A false free market

I touched upon this a little bit in a post yesterday but I think it deserves a little more attention, Steem is not a free market where the market decides supply. It has never been and has become even less so over the last ten months with the bidbots operating in the waters.

As much as people claim freedom here, what is supplied is not bound by what is demanded. I talked about this in respects to popularity as normally, popular is dictated by the group, a democratic election. However, since Steem is a stake-based system, democratic process is of very little consequence.

With manual curation of content, there is an element of market influence on price and popularity of content even though there is a weighted bias but, with self-voting and more importantly, bidbots, the laws of supply and demand are no longer in play as the largest influences.

Imagine starting up a business and not actually needing clients to purchase products at all to make a profit. Instead, it is possible to buy your own products and turn a profit or, pay for someone else to buy your products for more than their value and give them a large kickback while pocketing the difference. This is essentially what is happening.

The interesting thing here though is that the profits are even larger for those self-voting and bidbotting than for the majority that live in a free market system. Yep, just like the profits of those who operate in protected industries, industries that if protected at the mature level, tend to become entitled, complacent, lower-quality and corrupt.

They often become this way because they no longer need to worry too much about actual demand or competition as they can not only provide for themselves, they can undercut the competition or, push them out completely. Governments are protected by their own laws and as a result, are highly inefficient but, highly profitable for players within the system.

Essentially, the system is a protected where those with stake make profits on their own content which locks the pool from other content providers. This makes it hard to break into the market to get the attention if an established account, only protects its staked quota or shares it with those who share it back in return.

One can always use bidbots but, this is the same as paying high import tariffs - taxes. Yes, you can get into the market but, the government is going to take its cut and either pocket it or distribute it back to the ones already protecting the pool, most likely, your competition.

So for example, using @paulag's post form a few hours ago on bidbot figures in April, 345,000 SBD was sent to bidbots and they took 31% of all curation rewards and a total of ~11% of all Steem earnings in the month. Not bad considering they only make up 1.5% of all the votes. I will remind, this is only for the major and known bidbots. Factor in that many of the same operators and delegators are also posting and self-voting on their main and alt acocunts and voting each other, and that number shifts even more heavily in their favour.

Now, I self vote too. At the moment, I have 28 posts open (and one on an alt) that are self voted. My vote is worth ~10 (less most of the time but close enough). That means I upvote 290 dollars worth in 7 days. That is a lot isn't it? Ah, but I also pay 100 Steem a week in delegation costs. So at 50/50, 145 SBD buys about 120 Steem, and I earn about 45 Steem on the posts, leaving 190 Steem profits. But, my vote is 5 dollars by itself, so I can earn almost the same without the delegation as I wouldn't have to pay 100 Steem for it. However, the other 50-60 percent of my voting power doesn't go to me, it goes to the community and that community figure is twice as large with delegation.

If I went full Haejin?

That would be about 700 dollars a week, 350 SBD buys ~300 Steem plus 100 Steem. That puts me 300 Steem up after paying the delegation instead of 90. And this is without any community vote at all. Of course, I am unlikely to get as many community votes if I act like an ass (perhaps I will attract some more too) but, there it is. Since I self-vote about 40% (normally a little less), 60% (400 dollars) goes into the community a week on comments and other people's posts.

The reason I am open with all of this isn't because it is all on the blockchain anyway, it is to try and work out a balance point for growing my own account and being a useful member of the community. Me acting as if this is an actual free market system is going to be very, very detrimental to my own growth while the protectors protect not only their investment but, grow their investment exponentially without having to be concerned with community demand at all.

For me, community demand is still something I consider as after all, this is a community and to survive long term, it requires more community actors. I try to add value with the words I use and help those I can along the way. Also, no matter the conditions of the market or Steemit, I have been posting consistently like this for over a year now.

I try to balance my content with supply and demand as I think that eventually, a free market system has to replace a self-protected marketplace. Some people might think my content is poor which is is fine but, if held up to the light in contrast to what might take my weekly earnings from the pool in one post, I think it is hard to say it doesn't deserve a reward of some kind.

Unfortunately these days, self-reward is a large part of my returns but, I don't feel so bad about this considering that I have powered up so much and share so much across the community. Some have recommended I be a little more selfish and grow my account more and worry less about the community since nothing is actually going to change here until, the code changes.

Code is Law.

Because the code incentivizes selfish behaviors over community ones and the difference is very large, people will always look to maximize and some will maximize very efficiently without consideration for others at all. Haejin is someone who successfully games the system... so far. But, he is only the largest single user (if you don't count his very generous whale friend). The bidbots are taking much more from the pool (including the curation side) than he is and factor in some of the very large accounts with up to 10 alts posting multiple times a week each and, Haejin is just a slightly taller poppy.

Even the curation return disincentivizes manual curation as it pays only in SP, not 50/50 like a normal payout. With SBD riding so high, this is a massive value difference. 10 dollars in curation is about 2.5 Steem but, if it was paid 50/50, it would be 1.25 Steem + 5 SBD which could buy 4.5 Steem making the total 5.75 Steem compared to 2.5 from SP curation.

Would making that change be enough to return people to manually curate while SBD is high? Perhaps some with good conscience but the Bidbots still outperform that return for the operators and delegators.

The Fool Card

The problem currently is that there are so many ways that narrow distribution and grow those who aren't community-minded and very few that help those who are deserving of the support as they are distributors and community minded themselves. This makes those who don't game the system fools, those that do the winners of a sinking ship.

I wonder, just for hypothetical sake what the system would look like if it was actually a free market. I know the code means it will never happen but what if content was actually King and the best way to earn here was to either produce great content that the market accepted as such or, curate content?

What I think would soon happen is that there would be very similar complaints to now as much of the content that is posted is so far below average it is very likely to get any support at all while that which is worthy, takes a large amount more. Of course, some of the current highly rewarded would drop from the ranks as their protection is removed but in time, there would again be familiar faces in Trending each day although their content will be of a higher caliber.

Would your content make it to trending, does your community service get rewarded in a free market?

This is a question that people should really ask themselves before complaining about the reward system or not being rewarded as if their content and comments don't hold up under community scrutiny, why should it be rewarded at all? It isn't good enough just to say, "but other shit is getting rewarded, so my shit should be too."

Yeah, there are a lot of considerations, issues and challenges facing Steem and this is just looking at one or two of them in a very casual manner. I always thought and still believe that humanity can do what is right for a community without being forced by an authority but, I don't think we are there yet.

This is one of the ironies of the Code is Law argument as essentially it is saying that, "Unless told otherwise, I am going to do what the code allows."

We are governed. Nothing is free.

Taraz
[ a Steemit original ]