Ned Scott: Steem - The Blockchain-Based Social Media Platform (Episode 162)

Transcript

[Music] this episode of epicenter is brought to you by The Ledger Nanos s the hardware wallet which sets the new standard in security and usability get it today at Ledger wallet.com and use the offer code epicenter to get 10% off your order and by Jax Jax is the userfriendly wallet that works across all your devices and handles both Bitcoin and ether go to jx. and embrace the future of cryptocurrency wallets hi welcome to epicenter the show

which talks about the technology projects and startups driving decentralization and the global blockchain Revolution my name is Sebastiano and my name is Brian faan crane we're here today with Ned Scott of uh he's a co-founder and CEO of steemit now probably a lot of you guys have heard of steemit before steamate is a project that has has realized the vision that we've actually seen a whole bunch of times on the show at least realized it uh to a bigger extent than those other projects which is this idea that people can kind of generate con content and have this cryptocurrency that's used to reward uh content creators and see it's gotten uh a lot of traction um with certainly more

traction than any of these other platforms and it's Scotland also very high market cap at one point which has since deflated quite a lot uh and yeah today we have a Ned on just to to run us through what the vision is um how steamate works and how the project has developed so thanks so much for joining us Ned hey thanks for having me on guys cool well let's let's Get Right started can can you tell us how did you become originally involved in the cryptocurrency blockchain space and and how did that lead you to to co-found steemit uh yeah it was 2013 beginning of 2013 I recently graduated school where I studying psychology and economics really

just loved U you know the science behind behavior and when I found Bitcoin it just felt like the perfect match for me because the way I began to understand is that there was this system uh that was made possible and secured by people's motivations and incenters I just fell in love with how that worked it was like poetry to me and I I quickly asked going to be my girlfriend and I spent every night with her uh thereafter and um I'm sure you guys have you know did something similar um but you know it was it was just something I was I was in love with and I dug my toes into every you know piece of information about the technology and tried to meet as many people as I could and quickly

started thinking about you know what else is possible uh technologically and I stumbled into a few projects I started looking at at counterparty when it came out and then I found bitshares I found Dan larer who I ended up co-founding steemit with also looked at theum and I've just followed you everything I can in the space and I've just tried to um you know just tried to you know be doing it constantly and um I I had another job I I went to work for a family the G family um based uh out of New York City and that was great and I was kind of balancing these things and then um halfway through last year I Dan I said Dan you built bitshares which is this decentralized exchange technology and it

it's it's kind of in line with what a lot of the banks are looking for in New York or at least the what the consorti are selling people you know there's potential there with the um the consensus mechanism that you've come up with in delegated for mistake and just with the technology in general the idea that you have these this asset issuance the idea that maybe you can have a pegged instrument on the blockchain so you know I was I was pretty proficient in in all of it and I started bringing it to firms in New York and just jumping up interest meanwhile you know uh talking with Dan saying you know let's figure out what the next mainstream application is um and the conversation turned towards Mutual Aid societies which was really the the concept of micro insurance and how can you bring together a group of people on this

technology this blockchain technology in such a way where they can pull capital and they can compensate people in cases of in in specific cases of loss and then make claims all through this blockchain and it's the question of can you make things more efficient can you um provide services to a market in in a more efficient way or or to a market that wasn't being served uh prior U but as we were having these conversations uh we quickly realized that you know there would need to be a forum directly built into the blockchain that all the conversation all the claims uh would need to be immutable and be tied to the account and all the cryptocurrency aspects would need to be tied right in um so that you can have auditability of claims and once you're at that premise where you're talking

about putting a forum on a blockchain trying to figure out how that could be scalable and all that uh well we quickly realized it was going to look like Reddit and uh things started to snowball and we're thinking okay we kind of have you know a social media platform on blockchain and uh just through some um you know through some Strokes of luck we were able to come up with some algorithms that U reward people subjectively for participating in this cryptocurrency economy and what that really means is that um we came up with the concept of of steam as a dow a decentralized autonomous Organization for rewarding content creation so there's this special algorithm in there

that rewards a set amount of tokens every day to people who are creating content and finding good content and uh that's one of the true Innovations here the idea that that um there can be content creation rewarded through a blockchain where you know people aren't paying uh directly to read content or or or uh access content and it's being paid in a socialized manner through this sort of fire hose of tokens points um so you know essentially you know I started at cryptocurrency got into the 2.0 stuff The Exchange stuff started thinking about insurance and then ended up in in social media and here we are you know we we kind of had the idea in January uh we were able to

string up a blockchain based on other open source protocols graphine um and uh a lot of the tools that were developed in past projects we able to string up the blockchain by the end of March and get it launched via a public announcement on big Point talk uh several stages later the uh steemit.com had been released as the flagship um interface into the Steam blockchain and uh then finally in July the Dow kind of turned on and started actually rewarding people for Content creation and it's been a wild ride since we've seen a lot of uh people come to the platform there's been more than 100,000 accounts created there's been more than a hundred applications built on the steam blockchain so what

that means is is uh you know there's a lot of entrepreneurs and developers being attracted to this system and um you know that's neat and and what it's forced us to do is is really come up with a way for changing the way the internet works as a whole and ultimately what I see Steam uh becoming is is a new content Network for the internet that is censorship resistant and uh you know Lacks sort of middleman that can tell people what they can and can't do with this data and and that's powerful because if you look at institutions like Facebook and Instagram and Twitter uh that are taking our time and our energy creativity and attention and then monetizing that and turning it into profits for their shareholders we

can now flip that model and we can allow people to monetize their attention um without uh any sort of middl man and without people giving up the value for all the work that they're doing this been quite a few projects in this space that have taken up some of those same ideas I remember very early on we did a podcast episode with gems which was a sort of a WhatsApp type thing but where it had the same kind of idea that you know you would reward people for uh creating content you might reward them for seeing ads and then of course let's talk Bitcoin as well LTB coin so it's this idea is is been coming

again and again or yours at the yours Network we did a podcast with them a few months ago um and it's it's interesting that you guys have seen s traction do you have why do you think that is why have you guys seen uh significant adoption you know for talking about Gems or yours you're really talking about um you're talking about tipping and you're talking about micro pains and steam is very different from that it's the rewards in Steam are much more like Bitcoin mining in the way that let's say there's 100 new Bitcoin created today for miners you could say that there's 100 new steam created today to pay people who create posts so really it's a it's a public competition uh to you know get a post um most uploaded by the community there's a

special algorithm in there that that distributes the steam according to how well a post uh does on the blockchain in a given day so it's this very new set of algorithms and token or or Point issuance that makes this robust and makes it attractive beyond that all the content sits directly in the blockchain which makes it completely censorship resistant which means you cannot delete the data from the blockchain which means you know people uh you know if you think about Twitter or Reddit where you know every so often there's oh they're there they're censoring us or they deleted so- and so's account that that really cannot happen in this system um and I think that the other platforms you mentioned don't hit on either of those points

so let's talk about these algorithms and I think uh for for most people that listen to this show they have a pretty good understanding of how mining Works how proof of stake Works um you know other consensus algorithms like proof of authority that we see Consortium style permission blockchains can you explain then how uh the steemit algorithm creates and distributes uh tokens uh for people who create content so steem it Ste steemit.com is just one web interface one web application that plugs into the Steam blockchain and uh the algorithms would be the the steam algorithms and essentially what they're doing is every

day they're tallying all the posts and all the votes all the stake that went into the votes uh behind each of the posts and then it's it's basically mapping that to the entire rewards pool so the rewards pool is just this this set of tokens there that the blockchain is ready to distribute and it just Maps them together and the post that got the most stake weighted votes behind them receive the most rewards receed the most steam uh as as as reward so the rewards pool is something that is defined by the algorithm like so is it similar to say in Bitcoin where you have a mining reward for each block there is a reward pool that's defined by

the algorithm that will get distributed yes absolutely in relation to the amount of say up up votes or comments or some sort of set of parameters uh these these tokens will get distributed to those posts there's essentially there's the the rules of the algorithm have defined sort of the supply of tokens and and and that you know there's a digital scarcity there's a predictable and set rate of tokens that can be created at any given day um this year there's nine and a half% uh inflation on Steam and every year for about the next 20 years that rate reduces by about five sorry 0.5% until it gets to uh a total effective

inflation rate on Steam of 0.95% and that uh inflation is primarily being paid to the content producers uh and then a portion of it is being paid to the witnesses who are part of the delegated proof of State consensus and are securing the network uh they're being paid to produce blocks and uh essentially you know caretakers of the network who can be voted in or voted out at any given time anyone who familiar with proof EST State it's um it's essentially uh a system of elected block producers by the uh by the steam holders by the stakeholders or Steamers okay so let's get into the different components then um perhaps a good place to start is who are the participants in Steam and so

you mentioned Witnesses I'd like you to go into details what is their role um we have obviously content uh creators content producers content curators and then perhaps even the different platforms that are plugging into the steam database and acting as uh sort of a window to this sort of block Explorer I guess if you wanted to compare it to bitcoin but one way one interface to the blockchain describe all of the different participants and you know what specific roles they have within the entire network sure yeah so let's start with the people who are directly participating with the tokens and are maybe taking you know piece of the the new token prediction so yes you have the

witnesses and the Witnesses are block producers uh they're responsible for you know running full nodes uh making sure that all the data is replicated these people are running nodes or these groups of people are running nodes uh that support all of the content uh that is pushed to the blockchain um so the content is replicated it's um uncensorable because it's being run all around the world and these people running these witness notes are being paid to do that and the only way they're really going to fulfill the job and get paid is if they are producing the entire set of data um so that's like being it's sort of like being a minor in Bitcoin except it's an elected position um so

there's there's the top 19 Witnesses who are expected so there's a round of block production there's 21 Slots of of blocks in each round and 19 people who are elected top Witnesses are pretty much always producing and they can be voted in and out so it's fluid but there's the top 19 positions always have one slot in that um in that queue of 21 and then there's another slot for proof of work miners there's actually a a subset of proof of work in this system so the minors are competing for that 20th slot and then there's the backup witness slot and there can be an infinite number of backup Witnesses uh who are being chosen for that slot depending on how much stake weight is behind um uh their their position essentially

and so reoccurring rounds of block production and um so why why is there proof of work and proof of say can you explain that yeah so so uh the governance and the consensus is is relying on on uh proof of stake delegated proof of stake um and proof of work is is a simple way for people to participate in the network uh who are minors and other chains they can uh obtain tokens and um you know essentially participate that way it's also a way to anonymously create an account name you can mine an account name into an existence this way no one has to you know if if you create an account through a web interface uh then you know someone has your IP Etc um but through the the mining process you don't

have to spend funds uh and you can do it anonymously so so it serves that purpose um so anyway the the next uh position would be the um the content author so anyone can show up uh to a web interface like steam which we'll talk about the interfaces in a second but um anyone can can show up and create content they can push it through steemit.com they can push it through the CLI wallet they can push it through there's another site called busy.org um and you know essentially it's like creating a post on any other social media site and as you do that then the community comes around and if you they have stuff you like they out quote you and then your post is subject to that rewards algorithm um and at the end of the day uh you'll potentially be

rewarded with steam tokens with steam points and um and yeah there's there's lots of people doing that I was just in Hong Kong and out of the blue one of the top bloggers on the site said oh hey I heard you're in Hong Kong I'm in Hong Kong too and I met up with her and her mother and we went out dumplings and all that and I you know this is just this was it was if you think about the the crypto world this was a very unique interaction uh this is you know someone who never would have been exposed to cryptocurrency before or um just some you know 22-year-old girl um you know who's a travel blogger and um you know about four months ago she got involved with steemit and has been doing really well on the platform earning the steam you know has become a cryptocurrency

Enthusiast from all this and has used Polo and you know all these other tools that exist in the crypto industry so it's been really special to see how many uh different types of people have been attracted to cryptocurrency uh through this platform um there's another group of of stakeholders in the system and those are the voters uh so if you hold steam power the more steam power you hold which is just the staking version of steam there's only one core token at the core at the center of this platform there's there's Steam and then there's this staking version of steam uh which we're talking about the the curators and um if you are staking your steam you get more voting power you get more influence over uh how rewards are paid to uh different content um so so that that's

one of the uh the value drivers is that people want to have influence over the network and so they they have Steam and then they Power It Up um you can power up or stake your steam instantly and you can uh Dake it over the course of 13 weeks um so what that does is it um well for one it helps protect against the tax for that rewards algorithm and um it also encourages people to be long-term holders there's a tiny bit of interest uh in terms of points that are paid to people who are staking um so there's additional incentives there to be a sort of longterm participant um but yeah curators are are essentially uh competing to be uh ahead of the curve to

be smarter than other people to find posts that other people are going to upload because if you if you upload a post before the whole other side of the community upst hit and you stand to earn more steam uh from that vote it's sort of like a prediction yeah so so that's the authors curators Witnesses uh yeah then there's the web interfaces and actually there's there's been a hundred applications built on the team blockchain since July more than a hundred now um there new ones being built all the time and and some of them are quite uh formidable I would say you know are are actually competitors to steam it but you know we actually implore that uh because the more

applications the more social media websites that are built on this U blockchain the faster the network can grow and the more robust and redundant uh the system becomes um so another one is called busy.org you can check that out they're in Alpha right now um and there's tons of others that do statistics you can go to steam tools.com and you can see this this massive list of of applications and I have a whole slack room filled with more than 100 developers uh you know people who are just interested in building things on this blockchain so there's this whole contingency of developers and entrepreneurs who are looking to build you know the next competitor to discuss or the next competitor to Wordpress you know

ultimately we see a a path forward for turning steam into the uh the content Network for the entire internet as a sensorship resistance system with no walls no barriers to entry at all you you model an application on it like discuss and now you can go to Every Network plan The Huffington Post the New York Times uh WordPress blog after WordPress blog and say integrate this this comments wiget now every time you have a post link that post into steam and then use the comment section uh derived from the Steam blockchain and now you have access to this entire network of people um and those people have the potential to earn rewards for commenting on your post and you have the

potential for this new Revenue stream by linking your content to the steam blockchain so it's a winwin win um so that's the sort of thing we're looking forward to is I think today we have a proof of concept and steem it in some of these other apps but ultimately the goals are very big to you know provide a censorship resistant layer uh to the entire internet let's take a break to talk about The Ledger Nano s the new flagship Hardware wallet by Ledger I'll pass it over to Ledger CTO nikab Baka who can tell you all about Ledger security features and SDK so leer Nano s is a personal security device based on a secure element the screen and button so that you can verify everything that is

done on device and make sure that you are really doing what you want it to do compared to our previous solution this device is based on a latest generation secure element the st31 from STD micro the st31 is an is using a secure arm core which means that you can have the same ease of development that you would have on a generic microcontroller but benefit from the security features of a secure element security features include an application fire w at the lowest level that let you protect applications from each other which means that you can load multiple application on the hardware wallet even post insurance and you as a developer will be able to leverage these features to load your own application without our authorization

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off your first order we'd like to thank Ledger for their supportive epicenter so steam it's a very controversial project right there's been lots of lots of criticism uh lots of um accusations of uh you know wrongdoing it being a scam and stuff and of course there's positions on both sides but one of one one sort of area where there's seems to be a lot of focus is on the the kind of the launch and and how Ste it was created so can you run us through you know when the launch was was and and what exactly happened then sure you know I I you hear a lot of these criticisms and something you have to expect in the crypto space where people have incentives in different places um and

what I've noticed is every single Bitcoin person or cryptocurrency person that I've spoken to or have come across and talked to about the platform ends up getting very very excited about so my personal experience is people who have been um you know out out you know wildly critical and outlanding in the way that they make their criticisms are usually I don't know it's it's like they're upset because they didn't get a white glove invitation and uh that I find ridiculous other times you talk to people and it's like every other criticism they have contradicts what they said before and it's very hypocritical uh what we did is we were very careful about um the way we launched the token so that it would be

uh you know it wouldn't violate uh any regulations laws andit states where we're based we're very conscious of of the issues with the different regulatory authorities around so we were very careful to mine the token into existence and not hype it up not make a big sale out of it there was no sale it just was software released on bitcoin talk uh there was uh essentially um a test net that ran for a couple days people got exposure to that um you know people probably spent only a couple thousand dollars in total uh sort of doing that and then there was another fullnet launched a couple days later that um has become what schem is today but

essentially was mined into existence over the course of a month and people who read the code so on on on that one you said there was a test net launch and then uh sort of a full net launch I was reading a little bit around there and there were basically people saying that well there was two well there was a launch that was in AO it and sort of relaunch but that wasn't communicated as a test net or launch yeah well we had to call it a test net because ultimately there was a a stack Overflow and you know I wasn't actually participating in this and I think you guys know Dan but Dan's our CTO and um you know he if he were here he could give you more details

but I can tell you this that everything that happened in the code is completely auditable you can go back to GitHub and see exactly what was in the code you can see the exact bug um and and ultimately what that did was it gave people two days of additional exposure into what this blockchain was capable of um and ultimately we spent thousands of dollars to you know figure out how this thing could uh you know operate successfully and gave people more time and more education and insight into what it would become um so so honestly you know a lot of those criticisms are just I don't know they seem ridiculous to me at this point so so you said steamate was Lo um mined into existence

over what time frame was that and and what percentage of the you know the steemit that exist today were mind in that time sure so so steam steam steemit is the steemit is the website right right Ste Ste steam is both the blockchain and the uh the native point system token um so actually the um the software was announced at the very end of March and then through the very end of uh April it was being mined it was pure proof of work and um I would say that that our company obtained about half the token Supply with the intent of growing the network and decentralizing the network over time understanding that everything most of the things that we

caked into this thing were very experimental uh and were expressed as such and it was fully our intent is our full intent today to decentralize this network and to grow it as best we can uh to support the community so those funds are portioned out for doing exactly that so you mentioned before this aspect of it being um being locked up um right when you have it the steam power right you get they get staked and then they get locked up for a certain time and it's my understanding is that in the beginning this was 104 weeks and this was Chang to 13 weeks is is that right and what was the logic behind that uh

yeah so when this thing started out it was very experimental and we had this this idea that it would be very uh great for the Social Network to create a system that supported long-term holders because it was our experience that most of the people who get involved in cryptocurrency projects or crypt toen projects want to support it for the long run if it's an Innovative idea and so we came up with a model that would essentially support that where where the steam the core token wouldn't be uh considered a currency at all because it were being was being hyperinflated but rather it was a door uh where people could get into the system and then begin to stake and get voting power through that and get voting influence in the network um ultimately that ended up

being very very experimental and not ideal in the community's eyes and they've asked us they had asked us and began to Rally around the idea that uh steam should reflect more of the properties of some of the other uh crypto tokens out there in terms of inflation rate so it was uh last week that a hard went through where all the witnesses upgraded actually well in advance all the backup Witnesses or majority backup Witnesses upgraded uh to basically patch in a version of the software that took the inflation rate from being very high on Steam to being very low and narrowing over time so that steam can actually compete as a viable currency so this is something that happened last week only that it went

from 104 weeks to 13 to 13 to 13 so what that means is you can Power It Up and then you can begin powering down and essentially each week you get an equal distribution uh until it's fully distributed back in the steam Ste power oh so you get like a 13th of this the coins back every week over 13 weeks yes and there's no hyperinflation at all so you know people can be in either bucket steam or steam power the issue the community had with the other one was that as soon as you move into steam it's like a hot potato or melting ice cream and you just kind of want to get rid of it and we uh understood that you know I think everyone learned a lot from uh this experiment it is an ongoing

experiment and ultimately I think this is worth a conversation about what is the purpose of blockchain we get asked a lot you know what is a blockchain why is what you guys are doing a blockchain ultimately what it's really about is consensus and censorship resistance and delegated proof of stake is a consensus model that actually acknowledges and Embraces the idea of governance so that a blockchain can be a tool for supporting Community interests um and so that's exactly what happened here is the community's interest was uh changing the model and I think the community's interest is also in stability um you this was a big change but ultimately the community is going to find Value in uh being stable

and uh not having things change today's magic word is steam s e M head over to letar bitcoin.com to sign in enter the magic word and claim your part of the listener [Music] reward coming back to the launch you mentioned that it was Min into existent over the course of a month was that sort of a linear uh way this happen so like 3% of the supply per day or was that some different yeah it was uh probably very linear I actually don't uh mine so um can't say

exactly what the algorithm was but it's all there on the blockchain and publicly auditable right because one of the criticism was that uh you know people G giving like wrong instructions so that people didn't nobody actually knew how to mine except the people who actually created the software themselves so I'm of course curious like you know what did it sort of have the this effect where you have to super quick mine in the beginning uh if you had a linear mining over a month then this might not make such a huge effect if it's a few days only the people created it can mine but but if you don't know then uh right right so so the real purpose here is to

make sure that the system comes into existence uh in a way that will allow it to be viable and successful in the long run and that's exactly what we executed on as far as the token being as far as far as the software being released it was all there absolutely public and auditable people can read the code and figure out exactly what they want to do with it but you don't remember how the mining actually took place in the beginning no no of course I I was don't know no I was paying attention I wasn't mining it myself that's what I but you're the co-founder of this company and you don't know how it happened how what happened how the mining what the algorithm was for the mining like how were those coins mined during the first month they were mined over the was that a linear or some

linear sure you can quote me on that I didn't write the algorithm for the money with regards to you mentioned the company has a Min about 50% of those coins how much does the were coins sold off and in What proportion and when and how much does the company very slowly we still have almost all of the tokens that we started with and it's all dedicated to the advancement of the ecosystem actually right now uh we're considering uh nonprofit Foundation uh model for you know essentially moving the assets into something where they can be uh publicly uh demonstrated and promised to be used

in a certain way we've already uh made those um uh those assertions in many ways that uh you know we are using these tokens to develop ecosystem and as a potential uh promotion sign up tool um to bring people to the platform Tot so so when you say very slowly they were sold off can you give uh numbers uh yeah we haven't sold uh from that account into any exchanges directly uh only by a sort of shape shift method and through other shape shift type companies so how much do you guys sell uh we can go back and look on the

blockchain but it's probably a couple million yeah I just wanted to ask whether you guys also mind personally like you or Dan or whe it was only the company that mined uh I didn't mind personally um everything that was mined U by people here would have been company property so regarding uh the launch uh if we go back into those uh let's talk Bitcoin or sorry if we go back to those Bitcoin talk uh posts uh the person who was making those initial posts uh the reverse flash uh do we know who that person is and does does he have a role with uh steam it the company today uh yeah yeah of course that's

that's us that's um I mean you can say that's the company some okay H but is that person identified as U like a member of of the steam team yes okay regarding rewarding content uh I'd like to go into detail about how content creators are rewarded uh it it yeah so could you explain when when a content creator M makes a post and posts to the website or through the CLI or through busy.com please explain how the algorithm figures out the content uh reward because it's when when we're looking at it it's unclear there seems I mean perhaps simply because we don't really

understand how it works um there's some things that seem inconsistent like we'll have posts with uh a lot of comments and a lot of upvotes but zero rewards While others obviously have rewards so can you go into detail about how that works yes so so the algorithm this is where it's very different from other platforms it's uh it uses stake weighted voting uh that is uh used because uh it prevents civil if you have civil attacks in a system like this where there's value on the line then people can essentially just clean up and and take more points just by creating more accounts that's a that's an attack um so it uses stake weighted vat and uh what that means is the more steam

power you have the more influence you have over the rewards that posts uh receive so if something has a handful of oats but a lot of steam power behind it then maybe it's getting a larger uh steam power reward at the end of the day but you have lots of Vats and not so much Steam mind it it may be getting less um there's a few things you know we've think we've thought about uh tweaking here there's one particular idea that I like a lot which is the idea of curation guilts uh where essentially people can pull their voting power and then share that voting power with people on the system uh in a way that's more democratic and that would be one way to increase the fairness across the

platform in terms of and also just increase the wisdom of the crowd because the more more people you have uh voting on things um essentially the more accurate you are in finding good stuff or representing more of the community's interests I mean one could argue the opposite and say that people who have more stake have more financial interest in voting on things that uh are essentially more valuable uh to the community um but I see it going the other way and I think that duration guilds and making things more democratic but actually be more you mentioned before that the inflation rate currently is 99.5% so is is kind of the way it works as a steam the steam

power uh holders they upload and download content and they then determine with those up and downloads how those 99.5% get allocated to content distributor that's 100% right now it's 75% of that 95 99.5% is what's being distributed to both the authors and the curators uh and the remainder is going to U but yes it's essentially those uploades that are determining where that inflation is allocated towards because I also read something about there being an inflation of steam that goes partially to steam power holders themselves sorry

yes so there's a small interest rate essentially um it's 15% of the the total inflation so you could say 15% of the um uh of the 9 99.5% and then it's 10% that's PID to the witnesses so 75% to the authors and curators 15% uh to the the people who are staking and then 10% to the witnesses who are producing okay so 75% of the new steam gets created goes to the content producer 10% to Witnesses and 5 15% to the stakeholders yes okay no so I I was I was a bit unclear about how the the economics works I mean I feel like this is a a general a bit of

a concern here for me as I you know I tried to read the white paper a bit and it is one of the most confusing and hardest to read white papers that I've ever seen uh and they're also long so it's just seems a super complex system now you know maybe this is necessary maybe not you know or but it's it's just makes it it makes it hard to understand I think what exactly is going on in the beginning the U objectives uh were so uh kind of experimental and there were so many uh different hypothesis that we wanted to test and ultimately I think that we

learned more than we would have with the simpler system but it's really uh become clear to us now that this thing has sort of moved out of uh you know being such a you know a less lesser known experiment into something that you know people are using every day it's become clear that uh Simplicity is where there's much more value the community is driving towards that and they're requesting these features uh over and over to simplify the system for instance now that um you know there's no hyperinflation now that the staking period is much shorter uh there's not so much tension between those two parts of the system and there's also you know because there's no hyperinflation steam is kind of like a

lot of the other cryptocurrencies that are out there that that don't have ridiculous inflation ratees so it's kind of a you could call it a cryptocurrency and the steam dollar was this sort of complex mechanism that was created to um essentially give people a place to go instead of being in Steam and still have a currency it was essentially steam with a smart contract wrapped around it to Peg it to the dollar and so people didn't holding that but ultimately it is a complexity in the system it's a very cool complexity there were a lot of things learned from that you know a socialized pegged instrument on the blockchain is is pretty not cool if we really get into it um and potentially has uses in other cases outside of a

contentor But ultimately with steam sort of being closer to a currency uh or at least you know a token that that doesn't have hyperinflation that could be used as a currency there's less of a need for the steam dollar so so we're kind of looking at it now asking you know does the community want to continue to be paid out in Steam dollars or do they want the system even more simple uh ultimately these things can be addressed uh through software upgrades if there's if there's a potential for simplifying it can be done um and it's possible that that's what the community wants so you you mentioned earlier and and this is sort of the one of the major premises behind steam that um it's it's a decentralized platform

that the content that is centralized and that uh there there's sort of this idea behind it that everyone is um you know everyone gets to participate in this platform um sort of at an equal uh as equals uh and one one of the criticisms that has been addressed is the concentration of stake within a very small number of actors and uh Since U these stakeholders ultimately are the um sort of Voters that will U decide whether content does make it to the front page or not in the end um that concentration does present itself as

some sort of a a vulnerability within this you know this premise of everyone is equal and everyone um has a chance to rise to the top uh can you can you address that in in in in a way that um well I guess my question is like who who are these people um are they you know members of the steamate community that have risen to the top through sort of organic uh means or are these mostly concentrated within so the core members that were there at the beginning that were mining the coins or perhaps even steemit um employees sure so so we talked about the the steemit uh holding that's used to or sort of reserved and

earmarked for uh improving the ecosystem and that is not it doesn't vote um it doesn't influence the content uh there are some other accounts for instance there's an account that that I control one that Dan controls there's accounts uh held by people who M the coin early on that have a lot of these tokens um there are people who have come into the system and either earned or I suppose purchased uh more tokens to get a bigger and bigger stake we point out those examples um but ultimately I think that uh most people realize that having a a smaller group of people voting and influencing the

content hurts the network because it becomes apparent that uh the the sort of algorithm for for figure out what Rises to the top and gets rewarded is too um it's not a wisdom of the crowd it's not a function of the crowd at def point and so that's why we talk about Solutions like curation guilds and actually there have been some really innovative offchain solutions where basically people have said okay uh you know guys let's so so there's a new key structure system here there's there's three types of keys there's the owner key the active key and the posting key the owner key essentially allows you to reset your passwords across all keys the active key allows you to transfer funds and the posting key allows you to post

or vote uh uh content because you know it's a transaction like anything else but it's a specific type of transaction um and so you kind of want to segregate it from your active key just ultimate it provides better security so what can actually happen that's really cool is you can share your posting key with other people and that's what what's happened all of these whales have essentially shared their posting keys with people across the platform people who are in the community chat rooms are now you know basically taking those posting keys and then other people are bringing in content and saying hey these are really good articles or these are really good articles about XYZ you could say they're about dog walking or they're about uh you know making great soup or making you know a a a a trip to Everest or something like that and and then that

group of people is is deciding based on you know their uh bylaws so to speak um what they think should be voted on that will help the community the most so you have people Outsourcing and basically giving away their voting Authority uh for the benefit of the community so ultimately the voters have become many many people uh instead of uh just being uhp holders and what is the incentive for those people to whom the keys have been delegated to do do they have some sort of an incentive to to get those keys other than simply a monetary incentive well one they could want the influence um and they could want to upot

specific posts that benefit the network they could also want to be paid I know that some of these curation guilts are paying some of these people to do the curation uh it's essentially a job um and so people who are concerned if you took some early minor who's concerned about the content that's Mak into the network it's possibly in their best interest to make sure that there's good curation and that we when people get to the site it doesn't just look like steam content or something like that but is has attractive self communic so uh when they Outsource the posting key they may also be Outsourcing the economic rewards that come from voting let's take a short break to talk about Jax Jax is a multi-coin wallet Tred by the people at the central now in

the past if you had a whole bunch of cryptocurrencies it was a pain to handle them you either had to leave the money in exchange which was insecure or you had to have all these different wallets which was a hassle fortunately now with Jacks those medieval days of darkness misery and suffering are over Jack supports multiple cryptocurrencies and new ones are being added but it's not just storing cryptocurrencies you can do with Jacks but you can also Al exchang them directly from with inside the wallet thanks to their shape shift integration and since there's only one seed Jax makes it super easy to back up and sync to the other devices Jax works with Windows Mac OS Linux Android iOS

and has browser extensions for Firefox and chrome so go to ja.io that's jx. to download the wallet and get started today we'd like to thank Jax for their support of epicenter I mean it it seems to me like this is a a good way to distribute the way that this content is being voted for but it does it doesn't eliminate the issue of concentration of power because ultimately you have these very important stakeholders that get to decide um who are their groups of people that they're going to trust uh to curate good content and so ultimately it it it remains uh the the decision on whether

you know content is good content or not well it it remains their decision so you know if you have like say 100 people that are uh you know 1% of the the stakeholders and they get to choose who their s content curators are they all they also have the ability to withdraw their keys um Can Can you address that uh that problem so so let's boil it down are are you suggesting that the problem is still um suboptimal curation I'm I'm I'm I'm addressing the problem of centralization of power so people have power proportional to the stake weight but the stake weight has been basically determined right by uh a short a very short time where

the whole thing was mined into existence right where people did not know about it it was uh well according to at least many accounts uh done in a way that made it very difficult if not impossible for most Outsiders to actually participate in this mining so you know if the stakes are all coming from there you know that makes it whatever else you do afterwards puts it on a dubious footing a dubious footing so so it's kind of like if you if you look at some other news network and they have an editor and they decide what gets posted it's kind of like that but better because it is distributed it is in the hands of of

many people uh can it be better yes it's a sliding scale um but in terms of you know people coming in early there's there's not an unfairness here there's still an equal percentage opportunity to earn based on your stake weight uh there there's a horizontal playing field in terms of percentage opportunity um so I I I'm still I I still feel like maybe we're still abstracting to the to the cor problem well I I I think that the problem goes I mean it to me it sounds like if one looks at the steam you know then one can see first of all a sound idea right uh it's the idea of of monetizing content this way of

having uh decentralized kind of social network or news curation site and and I think those are all um sound ideas and and you guys have obviously done some some real really good work there uh and I think especially where steamate has done great work is in the in the user experience which is pretty nice right it feels a bit it feels quite a lot like Reddit and you know of course Reddit is um has succeeded there and it's been a challenge I think for a lot of um a lot of these projects to have good user experience because often right bringing in blockchain bringing in cryptocurrency makes it much harder to to have good user experience so there as well you

guys did a good job it's not totally clear to me to what extent there is a sort of centralization risk through the steemit.com website you know if that's kind of a like a sort of web wallet um so maybe that's a question to ask as well but it seems to me where this is more questionable is actually around that launch and how that happened and there is just reading about it it's quite it's very disturbing to be honest and uh to me it it does certainly sound like from Reading uh a variety of accounts on that that is sort of structured in a way to ensure that you know you guys would hold a very large

portion of the stake and then of course if aftering right it's very clear the company owns about 45% of the state the employees here probably have 10% distributed amongst 14 or so people um and after that it's all in the community and now you take that 50 or the 45% owned by the company it's not being used in the system whatsoever um so it's probably not as bad as people are making it out to be um and it's completely dedicated towards getting better and decentralizing over time any object that comes into existence uh is centralized at its birth moment and over time de centralize this

and we are at the very beginning of and over time it will decentralize so if there are issues with it today uh you know decentralization is a subjective and sliding scale hopefully it gets to the point where steem it doesn't matter or Dan and I don't matter and you know that's could be years away I don't know but um there's still a lot of growth to be had a lot of development to be done and it's fully in our objective to make sure that that happens okay cool so another thing that of course steamate why it got a lot of attention was because the price went from or you know went from being totally unknown it's a huge market cap of almost

uh $400 million at least sort of seemed be around there on coin market cap which I don't know was that maybe number two even at the well number three I guess behind ethereum uh behind ether and and since then it's uh collapsed quite dramatically so it's now at about 10% of of its peak what's your view on that do you have an explanation for those enormous fluctuations yeah I you know it's it's the the nature of of uh you know people finding out about a currency it happened after the system kind of fully turned on and people actually being rewarded and using that you know those tokens to go

and pay their rent or buy a washing machine for their mother and and do real world things and they're like why all I had to do was blog to to you know get a piece of this cryptocurrency and and confidence I think just went through the roof and that led to whatever happened in the markets whatever the speculators um you know did is what happened and the interesting thing with cryptocurrencies is we've seen this happen before we've even seen it in h happen in Bitcoin from the end of 2013 uh to you know six months later you can pretty much overlap these charts dot for DOT uh and you know ultimately that's not what matters to us uh we're not focused on price we don't care about

what's going on in the market what we care about is growth we know that if we can build a mainstream application with 10 million unique visitors per day that we probably already won and that is what we're driving for we're improving the user experience we're you know making it easier for people to sign up we're solving all sorts of problems with crypto security and password management uh for blockchain and cryptocurrency based systems uh there's a lot of work to be done there and there's a lot of gamification to to do on steemit and there's a lot of encouragement of third-party apps and making sure that there are viable business models for other applications uh so you know the community is is asking for changes like Revenue splits so that someone creates a

post and they can say okay well I collaborated on this post with XYZ people or this post was hosted on Huffington Post so the reward should be shared with the author and be shared with the platform and be shared with the refer and and that sort of thing uh so there's all sorts of of things yet to be done and that's what we're focused on and if we do these things if we grow if we develop everything will take care of itself and whatever happens in the market is just what happens in the market so before we wrap up uh I'd like to bring it back to the to the community that uh that has gathered around Steam and the steam at website um so give us your impressions on what has so I mean because as Brian mentioned earlier we've

seen these types of project projects before and none of which that has that have had as much traction as uh as Steam so what do you think uh from your perspective uh is unique about Steam and has made it so that you know we have you know thousands of people today using this platform and it's you know one of the larger one of the largest cryptocurrencies and you know it's certainly not the same size as Reddit or some other social network but you know comparative it's it's uh to other projects we've seen it's it's quite successful what what are your thoughts on that well it's like I said before there's a a special uh rewards designation here that that has not existed on any of these other platforms that you guys have have interviewed or

or seen uh it's completely new it's the idea of a subjective proof of work where people can contribute to a community by developing projects or writing blog posts and then sharing that with the community and getting rewarded directly it's a really it's a it's a it's a it's a it's and it takes a village kind of model and people are contributing in all sorts of ways uh you know whether that's by building tools or providing valuable information and then the blockchain itself is designed to reward those contributions through a subjective consensus that there was value there so it's it's essentially subjective proof of work that is the new element here that's giving people a reason to get involved and that is a a big driver for

for the pro to the so just uh to end on that um so you now have uh such a community that there have been events uh being organized a steamfest uh can you tell us a bit about uh steamfest and what it is who comes there what happens actually I have a scarf from the event actually it was in Amsterdam and uh the host made these fast no it was great there were more than 200 people there uh speakers from the blockchain industry uh prolific authors Neil Strauss was there author of The Game and and rolling stone contributor New York Times contributor uh it was a really special event and everyone I met there felt like family

you know we've all been our in our digital silos for the last six months and you you see people's usernames and handles and that sort of thing and then you meet them in person and it's it's really it's really special for that sort of thing to happen I think a lot of good collaborations are going to come out of that and hopefully more events uh it's really um productive to get together and and and talk with people about you know what the platform needs we went there completely ears open asking people you know what's your input into uh what we should be doing with the website with the blockchain what do you want to see this thing turn into and uh you from that standpoint it's very um so yeah so hopefully there'll be a steam Fest too by some point next year and we can get even more people

there okay cool well net thanks so much for coming on um and uh we we certainly look forward to seeing how both steid and steam uh develop uh and what comes out of this I mean there's no there's no question that there's something there right in this space and that this is going to have a very big impact I think uh the whole media creation coupled with incentive mechanism and uh and cryptocurrency and uh and you guys have certainly done uh important work I think in driving this F forward so I think it will be would be great to see where this all leads in the end thank you guys I really appreciate you having us on we're definitely looking forward to uh coming out again

soon cool all right well and with that we at the end of our show so epicenter is part of the let's talk Bitcoin Network you can find this show and other shows on let's talk bitcoin.com and uh if you like the show then please uh leave us an iTunes review that helps new people find the show so thanks so much and we look forward to being back next week n [Music]