This post is reviewing economic publications dealing with "Steemit" as a crypto-economic system.
While for the community members, "Steemit" is just the original dApp, a blogging platform to showcase the capabilities of the underlying blockchain technology, outside observers refer to the whole ecosystem as "Steemit".
Steemit was dubbed "the most advanced crypto-economic system" by the prestigious "The Economist" magazine back in July 2018.
I have long deplored the relative lack of interest in blockchain from the economic profession. Aside from "The Economist" and the notable exception of Oliver Beige, economists seem to shrug when blockchain is brought into the conversation.
I have done a search with the terms "economic analysis steemit" and found three articles:
- "The Concept and Criticisms of Steemit" was first published in February 2018 by U.W. Chohan from the University of New South Wales in Canberra, Australia.
Taking the stance of a philosopher, the author compares the reality and difficulties encountered by the community with the original vision. He specifically raises questions "about the structures of accountability in the cryptocurrency realm, and of the abuse of cryptoanarchist principles in practice".
Indeed, as I've also observed in previous posts, when:
- people act anonymously, and
- there is no shared, commonly agreed notion of "good" and "bad" (moral)
then the system is going to be abused no matter how well-designed
The way U.W. Chohan summarizes this is by saying: "there are fundamental accountability problems that arise from the abuse of cryptoanarchist thought"
However, he also notes a lot of positive points which make steem/hive unique:
"In stark contrast to other digital currencies, which are difficult for the general public to access due to systemic barriers to entry, whether legal or material, Steem erodes those barriers to entry by structuring a system of earnings through posting without forcing an initial outflow of capital from users."
I believe this is a major point which hasn't been underlined often enough: if a blockchain is a "locus of cooperation and collaboration" between people who previously had low or no trust among them, then a barrier to entry into this locus will reduce its effectiveness.
If one wants to collaborate with others on the bitcoin network, one needs first to either "buy bitcoin" or "buy mining equipment" (in addition to having the means to access and use the internet). The same thing holds true for the public Ethereum network.
In contrast, in order to start collaborating on the steem / hive networks all that is needed is one's creative effort (and a seven-day wait for the first rewards). At this point, the highest barrier to entry in these networks is the difficulty in obtaining an account (long wait for steem; I don't know about the length of the wait for hive yet).
Coming back to U.W. Chohan's article, he rightly concludes that "there is a stronger correlation between the underlying function of the platform and the value of cryptocurrency than is found in other altcoins."
2 . "Can Social News Websites pay for content and curation? The Steemit cryptocurrency model" by Mike Thelwall from the University of Wolverhampton in the UK.
This article is more focused on data and analyses the earnings of "#introduceyourself" posts, concluding that it pays to write emotional texts which attempt to weave social bonds rather than factual, informational posts.
This article seems to have never been published, so I didn't spent as much time with it as with the other two (I might have been wrong).
3 . "Sustainable Growth and Token Economy Design: The case of Steemit" by Moon Soo Kim and Jee Yong Chung from the Seoul School of Integrated Sciences & Technologies and the Duksung Women's University in Seoul, South Korea, respectively
While U.W. Chohan's article was rather philosophical and reflective, this article has more analytical depth and a broad scope as well. Its stated objective is to analyze the "Steemit" design ("the most advanced crypto-economic system") in order to infer possible rules for designing a successful ICO.
Token Economy
The ability of "reward mechanisms" to influence human behavior has long been researched. One of the most widely cited works in this field is the 1968 book by Ayllon, T. and Azrin, N. called "The Token Economy: A Motivational System for Therapy and Rehabilitation". I borrowed this book virtually, from the "Internet Archive" and browsed through it. It tells about actual therapeutic protocols which were proven to be effective in improving the behavior of difficult psychiatric patients.
A few years later, token-based reward mechanisms were reported to be effective in improving the behavior of "pre-delinquent boys" as well as that of "chronic pain patient"
Mechanism design
The above results prompt the question: how does one come up with an effective "token economy"? The paper points to a more recent field of economic and game theory research called "mechanism design".
"Mechanism design" is a sort of "reverse game theory" and for "having laid the foundations" of this field, L. Hurwicz, E. Maskin and R. Myerson received the Nobel Prize in Economics in 2007
If game theory tries to analyze how "autonomous agents" behave given a set of rules, "mechanism design" turns the problem around: it starts with "desirable behaviors" and then tries to identify "game rules" which would encourage those behaviors.
Like Game Theory, Mecanism Design assumes the participants are rational and act in their own best interest. To achieve a socially-optimal distribution of goods or resources, the designers need the participants to reveal their preferences truthfully. However, we know from real life that when we reveal our preferences truthfully, others can take advantage and can exploit us. Being truthful, saying the truth is often risky in real life.
A mechanism where actors do not end up worse off by revealing their true preferences is said to have "incentive compatibility"
The paper analyses the choices made by Ned Scott in designing the steem crypto-economics in order to achieve "incentive compatibility".
Though with hindsight we can now say that Steemit did not quite succeed, it has to be said that this is a really hard problem to solve in a real life setting (much more so than in a "paper and pen" one).
Conclusion
The steem and hive blockchains propose, still today, the most advanced crypto-economic system.
As the third article reviewed above note, it attempts to solve an important problem:
The relative scarcity of scientific papers analyzing the blockchain ecosystems tends to indicate that the economic profession has yet to realize what a boon for research in various fields of the economic sciences these ecosystems can be.
I was thinking of this today, like 4 hours ago. It'd be fun to make more similar experiments but it's hard to get users. I happen to have a big community but it's also hard to find free crypto tokens to distribute and see if they can get value. And even having users and tokens, it's hard to design a model that can create value for it. What I hadn't thought about is the reverse game theory model.
It's very useful to have that in mind, that one can think of exactly what behaviours to promote and then brainstorm what tools, restrictions and mechanics would encourage them. It's also fun to "theorycraft", but it's hard to find the means to actually put those theories into place.
I've always been a little passionate about Steem/Hive as an experiment that can be studied. It's recent, unique and has yielded interesting results. At the same time, there are countless theories floating around regarding what would be "ideal for humanity" or "ideal for a community", but as you said, people can't even agree on what moral goals should be pursued, even less on goals derived from them, and then an economic system derived from these goals.
It'll be really interesting to see in the future how these systems evolve and what little crypto creatures come out ahead in the Darwinian Evolution Centre, and then to see their effects on the global economy.
I personally need an "anchor point", something approaching a "moral invariant" to be able to structure my thinking. The one that comes closer (for me) is the notion of "personal/individual responsibility/accountability" if you wish) that comes back over and over again, most notably in the Zizek - Peterson debate
Then, the next construct is that of a moral scaffolding, a moral structure to which a group believing in both freedom AND responsibility could adhere to ...
Once you have these, playing with economic mechanisms becomes really gratifying I believe.
I see. I have a hard time with morality. I'm amoral but I agree with the need for terms and conditions for communities to endure. I like the idea you mention, "personal/individual responsibility/accountability", but at the same time I'm reluctant to accept rules that will restrict my good-faith actions, so I tend to visit laxer places rather than stricter ones (top reason I like crypto). That having been said, and as was said before, if the goal is to create a promising community, the characteristics and mechanics one wants for this would have to be established (something I'd rather do functionally, based on user satisfaction, instead of a pre-existing moral system), and then to create the rules.
One of the main problems I see with "free" communities is that not only are there no rules, but sometimes there are also no means for people to effect change. One of the main arguments for free market and laissez-faire politics is that people will incentivise what they want to happen, and they'll disincentivize what they don't. When interactive tools and possibilities are low, communities can't incentivize or disincentivize as much as they would like, and the supposed freedom fails because these systems favour breakers of sub-community rules, who will go unpunished. In this case, one good solution is to simply give more tools for people to interact with their environment, therefore allowing communities to establish their will and sovereignty under the desired scope. (Basically, increased interactivity => higher control => higher satisfaction => higher endurance)
All of this is to say that by starting from a moral system (such as JP insinuates with his comment about the superiority of the Abrahamic moral system), the leader of the community assumes the role of the community. Instead of allowing for interaction and self-regulation to occur, those roles are taken away from the individual by the ruling organization, and therefore, while control is enforced, it's not the same kind of control. One is control of the environment by the individual, and the other is control of the environment and the individual. Both models can give people satisfaction (it's not like people in China and in England live miserably and can't find anything joyful to do with their lives under overreaching states) and can bring economic prosperity to a community.
However, those systems also work differently. One (mechanically designed laissez faire without a priori morality) is "mechanism design"/"reverse game theory" as you described it, where tools are given to a community to enact change on their environment, all based on the principle of individual responsibility, and the other is a priori system design and management (imposition of a moral system) that switches individual responsibility from path-making to path-following.
In summary, I don't think that what you call the basic tenet regarding individual responsibility can be considered to be "morality", but the void of it, which will be filled, carried and utilised by each community and individual according to their own beliefs, needs, preferences, etc. And I like this more than the alternative (traditionally monocultural governments). :)
Very interesting debate, thank you for the highly elaborated responses. I could write a book about this fascinating topics but here I'll try to keep it short and telegraphic:
So here we are: for the benefit of the community, we need to minimize the time and energy spent in disputing the criteria and the system for choosing the best persons to occupy a position in the various organizations which benefit the community.
Now I invite you to temporarily set aside whatever definition you assume for the term "moral".
Set it aside and consider the following:
"the moral of individual responsibility", in this context, means "pledging to honor a system for selecting people for roles in society, and keeping one's pledge even when the outcome of the selection adversely impacts one"
This is what the "moral of individual responsibility" is.
It is "good" to keep your word and abide by your (freely chosen) prior commitments. It is "bad" to say today something and then say the opposite the next day if you see that it doesn't suit you ...
If that would be moral, would you still say that you are "amoral" ?
Well, I am self-interested. Imagining that's a contract, I wouldn't agree with it in the first place because I always do whatever I want. So yes, in that context I am amoral too. However, I would agree to create such a system, even if I am unlikely to honour it, because it seems like something interesting to explore. And who knows, maybe the secondary or tertiary activities that I'm assigned do please me!
Is what you described a minimalized description of the monetary system, where the "selection" process is the free market? In that sense, it is impossible to leave the market, and therefore it is impossible to go against the moral rules because morality would be embedded in causality (kind of like cryptographically enforced rules in blockchain if they were impossible to break with sufficient power). Manipulating market participants would simply alter the selectability, the way people do when they lower or raise prices or create new services and products.
I don't know if I'm misinterpreting what you say haha!
Actually you have, perhaps unintentionally, pinpointed the problem.
The problem with the monetary system and the market. These are "moral-less" or amoral - they function as they are intended to, there is no need for "good" and "bad". As you correctly note, if the rules of the market are called "moral rules" (which I don't, but let's pretend for the sake of the argument), then it is impossible to go against the "moral rules"
So no. The main message that many people are trying to reformulate in various shapes: a (market + monetary system) is necessary but not sufficient to sustain a prosperous society. You need an additional "anchor point".
This is for instance a thing both Zizek and Peterson agree upon when discussing religion. Human societies need some kind of external "anchor point" to be stable over a longer period. External in the sense of "in addition to a free market and a monetary system"
Now that external anchor point, referential, commonly agreed "transcendental authority" has traditionally been the religion but it needs not be. For instance in France it is now "La République". "la République" does not literally mean "the republic"; it is, for the French "body politic", a transcendental abstraction - it means "the essence of what holds us together, a shared set of values"
This is what U.W Chohan observes in his paper: a community like "Steemit" is unstable and unsustainable and "eats itself out" if there is no external, transcendental authority to which the members of the community all bow and refer to. If there is no set of rules, values, principles that the members agree to honor and enforce.
In that environment, you can still be self interested. And you can still do whatever you want. But if by doing something you want to do you happen to breach the commonly agreed rules, values, principles of the community, then its members should try to punish you or even bane you.
The very existence of the community depends on that.
The idea of having to find something to "bow down to" seems dystopic and oppressive to me. It leaves a bad aftertaste. Since I don't follow rules unconditionally anyway, I like to think of the goal as creating the tools for self-regulation. I've been reading a lot about statistical incentives and think something could come from there that would trump centralised authorities.
The idea behind statistical incentives is that there are behaviours (I mean this psychologically) that can be encouraged through active and passive measures (examples I took from a quick google: 1 & 2). These techniques are already being used every day by companies, urbanisation planners, AI developers from Facebook, Youtube, etc.; I'm sure you've read about this already. You will also find that people have different attitudes after certain events.
Look then at Steem where downvote pools were made available, and certain blockchain changes were made (the 50/50 that you mentioned) that created enormous change in people's activities. These are small code alterations that can be said to have practically changed the life experience of thousands of people. It wasn't a total success but we're just starting.
Imagine planning the internet the way architects plan urbanisation. Just as Steem had goals that were easily met with code, and it massively changed community interaction, other tools such as Steem can be created that have goals, something interesting to pull users, and structures that encourage specific behaviours quantitatively.
I think there's something beautiful to encouraging both critical thinking and positive behaviour in parallel. When there's a choice between ideological imposition and structural incentive, I see no reason to go for the former. For me, it's the same as Catholicism did to me when I was young. There were two things I could have been told:
I was pressured for most of my youth to join this homogenous idea both in mind and body. I was mentally tortured by the idea of either belonging or being a failure. Once I broke from my belief of God, I rejected many ideas of morality, all of those things I did only to please Him. I was never taught the value of morality, only that I had to bow down to it or I would be incomplete and lose God's approval. It took me years of being a violent mess, of believing in the remnants that Christianity left in me, of defending justice by insulting and mocking people, because I somehow felt superior. The absoluteness of morality was the most harmful thing to my conduct, to the point where I missed many, many opportunities in life, and lost many things that I valued.
It was only when I gained the ability to critically evaluate ideas that I understood that "morality" as a handbook for behaviour in specific communities has enormous value, not due to "humaneness" or "completeness" but because it's a tool to have fulfilling human relations. I feel cheated and am disillusioned by my community's efforts to lead me astray from my own desires. I still follow many general moral rules, and I don't do much that may make people unhappy because I feel good when I do it. So while I say that I am amoral, I act morally in general, and I consider myself to be a much more apt member of society than when I was pushed inexorably down by the endless lies, shame and misconceptions.
I guess my point is that if we can avoid creating a lie-and-imposition system to accomplish the goal of general prosperity, then there is little reason to still go for it. Especially when that time could very well be dedicated to doing the opposite and promoting education about individual choices, and the creation of behavioural encouragement systems that move communities toward prosperous attitudes without removing the person from the equation.
edit: I should also mention that since there are plenty of different moral systems, imposing one or another would be like playing crusader or jihadi. If we want to create a prosperous system while allowing all beautiful cultures to stay alive without changing everything that makes them unique (relevant article I wrote), then the solution, more than central morality, is well-researched goal-oriented encouragements for focalized environments (worldwide lens allowed).
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Hmm, there seems to be glitch ... Everything is at 0 for my username
Indeed, a small glitch at page load. Please refresh you browser, it should work now.
It does indeed, thanks
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