This is the third post in my series on difficulties that new users face when creating a Steemit account.
You can read parts 1 and 2 here:
My central point is that the difficulty associated with getting started on Steemit is increasing daily. Flowing from this I would argue that if this trend is left unchecked, we will reach a point where the platform is no longer attracting new users and we are left with MySpace.
My argument is not that Steemit should be easy. Nothing worth doing is easy. When the level of difficulty increases so much, and continues to increase week by week however, you have a system that is self defeating.
Back in my day…
Let’s start to look at some other ways in which Steemit is becoming more difficult for new users. It’s very common to see posts on this platform where existing Steem users provide tips to new users on how to succeed on the platform. I have written one of these post myself. What frustrates me about the vast majority of these posts however, is that they are quite often written in the context of what I would call the ‘back in my day‘ is mentality. This message in one form or another states that, back in my day I worked hard to succeed on Steem and therefore all you have to do is work hard and you can be successful like me. Let’s explore this and see why this statement is demonstrably incorrect.
Let’s imagine a hypothetical scenario where a new Steemit user was able to produce good quality content, upload it to the platform, and received author rewards totalling five dollars. Let’s also assume for simplicity that the author chooses the 100% SP (SP) payout ratio. The same logic applies for a user who chooses to be paid in 50% SBD, but the numbers become more difficult to demonstrate, so I'll stick to a simplified scenario. In this scenario the user would receive a total amount of SP equivalent to $5.
With a Steem price of $2.50, which is both convenient to work with, and a very close approximation to today’s price, this sees the author receive 2 SP in reward for their efforts.
Now let’s compare the outcomes we achieved above, with the outcomes the same author would have achieved had they posted their content on 9 March 2017, which is exactly one year prior to the date I wrote this article. On 9 March 2017, the Steem price was $0.08 US. For exactly the same post, earning five dollars in pool rewards, on 9 March 2017 the author would have received 62.5 SP. So, in a hypothetical scenario, for the same post, achieving exactly the same level of author rewards, today's author today receives 3.2% of the reward as measured in SP as they would have achieved 12 months ago.
It can be validly argued that this example is wrong because in March 2017, the author only received 50% of the post rewards, not the current 70%, therefore their payout was lower. To have included this would have overly complicated the calculations however, as it is the magnitude of the change, not the actual % change that I am attempting to highlight. As such I am comfortable that the example used serves it purpose.
To provide another example let’s look at what would have happened on 9 November 2017, which was approximately the time that I joined the platform. The price of Steem on 9 November 2017 was $0.96. Meaning that for a $5 post, posted on that day, you would have received 5.2 SP, which is approximately 2.6 times as much SP as you would receive today.
But wait you say! This is a ridiculous argument because the total amount of reward that I have received in real dollar terms has not changed. Whether I get 62.5 SP with Steem being worth $0.08 per coin or 2 SP with Steem being worth $2.50 per coin, I still receive a total amount of $5 in rewards. This is correct. What this does not consider however, is the rate at which new authors are able to accumulate SP.
The Importance of Steem Power
Anyone who has been on the platform for any period of time understands that the way to ultimately be successful on Steemit over the longer term is to accumulate SP.
SP gives you influence.
It allows you to attract followers, because when you have SP people wish to interact with you because they hope that you will interact back up and upvote their posts. SP also provides you with censorship resistance as the greater your SP, the greater the power of your down vote. There are any number of arguments as to why SP/influence is important on Steemit. I covered these at length in my first post linked above.
It is my belief that most people who are serious about wanting to use this as a blogging and content sharing website are not here to make a quick dollar. They are here for the longer term. To create a successful account with a large number of followers that will allow them to share their work. Accumulation of SP is the only way to do this successfully. With the Steem price having risen so dramatically over the past 12 months, it is now significantly more difficult for new users to accumulate SP and therefore be successful on this platform. Let’s stop pretending that the solution is just to work as hard as I did and you can be as successful as I am.
It is a fact that it is harder for new users on Steemit to be successful today than it was for those of us who joined six months ago, and it is many, many times harder for new users on Steemit today to be successful than it was for those who joined 12 months ago.
How a rising Steem price makes the problem worse
If we extend our above analysis we can look at the effect of rising Steem prices on levels of difficulty for new users. It’s purely coincidence that I have chosen to write this post at a time when the Steem price has taken a significant fall to $2.50. The table below shows the effect of a rising Steem price on the rate at which a user will accumulate SP.
|Steem Price||SP Rewards from $5 in Author Rewards|
This table clearly demonstrates that as the Steem price appreciates it gets more and more difficult for new users to accumulate SP and therefore influence on the platform. The total dollar value of rewards does not change, however the difficulty for a new Steemit user to build a large and influential account increases as the Steem price increases. In effect an appreciating Steem price makes those of us already on the platform more wealthy, whilst at the same time discouraging new users from joining the platform due to the increased difficulty of replicating our success.
The problem is we have a Catch-22 situation, because the longer term success of Steemit relies on the platform continuing to grow and attract more users so that the price appreciates. As the price appreciates the platform becomes less attractive to new users however. In the absence of an effort to address this issue, there will come a point where Steemit will stop attracting new users in large numbers.
The break in the SBD peg has masked some of this in the short term. If Steemit was functioning as the creators outlined in the White Paper, we would all be receiving one dollar in rewards for each SBD that we earn. Currently we receive significantly more than that, which means everyone is cashing in on the short term riches, and many are not looking at the longer term consequences of the way in which interactions on the platform are playing out. If the SBD peg was still in place, author rewards would be significantly lower than they currently are, and much of the incentive that existing users have to interact with the platform would be removed.
Please note that I’m not advocating in favour of, or against the SBD peg. This is not something which I understand in sufficient detail to provide an informed opinion. I merely highlight the fact that because it is currently broken, we are all getting a short-term sugar rush of higher than usual rewards, which is potentially distracting us from the longer term implications of the way in which rewards are currently distributed.
It’s Not The Fault Of The Whales
I need to pause the article here highlight that I’m not criticising early adopters of the platform. I would congratulate those early adopters for having the vision to be involved in the project at an early stage. They are now in a position to reap the rewards of the work that they put in before the rest of us could be bothered to even learn what Steemit was. The fact that someone was able to accumulate a large amount of influence in the early days is not a problem in itself. This can be seen as a justifiable reward for the risk taken to become involved in a platform that was, at that time, unproven. This doesn’t change the fact that for us to all be successful in the longer term, we need to ensure that Steemit remains attractive to new users and continues to attract growth across the platform.
Buying Influence - Another Way That A Higher Steem Price Disadvantages New Users
The other way that someone can gain influence on the Steemit platform is by purchasing Steem and powering up. It is very simple to go to an exchange, by some Steem, transfer it to your account and power up. This overcomes a lot of the angst that new users feel in getting their account off the ground. The first 500 SP is most definitely the hardest to earn. While it’s important to note that it is beyond the means of many Steem users to buy Steem, it is still one way in which a new user can give their account kickstart towards longer term success.
Unfortunately, the same dynamics we have demonstrated above also affect the amount of SP that a new user is able to purchase.
Looking at the same dates that we use our example above, let’s examine an example where a hypothetical new account holder decided to invest US$500 into SP to give their account a boost. Had they done so on 9 March 2017 they would have received 6,250 SP for the initial investment.
Were they to invest US$500 today they would receive 200 SP.
Whilst I haven’t looked at the statistics in great detail, I would argue that 6250 SP is more SP than the vast majority of Steemit account holders currently have. Most minnows can only dream of having an account balance of this amount. To purchase 6,250 SP at today’s prices would require an investment of US$15,625. This amount of money is clearly beyond the reach of the vast majority of Steemit users. So, purchasing SP is another avenue that has been closed off by the higher Steem price.
Let’s Be Clear About What I’m Not Saying!
I am not saying that a higher Steem price is a bad thing. Clearly all of us on Steemit benefit with an appreciation in the Steem price.
What I am attempting to highlight is that if we wish the Steem price to continue to appreciate, then we must ensure that the platform continues to attract new users, otherwise over the longer term it is likely to fail. Clearly this hasn’t had a negative impact to date as shown by the diagrams in my previous post, which clearly demonstrate that the number of new accounts is rising very strongly.
It is my opinion however, that over the longer term if we don’t make it easier for new users to succeed on Steemit then several things will occur. Firstly, the number of new users coming to the platform will slowly stop. Secondly the number of existing users who choose to leave the platform will increase. This is what happened to my friend @just2random that inspired this post. It’s possible that even with a large number of new users flocking to the platform, we can still go backwards if existing users drop-off faster than new users are added.
Enabling minnows is key to the long-term success of Steem
Main image courtesy of Steve Harvey on Unsplash
Written with StackEdit.