Why Steemit Inc. Doesn't Call Out Bidbots...

11개월 전

steem bidbots.png

Why Steemit Inc. Doesn't Call Out Bidbots...

The Comment That Became A Post...

The reason why Steemit Inc. doesn't call out bidbots and seek to nip them in the bud is because they understand economics. They understand that bidbots were a pleasant surprise, and Ned even pointed this out in a video recording. It is an interesting new form of business model that requires the buying of a large sum of STEEM and staking it.

I sincerely doubt that the majority actually do want bidbots removed. I hear the word "majority" a lot from what I bet is actually the loud minority. And even if the majority do want bidbots gone I bet they would regret that decision the moment the bidbots left.

Why? Because in all likelihood your STEEM would be worth much less. Contrary to what some might try to tell you, upvote services are not causing downward pressure on the price of Steem, they increase demand. This is because the bidbot businesses are a big part of the demand in today's STEEM demand/supply ratio.

In the end of the day, nobody cares how much STEEM they get, they care how much Steem Backed Dollars they get. SBD depends on demand for the STEEM supply and this means that long time stakers, like businesses, help increase the amount of SBD you can get from upvotes. In other words, upvote services and other organizations buying a lot of STEEM and powering it up are the ideal users.

Want your STEEM bags to go to the moon? Then encourage more people to open up shop as upvote services. They don't have to be "bidbots" but upvote services of all kinds, be it contests, not-for-profit organizations like @ocdb and also the for-profit ones. Why? Because they buy a lot of STEEM and then they lock it up as SP for a very long time. That is very good for the price of Steem Backed Dollars.

Upvote services are not expensive, usually they can even get you more STEEM than you had originally, so its kind of like paying for promotion where you get all the money back... Cool right? Totally...

On top of that, not only is the bidbot's STEEM locked up, but the people using those bidbots are locking up STEEM too! That's right, they are locking up STEEM because they have to go buy STEEM and pay the bidbot, and they have to wait 7 days to only get HALF of the STEEM back! Let me show you with some math how this works...

Let's say your account is set to get rewarded in 50% SBD/ 50% SP, well that means that when you send 20 STEEM to @rewardpooleater you get an upvote of 27+ STEEM which will take 7 days before you get it. However, when you get that 27 STEEM (-25%) it comes out as 20.25 divided between Steem Backed Dollars and Steem Power. Half of your STEEM gets returned to you as automatically staked/locked up STEEM!

This is very good news for other STEEM hodlers, because your liquid STEEM just got cut in half, which means that if you want to promote another post at the same 20 STEEM you're going to have to go out and buy someone else's STEEM. This creates a much needed sink for the cryptocurrency, one that has the potential to become an ever continuous cycle.

But wait!!! Wouldn't the 20 STEEM you spent go to the upvote service and immediately get sold on the market as profit? Not necessarily, because the more upvote services come into existence the more competitive the services will need to become. This means that as new upvote service businesses arrive (after buying a wicked ton of STEEM to power up) the original gangsters will need to offer something the new guys can't like MORE POWERFUL upvotes or more lucrative ROIs to their customers/users.

No, Steemit Inc. does not want that to go away, because they're not stupid. In an industry where everyone is making a coin/token and everyone else is asking what their utility is, STEEM actually has a legit utility in the real world: promotion. Another token also has that same utility and its called the Minds.com token, but that utility is quite centralized.

Steemians should be quite proud to say that the promotional utility of STEEM in the form of upvote services is decentralized, because anyone can offer the service by buying up STEEM.

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@mack-bot you are systematically harassing me. You and your delegators such as @misterdelegation can become legally liable for damages.

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Are you part of some flag war @blake.letras?

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I am not a part of a flag war that I know of, but I believe my views expressed about bidbots not being bad has put me on a blacklist.

Doesn't matter, I can always make another account.

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hi @blake.letras

How have you been doing Blake? Didn't hear from you in a while so I decided to visit your profile and see if you posted anything lately.

I'm guessing you must be very busy those days. Hope your HOBO token is moving in right direction.

It is an interesting new form of business model that requires the buying of a large sum of STEEM and staking it.

Very sad but very true. This is business model that allows to create a monsters. Few huge accounts which do not bring any value to ecosystem except of encouraging users to "stake" their tokens

Contrary to what some might try to tell you, upvote services are not causing downward pressure on the price of Steem, they increase demand.

I actually don't understand that part. If thanks to bidbots there would be more rewards being created and distributed daily, then wouldn't it increase total supply of tokens being hold by Steemit users?

Yours,
Piotr

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Hi @crypto.piotr,

So there is a difference between STEEM rewards and SBD rewards. STEEM could be worth $8.40 or $0.17, when STEEM is worth $8.40 the amount of STEEM you get is less, but the amount of USD (US dollar) you get is more. What do you want to happen?

It is easier to obtain STEEM when STEEM is not very valuable because rewards are paid out in STEEM and Steem Power, but when STEEM goes up in value the rewards switch to SBD and Steem Power. This is because the amount of STEEM you are likely to receive is less unless you immediately convert your rewards to STEEM. In essence, the Steem blockchain's reward system is designed to try and give you US dollars when STEEM is valued high against the US dollar but give you more STEEM when it is valued low against the US dollar. The objective is to give you the inferior asset, which ever one that is at the time, as the reward.

Sounds bad in a way, but there are a lot of positives here. Ultimately, STEEM is just a utility token that provides you with access to the network and its reward system, from there your aim is not to obtain STEEM but USD. Ideally, STEEM would be very valuable, which means the network would not want to be paying you in STEEM but in SBD, which ultimately means USD.

So, what I am trying to say here is that bidbots actually increase the value of STEEM, the token itself. This is because they fill some of the demand for the token. If bidbots were not buying STEEM and staking it to run their business there would be less liquidity for the token and it would be worth less than it is today. Smartsteem owns 234,000 SP, which is not on the market because they find that SP useful for their business. They utilize their SP to provide a service to content producers, and many content producers use their service regularly. If they got out of the business would there be someone to buy their SP? Maybe, but it would likely lower the value of STEEM's price. They are locking up large amounts of STEEM in order to create a service.

The common argument against my point is that the reward pool pays out daily voters. So, this means that if the bidbots and whales were not voting all the rewards would go to the little people. Some people think that it is reasonable to say that the whales shouldn't vote on stuff because it means less rewards for the minnows. Here's the problem, the vote share that those whales have when they vote is fair according to their investment in the network. If everyone owning SP all voted 10 times per day, they would get their share of the inflation according to their purchased amount of SP, which is fair. Thus, it is not unfair when whales vote for stuff, its their right, and if they did not own the SP that they own STEEM would be worth less. That's why some people get angry when Steemit Inc. sells 800,000 STEEM programmatically.

People have a silly idea in their head that wealthy people should buy up a lot of STEEM and stake it in order to make the price of STEEM go up but that they should not use it, or at least only in a selfless way. That is completely illogical, investors don't buy assets for charitable reasons but for monetary gain.

The more and more I think about it, the less I believe Steem can ever succeed by targeting individuals. I believe Steem will only succeed if it comes to realize, as a whole community, that adoption will come from businesses first and gradually move over to individuals through the businesses.

The average person will not be easily motivated to buy STEEM. Large, medium and small businesses can see value in investing in large amounts of Steem Power in order to motivate their own users to behavior in a way they like.

There is a huge snag in that theory though... The problem is account creation. While Ethereum may require ETH to perform transactions on the network, it requires nothing for people to set up a wallet, which is essentially the same thing as an account on Steem.

This allows Ethereum tokens to be more competent than Steem SMTs for mass adoption because they have two options available to them:

  1. off-chain activity with optional on-chain storage of assets
  2. on-chain activity with developers covering fees by utilizing a plasma chain, Loom Network or Gas Station.

However, Steem has none of those options available to it. Because if they do all activities off-chain like Minds.com is doing with the option to store their SMTs on-chain at some point, this will mean that the moment they want the asset on Steem they have to THEN create the Steem account, costing large amounts of RCs or 3 STEEM + enough SP to perform actions.

Additionally, SMTs will not have RCs but they will require RCs to perform actions on Steem. This means that businesses hosting social sites that have an SMT either have to motivate all their users to buy STEEM and power it up, or more realistically, they will have to buy a lot of STEEM and power it up in order to delegate RCs to all their users.

If the price of STEEM goes up this becomes exceedingly cost-prohibitive. I suspect people will do it only if it remains cheap, meaning that once STEEM goes up to a certain price it will drop back down due to the fact that businesses just can't make it cost effective. It can work for very small niche communities, but if a company wants to be able to receive thousands of new users per day it becomes virtually impossible.

Ultimately, I believe the flaw in both Ethereum and Steem is in charging people for performing actions. They do it in different ways, but they both force a cost per action at the end of the day. The ideal model would be one that does not charge per action, which might be a major challenge, but nevertheless, I think it is crucial to mass adoption. RC requirement or transaction fees, both result in businesses struggling to make it feasible for their businesses.