Things To Like About Steem as a Blockchain Project

  1. It’s a great onramp for users to the cryptocurrency economy.
  2. It’s a real world experiment of Delegated Proof of Stake (dPOS) at scale.
  3. It’s a functioning combination of Reputation + Curation + Reward Distribution that can be used as a platform.

How to get your first cryptocurrency

Interest in Bitcoin, and cryptocurrency in general, has crossed over into the mainstream media, but your average consumer doesn’t have any idea how to go about getting their first bitcoin. Buying it can be difficult due to the friction introduced by Know Your Customer laws, and state specific regulations around exchange products. Even if there’re straightforward, legal services, to buy bitcoin, going through all the steps involved is enough to block a mainstream user. Steemit is the first place I’ve seen that a regular consumer can earn cryptocurrency easily for taking normal actions that they’re familiar with, like writing a blog post, or curating/voting on content. As soon as a user earns Steem Dollars, which half of their rewards are paid out in immediately, they can optionally convert to other currencies of their choice via services like Shapeshift.

Delegated Proof of Stake in the real world

Proof of work, or traditional cryptocurrency mining, has resulted in a secure network for Bitcoin, Ethereum, and other blockchains, but due to the large amount of power consumed and potential centralization of miners, there’s a lot of research going into Proof of Stake schemes. Many such schemes are theoretical, are potentially months or years away, or represent existential threats to existing networks with large amounts of value locked up, in the case that things don’t go smoothly with implementations and transitions. What Steem has already done, is launched a delegated proof of stake (dPOS) blockchain project, with a large amount of users, transactions, and fast block times. In this scheme, users use their voting power to elect a fixed amount (19) of “witnesses”, who take turns producing blocks. Users can also mine or wait in line to have a turn producing a block if they weren’t elected.

Reputation + Reward Distribution

When you introduce money into a system where people are use to acting for other non-financial incentives, users begin to act differently. They try to game the system, either directly by exploiting weaknesses in the design of the protocol, or subconsciously by tailoring their actions towards maximization of profit as opposed to what was previously driving the behavior. I have no doubt that Steem has suffered initially from some of these issues, and they’re likely doing what they can to offset it. But, one of the promises of blockchain technology is that applications and networks will start to have economic incentives embedded into them across all sorts of use cases, and when economic incentives exist, the protocols needs to account for how to divide up the money. And when starting from scratch, this is a tricky design to get right without exposing yourself to being gamed.

  • user stake and reputation
  • voting/curation
  • flagging
  • bandwidth limiting on participation
  • multi-tiered reward distribution

Conclusion

I’m rooting for Steem to continue growing their network, and for finding the right economic balance between money coming into the network due to speculation and willingness to route attention, and money flowing out of the network to content creators and curators. Whether Steem gets there or not, the above aspects of the project have pushed the blockchain community forward, and will likely pop up in new forms in projects that are yet to come. I know I’m excited about incorporating many of the lessons learned from Steem in my work going forward.

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Building live streaming on the blockchain at Livepeer. Previously Founder, VP Eng at Wildcard and Hyperpublic (acquired by Groupon).

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Doug Petkanics

Doug Petkanics

1.97K Followers

Building live streaming on the blockchain at Livepeer. Previously Founder, VP Eng at Wildcard and Hyperpublic (acquired by Groupon).