The exponential rate at which Steem grows may put on fast track a solution to the scaling issue that the Bitcoin community faces.
Steem is a digital currency behind Steemit, a decentralized social media platform which rewards posters and voters online. Scaling Bitcoin has become a hot button issue in the community. This is the process to increase block size from its current form in which the network can only support up to seven transactions per second to process more like Paypal achieves with about 100 transactions per second, and as Visa does with about 4,000 per second.
In the wake of the Steemit hack
Recently, Steemit was hacked, with about 260 accounts compromised.
David Wachsman responded to those who claim the hack was intentionally organised by Steemit itself as false.
He wrote via email:
“Without even presenting it to the Steemit team, I can tell you that the insinuation is completely outrageous and false. Once the issue was identified, the Steemit team worked heroically and tirelessly to protect its community. The Steemit team continues to work extraordinarily hard to get things back to normal as swiftly as possible. CEO Ned Scott may post updates to the situation on the Steemit website from time to time, and we plan on sharing those with the media simultaneously whenever possible.”
Overtaking the DAO
With Steemit being touted to be the bridge that has the ability to bring people who have no interest in cryptocurrency into its world, Steem overtook The DAO to be the world’s fifth most valuable cryptocurrency following its 1000% plus growth in the days following Steemit’s first cryptocurrency payout on July 4. After the $1.3 million giveaway, the number of transactions, posts, votes and new users signing up to Steemit’s decentralized Reddit-like platform tripled.
In a media release its CEO, Ned Scott, says:
“After the successful payout on July 4, consumers have seen that our system really works. Everyday users are jumping onboard our social network and many early adopters have benefited. People have started saying that they have paid their rent with money earned on Steemit. Others have bought cell phones, washing machines, and even paid their electricity bills. We have constructed perhaps the first Blockchain application that anyone can use. Content creators and curators have enjoyed earning valuable crypto rewards through a fun and seamless experience.”
Steemit is on track to become one of the largest and fastest growing cryptocurrency projects worldwide in less than three months of its inception. As Steem reaches millions of people in the next year, it could possibly choke Bitcoin's capacity if all the people were to use Bitcoin as a gateway to buy in and/or cash out each month.
The writer says Bitcoin companies and their products do nothing for people outside the one percent who know and use Bitcoin. He cites Purse.io as the closest thing to a Bitcoin killer app to convince those outside the cryptocurency community but, as yet, hasn’t had much luck. The same applies to OpenBazaar, Bitcoin gambling and P2P lending sites, who have not provided a reason for those people to care about Bitcoin or a need to have it, except for speculative purposes.
In an analogy, the writer concluded, based on available figures, that the new social media site could acquire at least a million Bitcoin active onboard users in a year.
“And if it happens as I expect, Steemit will acquire 1 million or more people onboard per year. That's 1 million people becoming more comfortable with crypto, finding it usable and relatable. That's a huge win for Bitcoin and crypto. The value of any cryptocurrency are the people involved and the network effects they bring, all enabled by the underlying technologies and their usefulness. 1 million more active users into the cloistered world of cryptocurrency seems like a valuable breath of fresh air. Steemit, despite not even being a Bitcoin project, looks like it has the potential to be Bitcoin's killer app. Bitcoin holders rejoice.”
“If Bitcoin and other cryptocurrencies wish to benefit from Steem's attraction of new people to cryptocurrency, then they will need to solve the scalability problem much faster than previously anticipated. Failure to scale means the market could pass them by altogether.”