A little while back i wrote a post addressing the reward disparity on Steemit, where some posts seemed to be getting ridiculous payouts for the content produced, while most languished in single digit obscurity. And when discussing marketplaces in general, I stand by the points I made - value being subjective, shooting stars not being a problem, the crazy spasticness of emerging tech and markets, etc. But I have come to reverse my position on the particular situation we face on this platform right now.

The problem, as has been addressed before by others, is the exponentially disproportionate awards given out by upvotes based on Steem power. And due to the existence of this distribution mechanic, Steemit does not resemble a free or open marketplace. It is in fact, a centralized system where a very small number of people try to manage the wants of a very large number of people. And what happens under such a system? Lets take a look at the most infamous example: the makeup tutorial.

Had $30,000 gone to a first time youtube video because a massive percentage of Steem users loved it, then there would be nothing to discuss. Supply, demand, subjective value, done and done. But that isn't what happened. The whales got into some sort of weird upvoting frenzy that shocked everyone in the end. If the majority of whales were women that just loved watching makeup tutorials....or...men that loved watching makeup tutorials - then it would simply be a case of Steem being a content market for the whales. Which wouldn't be good or bad it would just...be. But i don't think any of us believe that's what happened either. The most common explanation, and what is most likely true, is that the whales wanted to promote something that was new and different.

So lets look at that fact in relation to the original intent of the whale system, or the vested user/steem power based system. I fully understand why the exponential influence model was adopted. In theory, it makes sense. The most vested users guide the content of the platform, because they have the most motivation to keep the content high quality and popular, hopefully bringing in more users. But in practice, 30,000 USD was invested in a girl's first youtube video, who had no subscribers or any following of any significance on any other platform. This actually reminds me more of a centralized financial system like the Federal Reserve than any sort of free market. The power voters don't have to divest themselves of something they already own in order to invest in a content creator since the money comes from a sort of third party source. And so what happens?

Mis-allocation of capital, false market signals and financial bubbles. With such a massive financial carrot on display, people started trying to curate makeup tutorials. But they weren't rewarded because the market signal was false. More content creators made makeup tutorials and were rewarded with cents. Because the bubble had already popped as fast as it was created. What did happen, is that one girl got incredibly lucky. In fact she, like many other successful users, seems to be on a whale watch and/or bot list that causes anything she posts to turn into gold. And that's fine, I hold no ill will toward her. She did nothing wrong, she has a lot of money now and that's wonderful. But it reveals something about the nature of this platform.

Steemit is a lottery

I fully believe that most, if not all whales are altruistic when it comes to this platform, and are genuinely trying to do the right thing. I imaging they scour the content as much as they can trying to reward quality content, and pay attention to upvotes to reward content that the community appreciates. But they are human, and few in number. So many resort to upvote bots or watch lists that are going to give certain users four digit rewards for anything they post to the platform so long as it isn't flag worthy. They can try and reward what is popular and curated, but what are the minnows incentivized to curate? There's no motivation to curate things you like, or even things that would be popular. The financial incentive is to upvote whatever the whales are likely to upvote. So we have this weird interplay of each group trying to anticipate what the other would like or reward rather than just...upvoting the content they personally want to show appreciation for. So are posts rewarded for genuine popularity, or are the votes following the dollars? Its all very chaotic and random, and in the end it seems to be creating a haves/have nots divide that doesn't need to exist.

The content doesn't matter

The original intent of Steemit, from what I can tell, was to create a crypto currency with a distribution method that would get the currency distributed and used by as many people as possible through a familiar portal, namely a social media site. The more people actually possess and use the currency, the more demand, the more value, so on and so forth. But in my previous post, I believe I said 'the robot overlord cares not what the hairless monkeys click on'. In other words, the content doesn't matter in the grand scheme of this system. This could become the biggest shit posting site on the planet, and people will continue to make posts for their lottery tickets. Now it might matter to the users, particularly the vested users, which was the rationale behind the disparate voting power system. But again, in practice I don't think that is what's happening. If the curators are incentivized to vote the way of the whales, then the content is not being judged independently for its quality. If whalebots, and in turn curation bots are being deployed, then the content is definitely not being judged for its quality or value. And if the whales decide to reward manually, they are inevitably overlooking the vast majority of content being produced due to their puny human limitations, and therefore that content is never evaluated for its worth.

In the end, the system is far too convoluted to be useful. It will function either way just fine, but it will continue to dish out massive rewards to a few, and virtually no rewards to most people, many of whom are probably producing similar and/or superior content. The crypto will flow to many, but in a lottery-like way that crates a chasm between users that serves no purpose, other than building an understandable resentment. I see no reason to avoid flattening vote rewards, or at least reducing the power based reward gap to a minuscule version of its current size. I could certainly see requiring a threshold of Steem power for your upvote to count for much of anything. Perhaps minnow power before the threshold, and 'regular' user power after something notable, but attainable like $100 USD. A thousand if you want to be demanding. I could also see having an exponential gap in voting power when it comes to flagging and unflagging mechanics. That would be a moderator like role for vested users that would resemble any online platform, something people would be familiar with.

I know one or more whales have explicitly stated that they are actively trying to distribute Steem to other users in an attempt to make bigger fish, resulting in bigger rewards when they vote, which makes more bigger fish, etc. And while it makes sense that this is the goal, I have my doubts that it would work, and I imagine it would happen at a snail's pace if successful. There are a tiny number of whales. After they make dolphins, and a few more whales, will there be a greater ratio of dolphins and whales in relation to the rest of the platform as it grows in users? I have my doubts the actual ratio will change much as time goes on. But more importantly, if the dream is to have a flatter reward system, then why do we not just implement a flatter reward system? We can just get rid of the divide now. Let content be rewarded directly based on the genuine appreciation of those consuming the content. Less than 200 users cannot be expected to reward content by trying to represent the varied appreciations and appetites of 30,000+ people. As I said before, the system will continue to work, but there is one thing to keep in mind if we choose not to change anything.

Steemit is just one of thousands of alt coins in existence. Anyone with the right expertise can copy this entire platform. The proof of concept and trailblazing work has already been done. There is nothing to stop them from recreating a similar crytpo and social media portal, and implementing a popularity based, flat reward system from the get go. If that is the stated goal of the developers anyway - a flatter ocean of upvote rewards - why not beat them to it? If not, do we not think that the masses of disgruntled users will flock there? Would newcomers from outside the crypto world not be even more excited about trying it? A copy and paste platform could completely eclipse Steemit.

You may wonder why I would bother writing such an anti-Steemit, or anti-whale post. I mean don't bite the hand that could feed you, right? But its really not anti-Steem and certainly not anti-whale. The whales win by default no matter what happens. They invested early in a platform that will be successful, even if eclipsed by another. If there is magic internet money being distributed, people will still post here for their lottery tickets even if they flock to the other site. The currency will continue to be used, and they will continue to make money on interest and steem value appreciation.

I myself plan to continue posting here from time to time. I mean, why not? You never know when a post might earn you a golden ticket to the whalebot factory. But I think the community as a whole would be happier with a flatter, popular vote reward system that can make modest but noticeable followings and rewards a reality for more people. I don't expect a big change, honestly. This is just some fish food for thought.