Topic: Steem pyramid scheme revealed - page 11. (Read 107069 times)

That is a stupid analogy and you know it.

Things are always unequally distributed, let's face it, Marxism is nonsense.

So you could just as well say that BTC is not well distributed and that people barely have a few thousand satoshis, so they can't use  BTC based services.

Steem is only little more than 1 year old, give it some time. BTC didn't got many users only by 2014 when they started putting ATMs in cities.

Maybe Steem will have to do the same, but it's only 1 year old. And there are like 300k users.

Wait 1-2 more years when there will be millions of users ,and you will get your economy 

Not more than a handful of people will use it because not enough people have STEEM to make the economies-of-scale sufficient to jumpstart it. And no one is going to buy STEEM to use it. Thus the cross-section of people interested to sell and buy from compatible locations at any given time out of a small population of Steemians who live all over the world, is roughly a handfull ± handful. It’s the classic hen-egg dilemma.

“Build it and they will come” is not a valid marketing concept. Identify an unmet need which drives viral adoption from the moment of launch.


Been noticing many Indians joining. I doubt most male Indians are there to build the ecosystem, but rather probably to game it and extract from it. Perhaps my experiences with male Indians is not representative.


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Steem is a true currency now, it can be directly used to buy stuff with. This is the definition of a true currency.

https://www.peerhub.com/

I’m not clear if you also intended your reasoning as quoted to also apply to the proposed idea wherein a company could take investment in exchange for shares which are securities. Then launch a decentralized ledger with a pre-mine but never sell those pre-mined tokens until it had completed all its managerial efforts. It is suggested that the said tokens would not be investment securities when sold, because there is no ongoing development by the issuer after an investor buys them. So it side-steps the Howey Test. Of course the shares remain securities, but the tokens are not. The company can then distribute the dividends to the shareholders. It is a different structure, because the investors in the shares get dividend income instead of capital gains. The investors in the shares never receive tokens.

Note the company could award some of those tokens for onboarding, because the individual onboarding does not pay anything to the issuer, thus there is no investment contract. The FinCEN implications of this idea were also analysed at the blog.

So this is how to redo Steem 100% legal.

This idea is obviously donated to the community as open source. With the ICO paradigm threatened, it seemed like it was an important juncture to share an idea that was originally intended to be proprietary until launch, so the community has another way to finance development.

The other legal model is proof-of-work distribution and donations for development. But then there is no way to do onboarding. Proof-of-work distribution doesn’t distribute tokens broadly. The tokens stay stuck within the same small group of nerds, professional miners, and eventually the capitalists (and their bankster financiers) who control the only two ASIC foundries in the world. If we want to disrupt the centralized Internet (e.g. Redditard, SuckerBook, Wankerpedia, GitHo, YouTurd, etc), we must distribute the token more widely than nerds with GPUs.

You can look at economic reality here. As Hyperme.sh pointed out, the mining was not competitive. It was at near-zero cost, based on asymmetric and privileged information, and therefore very much unlike competitive mining that takes place over a significant period when there is ample opportunity for information to disseminate (and the developers are not admittedly and deliberately exploiting their exclusive access to that information to gain a very large non-competitive advantage).

So the outcome is effectively (about) the same as a premine, regardless of how they got there. (And conversely such an outcome would most assuredly not be achieved with competitive mining over an extended period as with Bitcoin or Litecoin.) Achieving the equivalent outcome of token distribution and investor funding of developer efforts via a different mechanism is effectively synonymous with looking past form to function (i.e. "economic reality") to me, but I'm neither a prosecutor, nor a judge, nor a jury. There is a small caveat here but I don't think it ultimately changes the conclusion so I will omit for brevity (and economy of my writing effort).

I agree that defendants can make arguments about subjectivity. Here is my logic.

Main “objection” (reply) to your point is the one @smooth stated, which I reiterated.

It’s the duration of the mining phase that most distinguishes a competitive proof-of-work distribution from an attempt to obfuscate a pre-mine.

Because otherwise we get into subjective arguments about where is the official location for an ANN, and what constitutes a sufficiently fair ANN circumstance (e.g. binaries provided, etc). Given a long enough duration of mining, the free market sorts out those subjective issues sufficiently to the value proposition which the decentralized free market ascertains. The duration should be sufficient that mining is still ongoing when the token has gained significant awareness in the market, i.e. at least until well after the first major pump (which for Steem was summer 2016).

I also lean to agree that it is unlikely that STEEM is prosecuted as a high priority, if ever (probably never). The probable main target of the current crackdown are the Xerox copy purely ICOs on Ethereum.

And perhaps other purely ICO distributed tokens such as NEO and Qtum although these are probably viewed constructively (i.e. not vacuous projects) by regulators other than the fact they have an investment securities structure. There is another way to structure fundraising so the tokens are not investment securities. That is to separate the fundraising shares and the tokens. Pay out dividends to the shares, instead of transferring capital gains in tokens.

But even though I may agree that it is unlikely that Steem will be become illegal to trade very soon, there is no way I would buy any of these. Why put myself in danger in the future 5 years from now when the governments in the West become much more desperate and totalitarian. They could dig up any old reasons to confiscate assets. Better to invest in things which were launched 100% legally. Surely you value yourself and your freedom more than some token.

I urge you to consider launching a Steem replacement which is launched 100% legally. Or joining someone who does.

My only "objection" is that I don't think there was an "instamine" or "stealth proof-of-work mining" in Steem, there was the [ANN] thread, and there was the code available for everyone. No matter how much easy the mining process could have been, there would always be some people that could not mine at all. If we make the claim that Steem was "premined" because people could not mine it if they didn't have a degree in IT then we can also make the claim that most coins are also "premined" because they require at least some basic IT knowledge, lets also not forget those that don't even own a pc, everything must seem "premined" to them. What I'm trying to say is... where do we draw the red line when we talk about "premine" based on how "difficult" is something to mine?

Imo, it's too far fetched, that's all.

Yes, Steem is nice for content creators but from an investors point of view it is a no go imho. Just have a look at https://steemwhales.com/. Steem ist not a decentralized currency, most of the coins are owned by Steemit and the exchanges.

Did you see “he” proposed an alternative to proof-of-work distribution which he claims would avoid the problem? See the section, “Pre-mine Without Securitization” and the comment that discusses Dan’s latest strategic blunder with EOS.


Mining is competitive, thus it’s not free to mint tokens. Thus it’s not a transfer of value from the investor to the issuer who is responsible for the managerial or development efforts which the expectation-of-profit depends on. And the issuers are independent from each other, not a centralized issuer. The miners are orthogonal to the developers who the investors’ expectation-of-profit depends on. The value is significantly burned and ends up dispersed into heat, utility companies, and hardware manufacturers, etc.; thus it’s not economically equivalent to an issuer (who are the developers) pre-mining some tokens for (nearly) free then selling them to investors. Read the linked blog again more carefully. You need to understand the 3 points of the Howey Test. Without a transfer of value to an issuer who the investor depends on for managerial efforts, then there is no investment security. Btw, thanks for the upvote.

Whereas, for an instamine or stealth proof-of-work mining launch where a significant portion of the money supply is mined over a very short period of time mostly by the developers group (and their insider friends), there’s no significant competition and thus the developers (and friends) mine the tokens at nearly zero cost (relatively speaking to the price they sell them for), and thus a very significant portion of the money supply has been effectively pre-mined at nearly zero cost by the developers who the investors’ expectation-of-profit depends on. Thus this is economically equivalent to an ICO and thus those tokens are effectively “ICO-issued” tokens under the Howey Test’s criteria. This is what transpired for Dash, Steem, and Bytecoin. In Bytecoin’s case, the stealth mine may have been over a long period of time, because afaik it was not publicly announced for up to year from the date of the genesis block.

Thus in addition to ICOs, Dash, Steem, and Bytecoin are also investment securities under the Howey Test (and possibly in other countries as well that may follow the sane principles about investors’ expectation-of-profit and value transferred to an issuer which). They are also likely illegal investment securities, because they weren’t registered with the SEC. Illegal investment securities are illegal for US persons to trade ever. US persons who are trading unregistered investment securities are culpable under the law. Apparently other countries are also going to harmonize their securities regulation with the SEC, so eventually all persons of the world will be similarly affected.

As for ICOs such as Ethereum which also then employed proof-of-work to distribute more of the money supply, those tokens which were in the ICO are not fungible with the competitively proof-of-work mined tokens, in terms of compliance with securities regulations. For those ICOs-issued tokens of ETH (and others), if they were registered with the SEC, then US persons may trade them, but only on exchanges which are registered with the SEC and they may not spend them (i.e. trade them) decentralized. Thus such tokens are not legal to use as a cryptocurrency. If for any person’s jurisdiction, the unregistered ICOs-issued tokens are illegal to trade (and spend!), then they can’t be traded ever without being culpable under the law. It is a giant mess because these ICO-issued tokens of ETH (and others) have been mixed together with the proof-of-work tokens, so the SEC and others countries will likely be forced to seize all ETH tokens on all exchanges. Note however, probably regulators will prioritize purely ICO tokens which were clearly scams first. I think the demise of ETH is some year or years from now, but I believe eventually all the ICO-issued token systems are doomed to illegality. What can happen is that past trading in ETH can be generally ignored, but when the authorities want to for example force you to testify in court against some other ICO prosecution, they can employ your past ETH trading as a threat against you. It is also possible that ETH in the future might become delisted on regulated exchanges where the tokens were sold in countries where they were required to be registered but were not (and of course illegal to trade on unregulated exchanges). Note how regulators have seized trading records from Coinbase and BTC-e, and surely they will attain all trading records from all exchanges eventually. The G5 (Five Eyes) national security apparatus are recording everything and tracing can be done even across VPNs and Tor (and Tor is a honeypot any way). Russia, China, and Germany’s national securities apparatus is also surely very active in recording and tracing all Internet activity.

The linked blog explains this in more detail.

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Click the link to the blog so you can read the section:

Steem was bound to fail from the start, even if it was completely legit. Anyone who has ever touched social media knew their approach would ultimately fail or be left to the vultures abusing it. We need room for better ideas.

Alts, sure, maybe some of them are also disguised investment schemes.


That's only one "interpretation", my intepretation is that the btc development is paid by the success of btc and by those that buy btc.