This contest was organized by Catered Content on the STEEMIT platform.
1.0 INTRODUCTION
The Internet and Business
Everyone in the world today needs to be connected; needs to communicate and share information and the internet provides everyone the platform to do just that; share information. The internet is not a strange place and there has been a tremendous impact on how information can be transferred to people around the globe. Information access and transfer have experienced a substantial improvement. However, this was only the era of internet of information.
The need to share information is basically why the internet was built and it has maintained that standard over the years. With the advent of various ways of utilizing the technology of the internet to create business opportunities, users have employed the skill creating contents that will yield value to them.
1.1
What is user generated content (UGC)
This is a term used to describe any form of content such as video, blogs, discussion, audio files, images or other forms of media that was created by consumers of an online service and made public to other consumers and end users.
Users on the internet can now use the internet to send pictures, write articles, or little comedy skits to get rewarded.
The Blockchain is a newer and more private and secure technology born of the internet created a more effective way for content creators to not only get rewarded for their contents but also have full and complete control of their contents and rewards.
1.2
Problems
[a] Transaction Fees and Micropayment
Micropayment is an e-commerce transaction involving a very small amount of money exchange for any user generated content made available. It is basically a fraction of a cent.
However, the value of most of these user generated content is so low relative to cognitive, financial and opportunity cost associated with making a payment. Having micropayments on every goes a long way to reduce the transaction types that can be processed in the network.
If value of the service or good to be transacted, a small transaction fee would be ideal. However, certain services should be made free. These fees when they become very high creates some sort of barrier for users who would like to explore the crypto world.
These fees are also prone to increase over time which could be a result of value of token or surge in capacity. These sudden increase in price of token for the user, is not ideal.
[b] Performance and scalability
In a bid to achieve a good performance and scalable network, Steem is using the steps followed by LMAX Exchange which has the potential to carry out 6million transactions per second. To achieve this, Steem does the following:
- keep everything in memory
- keep the core business logic in a single thread
- keep cryptographic operations out of the core business logic.
- divide validation into state-dependent and state-independent checks
- Use an object oriented data model
[c] Manipulations and Attacks
Manipulation by a single user or certain users can cause other users to lose faith in the system. The scoring systems are not entirely full proof and the system is deemed not fair. The ONE-USER, ONE VOTE creates room for manipulations by a user using SYBIL attacks.
2.0
STEEMIT PLATFORM
Steemit is finding the best way to reward content creators in way that has never been seen before.
2.1
AIM
Source
[1] Support social media/online communities who contribute valuably to the community by rewarding with cryptocurrency.
[2] Reach a broad market which includes persons who are yet to participate in the crypto economy.
2.2
STEEMIT PRINCIPLES
Any business (crypto or not) must have a rule of set of rules on how they hope to achieve their proposed solutions. Steemit has three (3) basic principles upon which their platform is based.
[i] Give all contributors of valuable contents a proportional ownership, payment, debt from the venture.
[ii] Monetary capital is equally as valuable as time capital. This means that those who spend their time curating content are rewarded alongside those that provide the physical cash.
[iii] The community creates values to serve its members.
[iv] Address the major barrier to adoption of social media based economy.
2.3
STEEMIT SERVICES RENDERED
[i] A source of curated news and commentary.
[ii] Getting high answers to personal questions.
[iii] A stable currency pegged to the US dollar
[iv] Free payment
[v] Members are given jobs to perform the aforementioned services
2.4
STEEMIT MODEL
[1] users whom have contributed more to the platform as measured by their account balance have the most influence in the scoring of contributors.
[2] Recognition of users’ contributions prompts them to want to contribute valuable contents more.
[3] The FREE MARKET as a single community ensures that everyone that participates in a trade gets rewarded according to the profit and loss. With this free market technique direct consumers of the content pay directly, the direct producers of the content.
2.5
STEEMIT CONSENSUS
Consensus is the process by which a community comes to a universally recognized and unambiguous agreement on a piece of information. The algorithms used by cryptocurrencies provide a better way to reach consensus. Cryptographically signed testimony from individuals is recorded in a public ledger that establishes the absolute global order of events.
A deterministic computer algorithm can then process this ledger to derive a universally accepted conclusion.
So long as the members of a community agree on the processing algorithm, the result of the algorithm is
authoritative. There have been many consensuses but let us have a look at the Steem consensus.
[a] Just like a traditional company with shareholders and investors making the key decisions in terms of business ventures, people with vested interest in the Steem platform gets to select individuals for including testimony in the public record (blockchain).
[b] In the effort to create equality in the consensus algorithm Steem consensus takes the following approach. For each round, 21 witnesses are selected to create and
sign blocks of transactions. Twenty (20) of these witnesses are selected by approval voting and one is
timeshared by every witness that didn’t make it into the top 20 proportional to their total votes. The
21 active witnesses are shuffled every round to prevent any one witness from constantly ignoring blocks
produced by the same witness placed before. This method ensures that everyone has an equal opportunity to participate in block production.
STEEMIT Voting and Security
Steem platform takes voting very seriously and also deems that it be duly rewarded. This simply means that the curator who contributes more to promoting a content is rewarded accordingly to the ultimate rewarded paid to the content creator.
The rate limited voting used by Steemit ensures that users can read and upvote contents but only a limited number per day. Any attempt to frequently vote is indicative of abuse or automation.
Voting power (in %) is multiplied by the user’s token to determine how much share in the reward pool should be allocated to a given work item (content). Every vote cast, depletes the total power and recharge is at a linear rate of 20% each a day.
2.8
STEEM Solution to Micropayments
The payment method by Steem is designed to efficient for all kinds of contributions. The readers do not have to pay content creators from their own pockets but rather use the system of upvoting. Steem uses their votes to determine the individual rewards. The costs associated with traditional payment system is no longer existent.
3.0
STEEM ECONOMICS
All crypto firm is associated with a distinct currency called the cryptocurrency. The Steem platform, has a set of financial asset that plays vital roles in the system. The assets are STEEM, STEEM BLOCKCHAIN DOLLAR(SBD) and STEEM POWER (SP).
[1] The STEEM
STEEM is the fundamental token, a fundamental unit of account in the Steem platform. It is a liquid currency so that means that it can transferred and/or sold to others in the form of payment or in exchanges. It is token from which the other tokens derive their value.
[2] The STEEM POWER (SP)
This token helps to emphasize the importance of contributions in the Steem platform. In Steem, the capital need not be liquid currency alone, some sort of investments will be required to be made by the users of the platform. This process is called VESTING. Vesting simply connotes that the funds invested are like shares and cannot be sold for a minimum period of time. It is a means of ensuring that users have a long-term commitment with the platform. With these investments in place, Steem as a platform can make long term goals and plans and also encourage the investors to contribute to the overall growth of the platform.
The greater the number of SP the more influence the user will have in the sharing of rewards. The SP can be increased by transferring STEEM token (powerUP) and can be decreased(powerDOWN).
[3] SBD
This asset was designed to bring stability to the world of cryptocurrency and to the users of the Steem network, it is similar to convertible notes which are useful instruments for short-term debts.
[4] Allocation
The Steem tokens will be created at an annual rate of 9.5% per year.
The rate decreases 0.5% per year
75% of tokens generated will go to the reward pool.
15% of the new tokens are awarded to SP holders.
10% are for witness to power the blockchain.
[5] Payouts
When a post receives a payout, it takes the form of 50%SBD and 50%SP. The steem power gives the user increased voting and transaction power while the SBD gives him a benefit of stable currency.
The user can also choose to have all payments in 100% SP or decline the payment all together. The reward in the case of a declined payment will be kept in the pool and distributed to other users.
[6] Liquidation
The presence of merchants improves the system by creating an off-ramp for users to exit the system without going to the trouble of using an exchange. Another means of liquidation is by tipping.
4.0 Conclusion
The Steem project is an experiment created to look into the several challenges in the cryptocurrency and social media industries, and provide a viable solution by
combining the best aspects of both. Steem presents earning opportunities to content creators and internet
readers in ways that have not existed within the social media industry. Steem emphasizes the importance of contributions in its network and duly rewards users whom have contributed by cash or time in the network. Those rewards may have dollar value
due to the market price discovery and liquidity of Steem, and the people who hold Steem may have more
exclusive earning powers than those who do not.