furion If you don't mind Ill add a few other reasons why steem is the best digital currency.
Steem/SBD is the only crypto with a real chance of being used for commerce as it's stable and SBD can be pegged to any asset.
Steem is one of the only altcoins that has actual intrinsic value, if the value of the token where to go to zero steem would just be as useful as it is now. Sure the rewards may be zero but people would still distribute those steem with their voting power and steem could very well have a higher price in the future.
Steem has community built in, which means it has a huge advantage over other crypto to bootstrap the currency.
People don't have to spend their own money to get steem, they just have to post and they can receive some steem.
Steem's blockchain is superior to pretty much every other blockchain in terms of technological advancement.
Steem has the potential to be integrated on every website in the world, that puts the technology on par with ethereum.
The development in steem is fastest growing than any other blockchain
Steem is super user friendly, no weird addresses, instant and free transac,etc..
Great addition to @Furion 's points. We are sitting on a gold mine indeed.
@furion word on this two points! some are trying their best to use it already but like some food store in Germany is already accepting Steem for a choco cake I remember that they met up in that place and used SBD or Steem can't remember but anyway .. you are right about these 2 points. We need a plan for this to happen and we don't have any as of the moment.
as for this ...
I once read on one of @heiditravel's blog where she was asking Ned and Dan for a Steem card. If you have read a few of my posts where I mention how btc is being used here - all you need is to scan it on your phone. Why not something like that? Handy and very easy to use.
I guess with this we have to swallow the fact that it's going through inflation and I remembering watching one of the dollarvigilante's video and I remember hearing it there that it is also designed this way. However, since @mallorcaman and @williambanks have recently given Steem a small breakthrough to be of used then maybe it would help if the many of us try that.
how about ads? many don't like having ads but I think once we start having ads and if we let the community choose which ads come out of each one's post then it would be okay or would that be too much work for the witnesses?
In my opinion the reason that the price of Steem has been consistently decreasing is the fact that there are a large amount of very large holders who are willing to sell at a specific price, combined with the absence of the required number of individuals to buy Steem as a means of investing.
Any time when Steem's value begins to increase, the increase is nearly always met with a very strong sell resistance which quickly drops the price back down. Steem as a cryptocurrency is different than others in respect that many medium to small size holders didn't necessarily have to invest "money", but rather time and effort.
In most cryptocurrencies, many holders will take a specific position and not sell until it is profitable, but when individuals don't have to invest currency to acquire the Steem many individuals are willing to sell during a price increase. Much of the Steem volume traded is likely from early adopters and witnesses who have recurring costs, meaning that they need to have a flow of income to come along with it.
I have heard from numerous different users things such as "I would sell at x price" and that's not necessarily a bad thing, but when a large percentage of users would be motivated to sell at specific prices, maintaining any major price gains would likely only be possible if there was a significant increase in investment into the Steemit platform.
Especially for individuals who acquired their Steem through rewards , individuals want to ensure that they actually get as much as they can out of their Steem if they have a short term view rather than an investment view. The abundance of sell motivation during any price gains make it very difficult for Steem to hold any of the gains it has earned.
This is a great post, and STEEM really is superior to Bitcoin in a number of ways.
I think the problem is though, that not enough people know that. This is a good article, but it's directed at those who already know all the benefits of Steemit.
We need to find a way to get this info outside of Steemit and in front of the eyes of the masses. Especially those who are only recently learning about crypto through the news of the Bitcoin price rise.
I also think that the steem is better than the bitcoin you have to give it more to know I think it would be very good that all help spread so that more people know the steem there is much talent in steemit that can create very good creative advertising that highlights the benefits of the Steem
There are many cryptocurrencies which are technically superior to Bitcoin, but that doesn't mean they will necessarily succeed in the long run. In addition to brilliant technology, to be successful a project needs brilliant marketing. Plus Bitcoin already has an established networking effect to overcome.
The Ethereum team has done a good job on this front, which is one reason Ether has become the #2 crypto by market cap today. Vitalik & his team travel the world, speaking at conferences, developing business contacts, and getting companies interested in developing for the Ethereum ecosystem.
Steemit is well positioned for a similar marketing blitz due to its social nature. But what I haven't seen so far (or maybe I'm just not aware of it) is an effort to reach out to the commercial sector and get big companies excited about Steem. I think this should be a priority. The Steem price isn't going to recover from Joe Sixpack and Susie Soccermom buying a little here & there. It's going to take organizations & seasoned investors with deep pockets, who recognize the potential of the technology and see an increasing network effect leading to more adoption.
I think in terms of what needs to be done: I think there are some issues with how steem works at its core that is the reason for the bad performance.
I've outlined this here:https://steemit.com/steem/@knircky/i-am-doing-it-again-power-up-steem
I think the blogging and social media app needs to be fixed. Then the payment and blockchain features can be used.