Note: Steemit Transaction Numbers are Misleading, It's Not About to Pass Bitcoin in a Meaningful Way
Note: This post is a response to a post entitled, "Steem Passed Ethereum's Number of Transaction and Will Pass Bitcoin Soon"
That post can be read here: https://steemit.com/steemit/@clayop/steem-passed-ethereum-s-number-of-transaction-and-will-pass-bitcoin-soon
While there is a good bit of activity on the Steemit platform, it does not appear many people are using STEEM or STEEM DOLLARS as currency. Let's take a closer look at the numbers from the above-mentioned post:
Bitcoin Transactions:222,146
Ethereum Transactions: 37,900
Steem Transactions: 116,208
The main issue here is that Steem counts various non-financial activities as transactions. For example, roughly 80,000 of Steem's "transactions" are votes on content. Another 30,000 "transactions" are comprised of posts, replies, and edits. This sort of activity most closely resembles the mining process in Bitcoin. When you look at actual money transfers on the Steem network, the number drops down to the 2,000 transactions per day range, which isn't anywhere near what Bitcoin is doing.
There appears to be a good bit of activity on the Steem network, but it's unclear if it makes any sense to compare this activity to Bitcoin. This would be like comparing activity on Reddit with activity on the Bitcoin network; it's a comparison of apples and oranges.
This is not a dismissal of Steem, but it's important to realize that Steem is not becoming a bigger network than Bitcoin in terms of financial transactions. Bitcoin has a critical use case in terms of regulatory arbitrage, which is why so many people use it as a payment method. Steem does not need to compete with this use case to be successful as a project. It would probably be better to compare Steem money transfers to Bitcoin transactions and Steemit.com traffic with other social media websites.
As a side note, there does not appear to be much financial activity on the Ethereum network either. Most of the transactions on that network appear to involve mining payouts, developer test transactions, and deposits or withdrawals at exchanges.
Kyle Torpey is a freelance writer and researcher who has been following Bitcoin since 2011. His work has been featured on VICE Motherboard, Business Insider, NASDAQ, American Banker, RT’s Keiser Report, and many other media outlets. You can follow @kyletorpey on Twitter.
I think this misses the larger point. Steemit posts, edits and votes are financial transactions and are occurring on the blockchain. Steemit is neither Reddit nor Bitcoin -- it's both on one blockchain. It's an adaptation of the tech that doesn't fit in a Procrustean bed.
Bitcoin remains basically unused as does Ethereum, relative to their value for sure. Tens of thousands of people, uniques, use Bitcoin every day. Those uses don't justify the price at all. It should be much lower but for network effects and speculation on future growth.
Steemit also has tens of thousands of daily users. It's valued at <5% of Bitcoin. People are actually engaging with a blockchain in a meaningful way that isn't just speculation for the first time. This is something new.
It may not work, but this is something new.
There are tradeoffs with scalability. Systems scale more easily when they're more centralized. We'll see if those tradeoffs are worth it for Steem as more people take a closer look at this project. I imagine not much decentralization is needed for this project to work, so more centralization is probably fine.
Do systems scale more easily when they are centralized? Is that consistent with economic history? Which scaled better, communism or market economies? What is a system in this case? The tech? The economy?
More broadly, what do you see as the point of decentralization, why does it matter?
I am new to Steem so I when I look at the charts I am more impressed by the fact that it can actually handle such a volume rather than whether they are monetary. :D
On the flip side, one could argue that most of the Steem transactions are actual human social interactions (posts, votes and comments) rather than bots or day traders trading mindlessly. The network effect and how well it will entrench into the people's lives will ultimately guarantee a system's success.
It really do depends on what you value more in life. :D
It's still a measure of use, and lo and behold, people are using steem. Quite a lot even, considering how long it's been around.
My key metric is total accounts and active in 24 hour accounts. These were increasing 2k per day until the new account slow down was put in place. Still it's nice how easy it is to get metrics for all these currencies. What is the right metric for ether? It's not really a currency transaction currency either. I think it might be fair to compare ether transactions to steem but I would think steem would always have more due to voting..
Perhaps transactions to certain contracts (dapps) would make sense for tracking success of Ethereum?
First, good analysis. Second, (and be honest, Kyle) you were looking for something to write because you like seeing your Steem wallet balance increase.
I like to see my Steem Dollars increase so I can convert them to BTC. Don't really care about Steem Power at this time. Still learning how everything works.
Agreed, and while I'm still skeptical of the sustainability of Steemit, I've managed to convert $14 of Steem Dollars into $14 of Bitcoin due to a few comments on here, which is more than I ever earned in tips on Reddit... so at the moment, the platform does provide some good value and a way to increase bitcoin holdings :)
Bitcoin only can deal with financial transactions while Steem or Ethereum can do with other activities. It is like that Bitcoin is a feature phone and Steem is a smart phone in 2008 when iPhone 3g was released but majority of people are using feature phones. If we view phone calls only, feature phones had a greater number than smart phones. But we know this is not an appropriate comparison.
Bitcoin can do more than financial transactions: https://www.proofofexistence.com/
To me, it's unclear if the non-financial transactions on Steem's blockchain need to be on a blockchain. The phone analogy doesn't work because it isn't clear if those "smartphone features" are useful.
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Depends on what you count as meaningful. I know that a big emphasis for @dan has been building a scalable blockchain. And indeed, that tends to be the tricky bit with blockchains-- especially as we look towards chains that can handle many transactions per second.
Building a scalable blockchain is quite a claim. We'll see how scalable and decentralized Steem's blockchain is as more people look into the project.
You are missing the point. A transaction is a transaction. The network does not care if it's financial or not. It must be capable of processing it the same. The Steem platform is capable of handling hundreds of transaction per second right now. That is way more than btc can do right now.
I'm not sure we know what Steem is capable of or the tradeoffs that are being made for scalability. We'll find out if Steem continues to grow.
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