Future challenges in front of steemit – pt. 1
1. The questionable beginning of the project
2. The volatility of the price of the token and reasons behind it
2.1. Influx and efflux of users in general
2.1.1. Contrast effect
2.1.2. Visibility of your posts
2.1.3. Possible unexpected turn of events
FUTURE CHALLENGES IN FRONT OF STEEMIT – PT. 1 by Dawei
Steemit.com has recently become quite widely-recognized as one of the first blockchain backed-up social media platforms. Despite having a slightly different target audience, Steemit has a reasonable potential of becoming an alternative for the most popular, traditional social media websites that we know of today, like Facebook or Reddit, just to name a few.
I'd rather refrain from explaining all the technicalities behind the platform itself, as most of the registered users are already familiar with the engine of the website and the mechanics behind it. There are tons of articles on this topic that can be easily found on the Internet as well, including Reddit and Steemit website along with SteemIt's Whitepaper.
An essential fact worth mentioning is that the content created on Steemit gets monetized once upvoted. The voting strength of a particular user depends on the amount of money he has, and the percentage of the power of vote (influence) he decides to delegate when upvoting another user's post. The more money the reader has, the more money the creator of the content gets. There are three classes of financial assets on Steemit.
STEEM - the base liquid currency token in the platform. STEEM can be powered up into Steem Power, traded for Steem Dollars, or transferred to other accounts
Steem Power- Steem Power (abbreviated SP) is a measurement of how much influence a user has in the Steem network. The more Steem Power a user holds, the more they can influence the value of posts and comments. Steem Power is less liquid. If a user wishes to “Power Down” SP, they will receive equal distributions of the STEEM on a weekly basis, over a 13-week period.
Steem Dollars - Steem Dollars (commonly abbreviated SBD) are liquid stable-value currency tokens designed to be pegged to $1 USD. Steem Dollars can be traded with STEEM, and transferred to other accounts for commerce or exchange. Steem Dollars may also be converted into STEEM via a process that takes 3.5 days.
Every user can freely choose whether the post should be rewarded in Steempower only, or in 50/50 ratio of Steempower and Steem Dollars. Even though Steem Dollars earned for publishing particular posts can be withdrawn and sold on cryptocurrency exchanges nearly immediately (after the 7-day period), it takes 13 weeks to liquify the remaining 50% of your income paid in Steempower.
There are a lot of issues that prevent Steemit from becoming what it actually aims for - the social media platform of tomorrow.
#1 - QUESTIONABLE BEGINNING OF THE PROJECT
The launch of the Steemit platform, altogether with its software components was a bit shady and not really executed well from the very beginning. Once the Steemit became open to the public, there was little to no information provided regarding the token mining and the usage of the platform itself. Also, it was difficult to store previously mined tokens anywhere as the only available wallet for the Steem token was for Linux OS, which automatically crossed out more than 90% of users who have PC and Mac.
While an average user could not really mine tokens, the developers and more tech literate users could and most of them (approx. 75%-80% of the Steem tokens overall) ended up in the hands of very few people since day one. This situation raised serious questions and doubts among the community, with many people claiming Steem to be a scam and a sort of a Ponzi scheme, which was difficult to disagree with at that stage of the project.
That event basically forced the developers to walk an extra mile and adjust the platform and the code behind it, so that it could meet the needs of the community and tackle people's doubts towards its credibility. In the end, the developers made a decision to basically relaunch the platform and introduce a few improvements, the most important of which was hardfork #16 (December 2016), which improved the rules of token distribution between the witnesses and gradually solved the ever-raising Steem token inflation problem.
#2 – VOLATILITY OF THE PRICE OF THE TOKEN AND REASONS BEHIND IT
Regardless of what one can say, the ultimate purpose of Steemit is to distribute content, which users get paid for creating, making it different from other social media platforms out there. For each and every post that a user writes, one can get upvoted by other less or more influential people for a variety of reasons, which is how money on the platform is created. Posts get monetized in Steem token and Steem Dollars respectively, both of which can be later sold on local cryptocurrency exchanges for fiat money or traded for alternate cryptocurrencies.
#2.1. - INFLUX AND EFFLUX OF USERS IN GENERAL
'There are two sides to every story', they say. Many Internet celebrities and influencers have switched from platforms like Youtube and Facebook in favor of Steemit. Getting their posts monetized in no time is among the main incentives for this decision of theirs. Their followers switch to Steemit because they want to stay up-to-date with the content published (former YouTubers often point out that they tend to be more active on Steemit as long as an interaction between them and their 'fans' is considered). As a result, more and more customers, who can potentially become future investors on the platform, become attracted to it.
#2.1.1. CONTRAST EFFECT
It's not uncommon for a YouTuber to earn $4000 for a single introduction post consisting of 250 words. People having their unquestionable input in promoting the platform should be rewarded and there is no doubt about that. The problem is that these people who bring new users to the platform will be consistently rewarded with whales' votes, as Steemit whales count on increasing the overall value of the platform regardless the content that newly joined members produce (as long as they are popular enough), which at the end of the day affects the price of the token itself.
Just a few dozens of thousands of Steemit accounts out of nearly a million accounts registered for the time being remain active and the rest of them are virtually dead. It's a ghost town and none of the money you will see (being unevenly distributed so to speak), will ever go to new users. Therefore, influential people on Steemit (with a few notable exceptions) do not have to care about their audience anymore, as their fans do not really contribute to the overall value of rewards they get from publishing their posts on the platform, unless their followers have invested substantial amounts of money in the Steem token beforehand. The whole situation can turn out to be pretty discouraging for an average Joe who has just joined the platform.
#2.1.2. VISIBILITY OF YOUR POSTS
The more users get registered on the platform on a daily basis, the more of them will try their luck posting the content, counting it gets monetized. The number of posts multiplied by the number of new users joining the platform every day, regardless of the quality of the content they create, will inevitably lead to more posts being published. This information overload can result in your content not being visible to other users. As a consequence, there would be a noticeable decrease of audience/readers/viewers.
#2.1.3. POSSIBLE UNEXPECTED TURN OF EVENTS
There is a probability that influential figures on Steemit can stop posting on the platform at one point due to their overall dissatisfaction with bad user experience caused by not really user-friendly software environment compared with Facebook, Instagram, and Twitter. Compared to these social media platforms Steemit still seems to be miles behind when it comes to general simplicity of use (more about it in the next post).
To be continued