BitShares Dev Hangout - April 22, 2016

Listen to Episode 151 - Create a BitShares Account

Dan Larimer discusses STEEM and Steemit.com, the social media platform.

Transcript

bytemaster: One thing I was going to recommend for BitShares is the moving of discussion of proposals and features and work from BitShares talk to Steem. With the purpose that the players involved can vote and rank and reward people who make positive contributions. The voting of course will have to be approved by the holders of Steem, but in theory positive developments in the crypto-space are positive developments for everyone.

So really regardless of what platform you come from, whether it's Ethereum or Bitcoin, moving the discussion over to the Steem platform can have the ability to reward contributors to all of those projects with a stake in Steem. And in a way Steem can be used to fund the growth of all platforms by recognizing those who contribute to the overall discussion in the crypto-world.

Thom: One things I'd like to have explained is exactly what is the Steem platform, in terms of moving to it?

bytemaster: The Steem platform organizes discussions into topics or categories. Kind of like sub-reddits or otherwise, so all BitShares related discussion could fall under the BitShares category and within that topic you can view the trending and recent post. Recent post is kind of like viewing BitShares Talk in the recent messages section or it just sorts the thing that's the most active, which is sort of the default view, it shows you all the new stuff up top and stuff that hasn't been poked in a while falls to the bottom.

fuzzy: The question I've been having recently is, is Steemit in Beta?

bytemaster: Technically Alpha.

fuzzy: So is the algorithm or all that stuff that is set in place to evaluate the voting of the value of the voting and the value of the post? Are these pretty much solidified or is this something that is going to kind of fluctuate over time?

bytemaster: I want to give the answer that it's pretty much solidified. In order to change it would require a hardfork. That said it's not a suicide pact. No rewards are actually going to be distributed until July 4th which means there's a huge blogging competition where several million dollars worth of STEEM will be given away to the best people who blog and post between now and July 4th.

We have the ability to change the algorithm if it becomes apparent that it's not behaving like we project it will behave. That said we do not want to be in the mode of constantly changing the rules, so there is a very high standard that we are trying to set. But obviously this early in the game we don't want the entire platform to die just because we got a single constant wrong. So we have to see how it behaves in the real world with a large number of users, which is really hard to simulate those behaviors.

Community: Can you give any explanation of how many people you see gleaning on the Steem platform that are outside of the BitShares Community?

bytemaster: A lot. There's some major players with lots of influence, skills and connections who weren't involved with BitShares, but they are involved with Steem. There's about 130 people in the Steem slack right now, which is a lot considering the relative barriers to entry to get into Slack, the level of motivation required to sign up there versus just staying on Bitcoin or BitShares Talk and considering it's still Alpha and relatively unknown.

fuzzy: Another question that I personally have regarding this is, whenever I go to Steemit.com/treneding, and this is something anyone can do, they can go and see the top post, they can vote on post that are in the stream that they are looking at, but whenver you go there and you see the top post, right now they're earning essentially in the 30's, 40's, 50 thousand STEEM USD. Can you talk a little bit about whether that is representative of what the actual reward is going to be to the individuals who are posting right now and do you see that changing or is that not reflecting the correct amount being played out?

Thom: Real quick, you said that anybody can go there and vote, is that correct, is that possible to vote or do they have to be a member of the Steem Community to be able to vote?

bytemaster: During the Alpha phase you can login with your private key, assuming you've got an account that you've mined onto the blockchain. Xeroc or maybe it was puppies (it was puppies), there's a post on Steemit.com (https://steemit.com/spam/@dele-puppy/register-bot) that gives instructions on how to create an account on Steem if you have a BitShares account and have bought some Steem on Bittrex ( or OpenLedger ).

So to answer fuzzy's question, the amount's assume that Steem has a $5 million market cap. The payouts don't go to the poster and it's not all in STEEM dollars, that's the dollar value that the blockchain is going to be paying to people involved with that post. Half of it is going to be allocated to the people who upvoted it and then half to the poster itself. I guess for the top post that would be the $17,000 split between voters and the person who posted it.

Now those numbers are all pending, so new downvotes can come in and they will also go down if there's more content because there's a fixed budget, kind of like Proof of Work. The more work you get, the lower the reward. So what this is saying right now is that the Proof of Work is incredibly easy and if you can even get a few votes you're going to make a ton of money. So coming in and participating and voting is highly profitable right now.

The numbers are so high because we haven't paid out any rewards over one month, so they've just be accumulating. And they're going to continue accumulating and they're about 10% of the market cap of STEEM, until July 4th at which point in time most post from the creation until then will be paid out.

After that period of time post are going to be paid out on a daily basis, so the amounts being paid and the things on the front page should be constantly rotating. After something gets paid out it gets taken down from the front page because it's no longer trending, it's been paid out. And payouts are 24 hours on average after each vote. So you can expect that new content should constantly be flowing to the top and getting paid out and then going back to the bottom.

Thom: I want to push back a little bit on what you just said about, "mining is incredibly easy". I've been mining since Monday morning at 9AM and I just checked and my miner has still yet to produce an account, which is the only way I'm going to be able to get in I think.

bytemaster: I wasn't referring to computational mining, I was talking to subjective Proof of Work mining.

Thom: Could you explain that further then?

bytemaster: The primary concept here is the blockchain's trying to measure and quantify subjective work, whereas traditional mining is measuring and quantifying an objective measure of work, a hash difficulty. We're trying to do a subjective measure of work. And subjective measure work is based upon the ... effectively the network effect that you can get in voting. What percent of total STEEM holders can you get to vote for your post.

Thom: Well I'm entirely confused now, so when you use the term "mining", exactly what do you mean by that?

bytemaster: I guess I've been a little lax in my definitions. If I say computational mining, I mean Bitcoin style mining. There's curation mining and posting mining, so there's different types of work that you can do that are subjective. There's also market making. So if you view mining as a general concept of doing work, sifting through lots of things and finding the diamonds in the rough so to speak. That's what mining is generally speaking in the abstract sense. We've got many different types. I think it's safe to say that traditionally mining refers to computational mining, but if I'm making an analogy ...

fuzzy: This is social mining.

bytemaster: Social mining, great. Alright so we'll use that term, thank you for the contribution fuzzy. Social mining is what STEEM is all about and the difficulty of making money through social mining is very low right now. There's not much competition which means the rewards are high. So the blockchain pays a fixed reward for a variable amount of work. The more competition there is in work being performed the lower the payout reward. It's kind of like computational mining, the more miners on the network the lower the reward.

So when you come to the main page and you see something as stupid as, "We're listed on Coinmarketcap" as being the top post, you recognize that "well maybe if I write a nice thousand word blog article and get it posted and published somewhere, that will easily make it up higher". But there's relatively few voters right now, primarily because it's difficult to sign in and the voters that are voting are kind of whale voters so a few votes can really push things around right now, because we don't have a lot of variation in the voter pool.

I wouldn't view the current ranking as indicative of what the actual payouts are going to be. But in terms of dollar value being distributed to people who contribute to the platform, it's currently underestimating the dollar value by a factor of three, based upon the market cap of the coin. We've hard coded a $5 million market cap just to be conservative until we get price feeds. But once we have price feeds published those numbers will bounce around with the price as well.

When the payouts occur, remember they're going to be in the form of STEEM Dollars and what we're calling STEEM Power which was previously known as VESTS. So I just want to make that clear.

fuzzy: And the STEEM Power is voting power correct?

bytemaster: Yes.

Thom: The terminology is very confusing regarding STEEM and if you want to get this adopted by the general public you need to make this brain-dead simple. And I'm not an idiot, so the fact that I have not picked up on it is kind of a shortcoming in your marketing so far.

bytemaster: Sure. I think a lot of that is a reflection of the fact that we actually haven't gone public. This is all Alpha insider stuff. A lot of your questions are answered in the white paper. It's a great white paper, anyone here who's read it and cares to talk about their impression of the white paper please speak up.

We are actively moving to make this so simple that people can understand. I think there's two things, one is using the site and if you know how to use Reddit you know how to use Steemit, which means you know how to use STEEM. The other is understanding how it works. People who use Reddit they don't know how the voting system, scoring, point system behind the scene works. So we're not trying to market how the engine works, we're trying to market how the car drives. It drives and we can explain it in a way that most people should be able to understand.

ingenesist: I thought the white paper was really excellent, it has me very excited about STEEM. So thank you for a very clear cogent explanation in the white paper.

Thom: That's good to hear.

Community: I read the white paper too and I'm very excited about STEEM. But I also have some grave concerns about BitShares. Being an investor in BitShares from the very beginning and having bought more BitShares all the way down from the highs near the beginning and despite the fact that I see the big picture with STEEM and think it's eventually going to be very good for BitShares, I do have a concern when the topic of BitShares 3.0 came up in the forum because of what happened from 1.0 to 2.0.

Some people's whole business model was based on BitShares 1.0 and I invested heavily in some of those projects and when 2.0 came out, yes it was an absolutely fantastic upgrade, but it also blindsided the people who built projects on 1.0 and I lost a lot of money from that. I'm concerned about the same thing happening when 3.0 is introduced into BitShares, having garnered all the upgrades from STEEM, from putting STEEM into practice bytemaster and others are going to realize what will work in BitShares and upgrade to 3.0.

If that destroys the business model of people who are building on onto BitShares 2.0 now then I'm going to lose another big chunk of investment money.

ingenesist: One difference between now and when 2.0 came out was that Cryptonomex and bytemaster was pretty much still in control, not maybe technically 100% from 1.0 to 2.0, but from 2.0 to 3.0 that will not be the case and people who want to stick with 2.0 are going to be able to do that easily.

bytemaster: I think his concern is that if a competitor that learns everything from BitShares, learns all the technological advantages of BitShares plus all the technological advances of STEEM plus new things that haven't come out it, it would put BitShares 2.0 platform at a disadvantage in the market which would still hurt investment in the 2.0 platform.

So we have a challenge, all startups do, of adapting to market conditions and recognizing that at any point in time a competitor to BitShares can come out on the market. And if you're building a startup that uses BitShares, I guess I'd say the business model of startups needs to be flexible and robust enough to be almost be platform agnostic. Utilize the benefits of a platform that can help build your business but able to easily and cheaply pivot to a similar platform that provides similar benefits.

Examples of this would be metaexchange, Blocktrades. These guys have integrated with BitShares but they are also integrating with and bridging other cryptocurrencies and exchanges.

Community: But these examples, these exchanges are a minority. So for example, we are using in Eco for our startup, we are raising capital right now and it's not just a little bit of money, we need a price stable currency. We need to be able to send money over the network within seconds, so if one of these features are disappearing in BitShares 3.0 version then we have to basically fork. So that's a concern for us that we really have to look into the development of BitShares 2.0 and where this is going.

bytemaster: Sure, so let's talk about that for a second. If there was to be something like BitShares 3.0, first of all I don't think it would be called BitShares 3.0 and second of all I think it would be launched as a new chain not as a mandatory upgrade, which means market participants could decide if it was a worthwhile upgrade or not. That said I think what makes BitShares BitShares is high-speed price stable currencies. If something comes out that doesn't have those two things it's not even a competitor to BitShares.

I guess BitShares is price stable currencies, user issued assets and an exchange among them. A 3.0 platform would probably differ from BitShares 2.0 only in how the price stable currency is implemented. It would probably, if this approach used by STEEM proves successful, it will create a better product upon which you could build your business with a better supply of price stable currencies with lower premiums, tighter pegs and higher liquidity.

So if those are the things you want, a 3.0 platform will boost your business. The only cost to your business would be changing a little bit of software that talks to the BitShares API to talk to the new API. And that's a trivial cost next to the cost of all the other stuff your business would be doing. That's the main thing that I have to say there.