The Ugly Truth Behind Steemit

 You  post content, people decide if they like it or not and depending on how  ‘popular’ it is, you get paid. Being able to monetize your content is  great and it’s about time that we have a way to do it. However, when it  comes to Steemit, appearance is deceiving.Through a new account called ‘thereverseflash’, STEEM was launched on March 24, 2016 under the premise of Proof-of-Work, No ICO, No Premine.

At  launch there were no compiled wallets and an error in the setup  instructions which allowed only the developer to initially mine any  STEEM. When users asked for assistance, none was given.

Later  on, user ‘Eclipse Crypto’ discovered that the instructions given by the  developer were incorrect, accounting for the errors everyone else was  experiencing that was preventing them from being able to mine.

Once  other users were able to join in on mining, the developer was  confronted with another problem. Overnight, an error on the developer’s  end resulted in all his miners crashing (for the second time). Other  users continued mining STEEM during this time. The developer, upon  realizing that he had lost some control of the supply, decided to  re-launch STEEM to ensure that he alone had majority of supply (at least  75%+ of supply). As you can see the developer did everything possible  to ensure almost complete centralization.

STEEM  is not decentralized. From the beginning it was and still remains  highly centralized. The launch of the STEEM network was heavily rigged  to ensure that the developer and his ‘friends’ had control over majority  of supply. Furthermore, this has major implications for the Steemit  platform.The  top 247 accounts on Steemit (most of which are probably owned by the  developer and his ‘friends’ through duplicate accounts) own ~87.50% of  total stake, without including the main steemit account which is also  controlled by the dev. Although any user can vote for content, the  influence of your vote corresponds to the amount of STEEM you convert on  your account. This means the typical user’s vote is almost meaningless  unless they manage to acquire a high stake in total supply.

distribution of stake on Steemit

All  content on Steemit is highly censored and centralized since the few  actual users who own majority of the supply get to decide which posts  make it to the front page and which posts get higher payouts. Accounts  are easy to create and majority of the top accounts are most likely  controlled by a small group of people making Steemit highly susceptible  to sybil attacks. Simply put, for any content to make it to the front  page, it is subject to the approval of the developer and his ‘friends’…Are  you an influential or well-known public figure? The developer and his  ‘friends’ will give you a nice ‘payout’ so you feel good and start  promoting their shady platform to the public. The number of people being  lured in through this method is alarming and disappointing. Post  something that the majority stakeholders don’t like and your post will  never see the light of day despite being well-received by many users.Reddit  operates using an up-vote and down-vote system and every individual  user can up-vote or down-vote content once. If a post gets enough  up-votes, it can reach the front page.Now imagine if each vote from the Reddit staff counted as 5000 votes. This is what is basically happening on Steemit.Steemit  is basically a version of Reddit that is almost completely controlled  and censored by the creator and his ‘friends’. The content on Steemit  and value of STEEM is also at their complete mercy. Unlike decentralized  networks, Steemit is almost completely dependent on the developer and  his ‘friends’.Simplified overview of STEEM and Steemit.

1. Rig the distribution process so that you end up with almost all of the STEEM supply.
2. Create a platform that allows for the monetization of content.
3. Make  sure certain users get extravagant payouts to lure in more users (the  payout is a tiny fraction when compared to how much STEEM you and your  friends own).
4. As  more people are lured in, STEEM becomes more ‘valuable’, resulting in  those who own majority of the supply getting rich along with the select  few they choose.

The  successful creation of a content monetization platform does not require  the developer to create his own ‘token’ or economy but Steemit chose to  do so anyways through the use of highly questionable methods. Yours Network  (soon to be released) is an example of a content monetizing platform  that is designed to monetize user content without the questionable  ‘get-rich-quick’ scheme for its creator and does not depend so heavily  on its developer and his ‘’friends’. You can follow progress on Yours  through the Yours Network twitter account.

There  are various other flaws and red flags present when looking at the  economic model behind STEEM and Steemit which will be discussed by Tone through a comprehensive analysis of it’s whitepaper.