Blockchain Social Platform Steemit Takes Advantage of Reddit’s Heavy Censorship

 Since the early days of the  internet, there has been a constant movement of people, from mailing  boards to Facebook and Reddit. Eternal September keeps chasing out the  best who are then followed by the rest with the process now repeating. Although Facebook is one of the biggest companies on earth,  few think it is cool – your mom is on it. Meanwhile, Reddit, itself a  product of an exodus from Digg, has brought to the forefront a serious  problem, private sector censorship of free speech. The duo of Daniel Larimer and Ned Scott, the former a techy, the latter from the world of finance, think they have a solution, Steemit.  The blockchain-powered platform is a mixture between medium and reddit  where users are paid for voting and posting in a new currency called  steem, currently valued at around $0.23 per unit. Steemit users just  received the first payout, $1.3 million in total, but can this really  work? 

The incentives of steemit’s design

There has been much debate on the use of money to  incentivise intrinsic behaviour, such as studying, donations, or healthy  activity. The jury is still out with one study concluding that the effects of monetary incentivization on intrinsically motivated behaviour, basically, depends: 

“A considerable and growing body of evidence suggests that  the effects of incentives depend on how they are designed, the form in  which they are given (especially monetary or nonmonetary), how they  interact with intrinsic motivations and social motivations, and what  happens after they are withdrawn. Incentives do matter, but in various  and sometimes unexpected ways.” 

The incentives of streemit’s design were described by Larimer, speaking to CoinTelegraph In eight points: 

No transaction fees.
Mandatory spending.
Liquidity rewards to bootstrap market trading.
Everyone who provides value should get a stake.
Don't ask for money, ask for time and energy.
Build value for people who don't buy in or use the platform (readers).
Natural marketing and SEO through producing content.
Make it fun.
 

Much of it is self-descriptive, but we asked for an explanation on “mandatory spending”. Larimer says: 

“Under Steem, it doesn't matter if you vote or not, funds  will be distributed to someone. This forces people to focus on directing  funds to the best cause, rather than ​*if*​ they should fund something.  The result of mandatory spending is that the platform gradually changes  hands from those who do nothing to those who contribute.” 

Distributing the funds

The monetary aspects of the platform are somewhat complex.  First of all, it all runs and is stored on a blockchain, so it has  miners. Second, it uses a mixture of proof of work mining, proof of  stake and delegated proof of stake. To make it a bit more fun, it has  three currencies. The “core” currency is Steem, which is highly inflationary  with steem units doubling every year. Many, therefore, convert it to  Steem Power (SP) which locks the currency in a stake for two years. Then  there is Steem Dollars which aims to be pegged to the US Dollar. There is an even more complex method of distributing the  funds which constantly inflate. 90% of the inflated funds are given to  SP holders, the other 10% is shared: 

“The accounting is complex, but fundamentally this is no  different than Bitcoin. Bitcoin has allocated 10% of its market cap each  year to pay for miners. Steem allocates 10% of its market cap to pay  for curation (voters), posting, mining, block production, and  liquidity.” 

The 10% is allocated to four groups, “1% block producers,  1% liquidity, 6% authors and 2% curators,” according to Larimer’s  estimate. There is no halving, so the currency continues to inflate at  10%, effectively, indefinitely. “It has really gained traction. New users are signing up  every day. There is a constantly growing number of active users,” says  Larimer with more than 700 active users yesterday and 20,000 pageviews a  day. 

Reddit’s heavy censorship vs. steem’s censorship resistance

One attraction, especially in light of reddit’s heavy  censorship by both admins and moderators may be steem’s censorship  resistance. As all is stored on a blockchain, unless 51% of node  operators, miners and stakeholders agree, no content can be removed.  That, of course, has two edges. After a terrorist shooting in Orlando, heavy censorship  was implemented by reddit moderators, especially r/news which went so  far as to remove a post giving information on blood donations. This  brought the bubbling reddit censorship issue to mainstream attention,  but only for just a day with no action taken. Reddit admins have taken a position that moderators can do  whatever they wish in their own subreddits. The problem is of course  that name domains are hot property as r/news retains a structural  advantage over r/news2 due to most newcomers typing the former. That opens our great public spaces where we congregate to  insidious overt and covert manipulation which may provide entities with  powerful political or financial advantage at, perhaps, the expense of  the common good. Many, therefore, think that reddit is ripe for disruption  as new space seems to have opened to figure out a more equitable way of  organizing our public discussions. 

Is steemit the solution?

Whether steemit is the solution is not clear. The way it is  currently organized seems to be limited to self-posts, rather than  direct link sharing from the title. Moreover, the administrators of the  website can, if they wish, remove content or comments, but they would  remain on the blockchain and anyone can set up a website to reflect the  blockchain just as there are a number of block explorers. This may be one way to address the other edge of free  speech. Content that is fundamentally in breach of all or almost all  values, although it may be on the backbone, stored on the blockchain,  would not be displayed on the frontend. Nedd Scott, CEO and Co-founder at Steemit, described his ambitions to CT as follows: 

“Our goal is to give [social media] back to the people by  making it a public resource and a utility owned by the people.  Ultimately the people who have say over Steem are the token holders and  that’s what will drive its direction in the long run.” 

From the voting algorithm to funding distribution, token  market price, monetary incitivization, the use of the blockchain itself,  there are many complex interactions, combining an instant market  reaction through price, financial carrots and sticks through voting, as  well as monetary reward for product creation together with a digital  currency element. Whether this will work in its current incarnation remains  to be seen, but it is one of the more unique attempts to try and solve  the decades long social media problem with the results of the  experiment, whether failure or success, undoubtedly closely watched by  many.