Why steem engine is not a replacement for SMT
There has been a shocking amount of comments below @steemitblog's latest post (where they announced SMTs again), claiming that they wouldn't be necessary any more as we have steem engine now.
After quite a few discussions in comments and especially on discord I decided it's best to write a post telling you why you're wrong, so I can leave it behind.
It seems a lot of people don't know why crypto actually exists and what it means to hold a decentralized token.
In a nutshell: Satoshi didn't want us to have to trust centralized entities any more. Everything in Bitcoin and alts is trustless, and a single actor has no big influence or responsibility. To be considered a part of the cryptoverse you have to follow this standard.
SMTs will do that. You don't pay individuals to provide a service for you, but the Blockchain to handle everything from issuance to transfers to state calculations.
While steem engine tokens certainly have their use case (i.e. DEC, a token which is clearly connected to a company providing a service using them), they are by no means comparable to other alts/tokens we know.
The centralization at the company providing the service means they will never be listed by other exchanges except the internal steem engine one, as those would need to fully rely on the issuer to keep their service up and not act malevolently.
As long as there is no mechanism to distribute the responsibilities and remove the need to trust anyone without steem engine being able to influence that, this won't change. If it would change, they would lose their business model.
I don't intend to keep anyone from playing around with the possibilities. But to me, those tokens are nothing more than a placeholder for projects waiting for SMTs, and to become listable by outside exchanges they will need to switch later.
I try to explain this whenever people ask about my project tokenizing. There is zero benefit to an existing project with a working model tokenizing on steem engine, except to participate in the money grab.
Since I don't need the money grab to survive, I would rather wait and tokenize correctly when there is a decentralized consensus protocol.
Great article! I was shocked about the many weird and bad comments under the article about SMT´s too. Nice that you are explaining the difference here for the people who don´t understand that the Steem-Engine Tokens are not the same as SMT´s. Best regards. Jonas
Thank you for this article!
You explain something that is on my heart for weeks or even longer!
Ha ha, have people been losing their sht over this on the steemiblog post 🤣
It's not rocket science, or even that hard to work out that steem engine is centralised by its very nature (not saying that's bad) and SMT's won't be.
Sometimes it's kinda fun to watch when people go bonkers over these types of things. Sit back, crack open a beer and enjoy the pointless arguments.
Good that you're clarifying it for people pharesim.
I would say it's not hard to see how SteemEngine could become decentralized. You just need more nodes than one. There is nothing intrinsically centralized about it, but here you are talking about rocket science and insulting the intelligence of anyone who thinks differently?
Interesting strategy.
Highly rEsteemed!
Respectfully... Steem-Engine is a replacement for SMT because SMT doesn't actually exist... except in some heads for now. Steem-Engine is Real and running. So "replacement" is a poor word choice for this discussion. Instead maybe point out that Steem-Engine is an adequate example of what SMT should be able to employ if it were an actual "Thing."
~Kind regards
Thanks for this post.
May you clarify it to me how steemEngine's tokes relly only on issuer?
There are no miners/witnesses? All the data related to blockchain are stored in one place? What happens if SteemEngine stops working?
Sorry if those questions are amateurish, I would like to know, but not that much to find it out for myself :D
Data is stored on the blockchain, in custom json transactions.
But as anyone can submit custom json as they like, that needs to be validated (is the sender really in possession of what he's claiming to send). Validation is happening centrally at steem engine. If they stopped working it would not be clear who can validate, as there is no consensus mechanism. From that moment the tokens are unusable. There are different options what could happen then
End-user validation of embedded consensus works fine and is in fact highly decentralized since validation is the responsibility of every single user and not some potentially-centralized set of validators. Any custom_jsons that violate the consensus rules can simply be ignored. It would mean that the user spent RCs to send a custom_json that does nothing at all. In fact this still relies on Steem's own witnesses to determine and finalize the order of those custom_jsons (since changing the order may change validity), which what happens now.
The most used token in the world, Tether, works this way. It is implemented using Omni, which is an encoding layer on top of Bitcoin. Nothing prevents people from submitting invalid Omni data to Bitcoin, since Bitcoin nodes don't even know anything about it, but the Omni nodes (including those run by exchanges) will ignore/reject it.
I don't know that steem-engine works this way, I've been told conflicting stories including by people who I would expect to know what they are talking about, so I find the whole thing quite perplexing.
Lack of a clear and well-communicated story on how it actually works is perhaps a better reason why it isn't ready for prime time than any clear technical obstacles, but I'm kind of guessing here, for this very reason.
Thanks for choking on and providing this very valuable input!
As @inertia mentioned they are working on the decentralization, and with that comparison in mind it seems very doable to end up with a completely legitimate product in the near future.
Hm... Am I too old, too conservative or simply cautious?
In the "broken banking systems" there are laws, regulations, guarantees, plans if something goes wrong - and it's bad
In the crypto world, like this case for example, it's just a matter of trust. We will provide the services, we sware to god.
If this is true what you say, I'm... Speachless...
In true crypto projects (Bitcoin, altcoins including steem and somewhere in the future SMT) trust is not necessary. Everything is written in code, so there's no need for laws besides what the code dictates.
From that point of view, steem engine is not a crypto project, they just use a blockchain as their database (or to be more precise: as a publicly visible backup for their own, traditional, database).
I think the word you are looking for is...intelligent (that's totally lost on ideologues).
Amen
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Steem Engine is a great way to solve a pressing issue fast BUT SMT is the long term solution we need to compete with more mainstream crypto token systems
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Thanks.