What I'm most interested in is experiencing the economic innovations created by decentralised blockchain based businesses and thereby understanding the full potential for economic revolution that cryptocurrencies & DApps enable. At least that's how I justify it to my wife!!! :-)
The Long Tail of Money
The people at Bancor (@bancor-network) talk a lot about the long tail of cryptocurrencies and how community currencies unlock enormous economic potential in communities as diverse as Tel Aviv mothers, economically downtrodden English towns and African villages.
For most people, national fiat currency is a limited resource that is mainly spent on the essentials of living (accommodation costs, food, transport etc).
Discretionary spending is limited or non-existent and there are many things we want but don't have the available fiat currency for.
Yet in every human being, there is economic potential to produce discretionary goods and services that others want, but are not able to pay fiat currency for.
By introducing a community currency and airdropping it to community members in some manner you unlock untapped economic potential, enhancing the lives of everyone.
But community currencies which are not exchangeable for other currencies are difficult to maintain as people move in and out of a community. They eventually fail.
To really unlock this economic potential, efficient ways to exchange these community currencies for each other and liquidity on such exchanges are needed.
This is where cryptocurrencies shine and the Bancor Protocol provides an automatic liquidity provision mechanism.
The Bancor people have observed that, like in internet videos, search and many other areas, the largest amount of value is in the long tail.
Applying these observations to Steem, we see that not only is Steem one big community (using the Steem cryptocurrency and blockchain), but it is also a collection of many smaller communities. Some of these communities are interest based, some geographical and some are DApp based, including communities of gamers.
With the introduction of Steem Engine Tokens these communities are able to create and issue their own community token and benefit from frictionless exchange and the market mechanism set up by the Steem Engine Team. This is already unlocking the economic potential of these communities.
By adding SCOT and Nitrous, these communities can now stake coins for proof of brain rewards and delegation, just like Steem, but with a different value distribution among community members.
Palnet (palnet), Splinterlands Talk (spt) and Steempan coin (sct) have already created stakeable community currencies for Proof of Brain reward mechanism for content creation relevant to their community. As of yesterday, in what I understand is a world first for a fungible token, these tokens can now be delegated to others.
While we take for granted that Steem can do this, other cryptocurrencies can't and certainly it is not possible with tokens on other blockchains such as Ethereum, EOS & Tron.
Staking and delegation take community currencies to a new economic level by enabling both reward for content creation and "investment" in new projects (economic enterprises) without risk of capital. We have already seen how Steem delegation and community support has provided seed investment and an excellent incubator for new projects on Steem.
Steem (not Steam) as a platform for Games
Computer gaming is a huge industry. There are now more than 2.5 billion gamers across the world. Combined, they will spend $152.1 billion on games in 2019, representing an increase of +9.6% year on year.
We are all familiar with the "freemium" model of games that are free to play but require spending on in-game items or levels etc to advance within the game. Other paid games also have paid upgrades and items. Some have in-game currencies while others have valuable items etc. But with all centralised games, any value you create in that game is locked in and completely dependent on the game company.
- When you tire of the game you can't transfer that value out. Whatever you have spent is lost.
- If the game maker decides to stop supporting the game or goes out of business, you are stuffed.
- You risk being de-platformed from the game and losing you whole investment if you offend some fine print-terms and conditions, or perhaps because someone at the gaming company doesn't like you political opinions.
- If you want to sell your in-game item to another gamer, there are not easy mechanism to do it. Items may not be transferable at all.
This is all highly unsatisfactory.
With blockchain based games like Cryptokitties, Steem Monsters and Next Colony, all these problems are resolved.
- In-game items like cards, orbs, planets and ships are really owned by the player, with ownership written immutably in the blockchain.
- Cryptocurrency provides an easy, low friction way for gamers to buy and sell items.
- The open source nature of blockchain games means that the backend of the game is forever maintained and others can maintain or develop new front ends and continue development if the original developers disappear or stop maintaining the game.
- No-one can kick you out of the game. The code, rather than corporate whim, is law.
Steem Monsters and Next Colony have demonstrated how you can create compelling gameplay within the technical limitations of blockchain development.
Critically, the free and fast transactions provided by the Steem blockchain distinguish them from the expensive (for the user (Ethereum) or developer (EOS)) and slow (Ethereum) transactions that plague Cryptokitties and other blockchain based games.
With Dark Energy Crystal (DEC), the Splinterlands team have created an in-game currency for Steem Monsters players with faucets and sinks that @aggroed has written extensively about. They have also tokenised Alpha & Beta Card Packs enabling even easier trading and establishing transparent market prices.
This has created an entire complex economy within the one game, which also interfaces to the outside world via Steem Engine.
Games + Communities + Long Tail Money: A Revolution is brewing
All the developments I've outlined above are coming together on the Steem blockchain to create something really extraordinary!
By combining the benefits of blockchain games, with community currencies and enabling Proof of Brain reward and delegation mechanisms in game based communities we are witnessing a veritable Cambrian explosion of economic development.
An example is illustrative.
My friend @brianoflondon has a son who is into Magic: The Gathering, a physical fantasy card fighting game on which Steem Monsters is partly based.
His son wants new card packs, so they have to get in the car and drive to the shops in another town and spend hard earned fiat money (New Israeli Shekels) on a card pack.
Because prices in Israel are often inflated, they pay a higher price for the card pack than if they bought in the US.
Sometimes his son excitedly announces that the pack contains a card "worth $15" on some website market for Magic cards. However, my friend knows that this is not really true because the markets for Magic cards are not properly verifiable, transparent or liquid and its difficult to sell that card from Israel without losing most if not all the value in postage and transaction fees.
In contrast, my friend was able to buy his son a Steem Monsters Starter Pack with Steem he earned from his posts. I was then able to supplement his deck in one click with spare cards I have in my Steem Monsters decks. He was then able to play in a Splinterlands Tournament @jpbliberty set up to promote the Crypto Class Action against Facebook & Google's Ad Ban with entry fee payable with the SUFB token.
When his son wins games he earns cards and DEC and can seamlessly exchange those for Steem on not just the Steem Monster's market, but also the alternative Peak Monsters market interface created by the @steempeak team (on which I'm writing this post). Whether he trades on the Steem Monsters market or the Peak Monsters market they underlying market data (offers, prices and trades) is the same. But each interface has different attractive features, fee & reward structures.
He can then use his Steem in Next Colony to buy warships from @flauwy & @chrisroberts's NextFleet Battleship Market or send it to a crypto exchange to get fiat currency. This, like Peak Monsters, is another business separate from the creators of the main game which offers services within that game community. They did not need permission and a complex and expensive partnership agreement - they just did it!
The fact that another business, unassociated with the creators of the game, can create a competing market for the in-game items is a huge development for the online world, which has fantastic implications.
With traditional physical items it was always possible for third parties, unassociated with the manufacturer to create markets (shops) to sell the item, as well as accessories and ad-ons for the item. The ability of entrepreneurs to piggyback on the product of unassociated companies is a critical driver of innovation and economic growth.
But the perversion of intellectual property law and the critical role of software in almost everything allows both online providers and many physical manufacturers to lock down their product so that only they can sell, service and enhance it. This is bad for consumers. It is bad for innovation. Its bad for the economy and society as a whole because the majority of economic growth and innovation in any economy comes from small businesses. Large businesses are unable to grow or innovate as quickly.
The ability of large companies to lock in consumers and lock out the range of small businesses that would normally arise around any successful product is a major reason why economic growth rates have dropped across the developed world. This stagnated, over regulated crony capitalism with high barriers to entry has unfortunately been made worse by the information revolution.
Steem is showing the way back to a true capitalist economy where entrepreneurs are free to meet consumer desires with extremely low capital requirements, no barriers to entry, and (so far) zero regulation.
My friend's son can earn Steem and Snax, spt sct & palnet tokens by creating relevant content on the Steem blockchain and elsewhere which attracts more people into the Steem world and thus enhances value for everyone.
Once he builds up his stake he can start delegating to projects he likes and so the cycle goes, creating more and more economic value.
We are witnessing an economic revolution, and Steem is at its heart. What is happening right here will change the world!
Signup for the Crypto Class Action against Facebook & Google's Crypto Ad Ban by sending an encrypted Steem memo to @jpbliberty saying "Join Crypto Class Action" and providing contact details.
More details in this post. https://steempeak.com/fundition-iqx614ch7/@jpbliberty/one-click-crypto-class-action-signup-for-steemians