Stage 1: Skepticism
Day 3 of the SteemIt experiment.
I started my journey with skepticism. To be frank, I simply didn't believe that users would be able to cash-out (in Bitcoin) the payout amounts. I told my colleagues as much and chuckled in my chair, safe in the knowledge that this couldn't possibly be real.
But what the hell... I am in the middle of writing an article about Appcoins, which I was going to be publish on Medium, and I decided I should at least use SteemIt for myself before trashing it.
Stage 2: Curiosity
After writing my first article, I had a pile of Steem dollars and zero understanding of what they were, how they worked, or if they could be exchanged for Bitcoin. I opened an Poloniex account and mistakenly used SteemIt's internal marketplace to convert my Steem Dollars to Steem tokens, unaware that I could have just exchanged the Steem Dollars for Bitcoin directly on the exchange. I discovered that conversion would take a week to complete, and kicked myself.
The second article I wrote on Social Collisions was also surprisingly popular and I found myself with another small pile of Steem Dollars. This time, I transferred them to Poloniex and immediately exchanged them for Bitcoin. In no time, the Bitcoin was transferred out of the exchange and into my Bitcoin wallet.
When I saw my wallet update, I leaned back on my chair and said, "Wow, it's real!"
Stage 3: Attention
But, to be fair, I wasn't paid out the total amount of money quoted for my article. The way SteemIt works is that half of the reward is converted to Steem Power, while the other half becomes Steem Dollars. In other words, only 50% of the payout for an article is liquid.
The Steem Power you receive takes about 2 years to convert into Steem tokens once you initiate 'powering down', and are not convertible directly to Steem Dollars. Unless you have a long time-preference, you may as well write off that value in your mind.
Nevertheless, I earned over 1 BTC for writing an article while I drank cinnamon tea and ate a coconut macaroon. That is pretty amazing, and totally unexpected.
(It tasted amazing btw)
Where Am I Now?
I'm a Bitcoin maximalist and still am. However, this experience has forced me to more deeply understand the value proposition and mechanics of how money and cryptocurrencies work. Without a doubt, it is all about the network effects. Being the first decentralized cryptocurrency, Bitcoin generated the largest network effect that acts as the reserve currency for all other altcoins and appcoins out there. SteemIt is no exception.
What I am still trying to understand are:
- Is the SteemIt model sustainable?
2.. What can we expect if the exchange value of Steem goes up or down? - How will Steem's insane level of token inflation affect the system and market value of the tokens and Steem dollars?
- Does Steem's network effect pose a threat to Bitcoin adoption, or are they parallel systems that can peacefully co-exist?
- How will Yours and other decentralized social media sites compete with SteemIt if they purely use Bitcoin? Can they compete?
These are questions I hope to answer over the next few days!
