And how a simple fix to the algorithm will prevent it!
Steemit uses casino psychology to attract users
This is directly stated in the whitepaper.
The fact that everyone “wins something” plays on the same psychology that casinos use to keep people gambling. In other words, small rewards help reinforce the idea that it is possible to earn bigger rewards.
We see the money raining on certain users and want to play until our number is called. This is pure genius and is the #1 reason Steemit has exploded thus far.
But an existential threat is lurking and has begun to rear its ugly head.
We're witnessing regular cheating, not just by stacked decks but by direct handouts
As "gamblers" in the casino we may be crazy, but we're not all stupid and we certainly don't like being shown up. Basically when people see obvious cheating over and over they stop feeling the rush of action and start feeling sick to the stomach.
Unfortunately for Casino Steemit, the pain doesn't stop there. In this casino, the players and dealers actually own the house. So when they get sick - honest dealers (good whales) and players (minnows) alike - they won't just leave. They'll Power Down and sell their STEEM faster than you can say,
I am sitting in a coffee shop and the dude next to me just showed me he made money off Steemit so I'm going to see what this is about. It's hard not to be skeptical.
And we'll have a Black Swan event aka Bank Run aka Market Crash in the price of STEEM
Then we'll have a new name for the whales.
Bag Holders.
One quick fix can save our ship
The days of 1 vote, instant $700 reward need to end. That isn't curation, it's a handout.
That vote needs to be affirmed by other votes -- ie, consensus on the quality of the content -- in order to carry that same $700 weight.
In the absense of consensus, it needs to be worth more like $7, ie orders of magnitude less.