Dr Samuel Douglas explores the ethical and political complexities of one of the front-runners in a new wave of social media.
OVER THE SUMMER, whiling away the hours as I sat "between" casual teaching contracts, a friend talked me in trying a new social media site: Steemit. It cost nothing to open an account and I was ready to boycott Facebook on principle, so figured it was worth a try.
Steemit is a blogging platform, not unlike Medium. Nothing much special in that. In my first eight weeks blogging there, putting in about the same amount of time I’d devote to other social media (which is to say, more than is healthy), I earned the equivalent of about AUD $300.
Got your attention now? I thought so.
Steemit blogs run on the Steem blockchain, where content producers and readers are rewarded for their efforts with a share of the network’s own "reward pool" of cryptocurrency: STEEM.
New STEEM is minted every day by its delegated proof-of-stake network, at a rate of about 9.5% per year. It’s this printing of money that makes up the reward pool. While we are on economics, I should also state the obvious: Because this cryptocurrency is inflationary, demand must stay high for it to maintain its value. Luckily, STEEM can be bought and sold through a range of exchanges. This allows new money in to maintain demand, but also means it isn’t immune to the volatility associated with cryptocurrencies.
The process of earning these tokens goes very roughly as follows.
When I post something on my Steemit blog, it’s written into Steem blockchain. People vote on it (known as "curation") and, after a week, I get a cryptocurrency reward based on how much I’ve been up-voted. Post rewards can reach hundreds of dollars, but most blog entries will earn no more than a few dollars. As more accounts vote for my posts, my reputation – which is supposed to indicate my overall trustworthiness – rises.
Curators are rewarded too: About 25% of my post’s payout goes to people who’ve voted for it. The influence of an account’s vote is determined by how much Steem it holds as "Steem Power" (SP). The higher the SP of an up-vote, the bigger the reward it delivers to the content creator and the bigger share of the curation reward it takes. At the time of writing, an account holding about $280 worth of SP has an up-vote worth about $0.02.
When I tell you that at least one account has a vote worth over $1,000, you’ll start to understand the wealth involved in this — some accounts are worth millions of dollars. The top 1% of accounts (by SP) control about 76% of the overall voting influence. Users with huge amounts of SP are known colloquially as "whales", those with much less are "minnows".
There are two main ways an account can be so powerful. One, the owners were around when the blockchain and platform were launched (tokens were much easier to acquire if you knew the right people). Two, the account is new but the owner has spent up big buying Steem to power it. A further advantage of having plenty of cash is that you can pay other accounts to vote for you — and commercial "bots" exist specifically for that purpose.
As well as up-voting content, there’s down-voting, known as "flagging". This reduces post payouts and reputation in the same way that up-voting increases them. If your reputation goes too low, your posts will still be on the blockchain but they will be hidden. Importantly, you cannot reduce the reputation of anyone with a higher reputation than you.
Readers with some critical thinking skills or a knowledge of the history may see some problems, both moral and practical, with this setup.
Flashback 1988: “Get Ready For A World Currency by 2018″ – The Economist Magazine! — Steemit https://t.co/X3UvsgIAzE
— adinqu (@adinqu) April 2, 2018
Voting is weighted by accumulated SP. This means the whales control what makes the trending page, who can make a living off their work and who is elected to the most lucrative "witness" positions that host the network and decide its future. This disparity of power is reflected in the distribution of the reward pool. At least one account is said to be earning over $2,000 per day, but many will be lucky make $100 in a year.
This unevenness of voting weight means that while a minnow might be able to destroy $0.10 of a whale’s earnings, that whale could totally demonetise a week’s worth of a minnow’s posts without even breaking a sweat. A whale can easily crush the reputation of a minnow through down-voting, too. Other than begging other powerful accounts for help, they have no recourse because you can’t alter the reputation of those higher than yourself.
If you think of a Steemit blog as a shopfront where people pay to read your articles, this takes on a sinister tone. Imagine; a rich person trashes your shop’s signage, burns your week’s takings, and tells the community that you’re untrustworthy. Sure, sometimes the owner is running scams or selling stolen goods, but maybe they’ve just said the wrong thing to the wrong person because they don’t know how to act around the ruling class. You can still try to sell the products of your labour, but it’s going to be more difficult.
Paid up-voting means that anyone with sufficient cash can make it to the top of the trending page, regardless of the quality of their work. Heavy use of these bots has led to concerns that the economy of the Steem network is moving away from rewarding original content and towards rent-seeking.
Law of Attraction and Crypto Currency https://t.co/6t3XW1HExV #lawofattraction #spirituality #cryptocurrency #Crypto #steemit #steem #AbrahamHicks
— Brittany Forrester` (@21BrightStar) March 20, 2018
This combination of factors – where money trumps merit, a handful of individuals control most of the wealth, the rich can punch down with crushing force but the poor can’t punch up – makes the Steem ecosystem a wet dream for laissez-faire capitalists and right-wing libertarians alike.
Clearly, some of this is due to system design – after all, design involves moral choices. But it’s also because a vocal minority of Steemit users maintain that all human actions should be voluntary, often because they’re upset about involuntarily paying tax. These same people seem unable to acknowledge that entering economic relationships to avoid starving to death or living on the street isn’t voluntary. Nor do they understand that gross inequalities of wealth and power have led to the upper classes sometimes having involuntary interactions with guillotines or firing squads. That said, most people I’ve met via this network, particularly the other Aussies and Kiwis, are genuinely decent and community-minded.
As a social experiment, Steemit embodies the inequality of modern civilization and should serve as a warning to those who think the super-rich can be trusted to voluntarily ensure the poorest in society lead decent lives. Despite this, blockchain technology isn’t inherently capitalist in nature. There’s no reason someone couldn’t automate voluntary wealth redistribution on the Steem network. Likewise, it’s possible that a leader with a bit of charisma and political nous could get so many disgruntled authors to protest that even the whales would notice. Will either of these things happen? I can’t say for sure. But as more people join in the hope of making a living, the higher the likelihood will be. Already, political ructions are cascading across the network if you know where to look.
For all its philosophical problems, ideological baggage, and economic uncertainty, this business model is probably one to watch. Steem CEO, Ned Scott, is pressing ahead with the launch of "Smart Media Tokens" (SMTs), which will allow media organisations to create bespoke cryptocurrencies, that run on the Steem blockchain, in order to incentivize their own content. Can these SMTs attract the influx of capital needed for Steemit to remain viable in the longer term? It’s too soon to tell.
Plenty of other companies are on a broadly similar cryptocurrency-powered bandwagon: empowr, sapien, sphere and minds, to name a few. Whether this approach is economically sustainable enough to transform the social media landscape remains to be seen. And, if it does, there are no guarantees on which network will come out on top, though I think Steemit is one of the least corrupt attempts so far. What is certain is that as soon as a significant number of people start earning money this way, questions around wealth, equality and fairness will not be far behind.
You can follow Dr Samuel Douglas on Twitter @BeachPhilsophy.
Top rising cryptocurrencies in the last 30 minutes
— Trading-Alarmer (@TradingAlarmer) April 6, 2018
#ACT +6.19%
#SMT +5.72%
#BTCA +5.04%
#BMC +2.49%
#VERI +2.22%
https://t.co/vNV79Kvqx7 pic.twitter.com/DamMFfEhmP
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
Support independent journalism Subscribe to IA.
Our Steem-Powered Graphics for The London Cryptocurrency Show. @sndbox_daily @LDN_CryptoShow @ixinvestor #London #Investors #Cryptocurrency @Steemit https://t.co/2dasjLEjDt
— Stephen P Kendal (@StephenPKendal) April 5, 2018
