The Gini Coefficient For Steemit Is Not Just Bad - It Is Getting Worse!
A few weeks ago, I calculated the Gini coefficient for Steemit and wrote an article about it after stumbling over the Steemit Whales Service where all users are listed in detail incluing the overall account value.
Steemit as a country...
My verdict back then was not very flattering, because it turned out that Steemit had a Gini coefficient of 76.3 which puts it into the global top five - or more the bottom five - if it was its own country. What made matters worse is the fact that I only considered the 1,000 most valuable accounts. But even without the top 100 accounts, the coefficient for the ranks 101 to 1,100 was still 45.1, which one user commentated with "So, better than Panama now. Woo hoo!"
The wealth distribution on Steemit is very tilted to say the least, but I have hopes that the situation improves. Because after all, there is actually some movement going within the ranks. To check up on that, I decided to calculate the Gini coefficient again with the numbers of today.
The Gini Coefficient Of The Top 1,000 And The Ranks 101 to 1,100
According to my numbers which you can find here and here in the form of a spreadsheet, the situation seems to have gotten worse - if you see a wealth concentration at the very top as concerning..
The top 1,000 have now a Gini coefficient of 76.84% (before 76.33%):
The ranks 101 to 1,100 have now a Gini coefficient of 45.73% (before 45.1%):
This is not good. I have expected a distribution that is slightly more even than three weeks ago. Instead the opposite. Both numbers worsened by about 0.5% which is significant, especially when considering the short period between the numbers). The close numbers also indicate that my calculation is correct (or that I got it wrong both times the same way..).
Please feel free to do your own calculation. Considering this change into the "wrong" direction it is better, when there is a second independent number showing the same development.
Possible Weaknesses And Aspects To Consider
Besides the fact that a growing Gini coefficient must not necessarily be a negative development, there are also other things to consider when discussing the results:
- As mentioned above, the numbers or the calculation could be wrong.
- I only considered the top 1,100 of all accounts and I do not know how the situation below is changing.
- External effects aren't considered (like buying more Steem Dollar or the time actively spent on Steemit).
- Maybe the whales are just more active and virulent than everyone else.
Overall, I don't think these aspects would change too much - at least not to the better.
What Needs To Be Done?
First of all, I think the number base must become better. In the next days, I will use the daily statistics by @arcange to see to what extend the situation for minnows and fish improves. He is publishing daily statistics since at least half a year, which will allow a better understanding of how Steemit evolves.
Another interesting thing would be to get more Gini coefficients. Unfortunately, the Steem Whale site only allows the display of 25 users at once and it takes a while for the data to be displayed. With the necessary access to the Steem database, it would be particularly interesting to see how users develop relative to their activity and size.
I still believe that this would show a more positive development.
But in case this first impression of a wealth concentration hardens, Steemit has a real problem. @steelabelle just wrote an article about the question whether Steemit is trapped in a death spiral. Right now, I would say no.
If a concentration is happening and despite smaller users trying their best to break through the glass sealing to become a whale, then there needs to be some mechanism implemented on the platform to turn around (or at least stop) this tilted distribution.
This is definitely a concern, although how much of a concern it will ultimately be (in terms of the success of the platform) is not yet clear.
While we cannot yet determine how much of a concern it will be, it's nevertheless an issue. As in any community, a massive wealth gap is counterproductive, if not totally destructive.
From what I've read and heard in my 2 months here, it seems as if most whales are as focussed on building the network / platform as they are on earning Steem or Steem Power.
Of course, everyone wants to get rich, so even on Steemit, we may see an ongoing wealth gap. Instead of trying to stop the inevitable, maybe we should focus on ensuring the rising tide lifts many of the minnows' boats too. (An outcome that supply-side economics failed to deliver.)
That way, we can ensure that we have a long-term, viable platform that may not enrich everyone, but that does at least benefit everyone.
Essentially, that would mean that we have a meritocracy.
it would seem steemit is just like everywhere else.. there is always going to be a 1%. However there is at least some kind of trickle down economics with whales selling votes and upvoting comments. There are many whales just rewarding each other; which is their right to do because it is allowed. I try to put myself in other people's shoes. I am learning what creates a good following and it is to reward your regular commentors. But that's a minnow going up.. not looking down. Looking down is more consolidating power, comfort, and sometimes greed.
That's the big question: Is there a positive selection despite the wealth contraction at the top?
mostly not. They don’t care about new minnows (generally). I’m not so sure if I would either. I’m not even really complaining. I have no real steak in Steem. I enjoy blogging and meeting people. Those that have put their hard earned money in to become dolphins should really be speaking up. But like anything they need to do their own homework. They wouldn’t be happy about all the premined Steem that was distributed before the platform began. “instant millionaire” :) best ICO around.
lol... maybe the solution to all problems is to conduct an own ICO^^
I'm now since 3 months on the platform and invested quite some time to get into the 50s reputation area and it happened to me too that I forgot about the little 25ers. You learn the system and then all you see is your own level up. I try now to deliberately help newbies when I see one. But it needs extra effort. Perhaps the whales occasionally need a reminder of that too.
I think the distributions of the future Smart Media Tokens will remedy this issue. Steemit, busy.org, dTube will have to work hard to design a fair systems of hybrid Airdrops/ICO's to make sure the distribution of tokens is more widespread. Unfortunately many Minnows need to sell their STEEM earnings to pay for living expenses instead of investing in STEEM Power, and this creates an environment where Whales can accumulate all of the cheap STEEM. Whales gonna Whale.
Do you really believe that there are users living off steemit who are not part of the top 100?
For example @mrviquez is living off of his STEEM earnings while he transitions to new employment.... another example would be @cryptopie who has a rare medical condition and fully supports himself from STEEM alone. Many other examples from what I've seen. With Smart Media Tokens coming next year we may be able to create an attractive environment for both investors and users who need to sell their STEEM or SBD to support themselves.
img credz: pixabay.com
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Now that's enlightening , thanks for researching this doodle!
I wonder, if the people who joined summer of 2017, will have the same results after a year as those who joined in the summer of 2016..
After reading some of the comments in stellabelle's post about the death spiral, the solution to decreasing the Gini coefficient is rather simple.
We need more genuine content. Less content about making money, less meta-posts complaining about certain flaws. Just more people writing about stuff they finding interesting. With more interesting content, that will attract more eyes and those new eyes will vote for what they enjoy.
The only issues from achieving this goal:
The comment section on @stellabelle's article is indeed very informative. Maybe the system works fine and it's the users who don't get it but for that it is too early to see.
I agree with you on the two points. Especially the site functionality is poor. I hardly find new interesting users to follow. But maybe that is the idea of the Steem blockchain: Build your own front-end and do it better. But so far - among the coders - only @elear understood that part, which would make it again a matter of time.
In case the mechanism does need some change, I would propose something like a square root solution for curations from a certain threshold onwards. That would change the voting power significantly.
I will be looking more information before I make assumptions, but it worries thank you for the post it made me question a lot and definitely kept me interested
2 Questions:
Interesting to see how many of the top accounts bought there wealth?
Interesting to see how much of a chance a small minnow has in becoming a whale?
(Extra Credit) How does this wealth distribution compare to that of Youtube (I know off topic, but it just may be a function of the "business model")
I would like to know all that too;-)
Well, it probably got worse during October because most minnow users were frustrated with the system down times. That left the big fish being able to still make their posts and earn some during the slower content times.
I don't predict that things will be better in November.
I wonder if the gap widens in part due to the price drop of Steem.
Good point. That is something I haven't thought of. It surely caused a dip.
lemme see if I got this right.
a group of investors pooled their money and started giving it away.
you're concerned because they're not giving it away FAST enough?
lol great perspective but if the Gini coefficient is rising, it's not a giveaway but a concentration of money in the hands of a few. Those hands can be changing, but overall the number of hands gets smaller. This can be considered very toxic for the attraction of the platform.
the money WAS all concentrated to begin with...now it is diffusing.
what is genie smoking?
The money might be diffusing back to where it came from. In an open system I find it ok not to do anything about it because the contraction is just a correction, but if it happens in a closed system like steemit, people will go elsewhere. At least that would be a negative scenario.
my credit union account would be annoyed to discover that steemit is a closed system.
If buying yourself in to become big and suck in the Steem is the only way to become big, then it is a ponzi scheme.
edit
But much more importantly: It would make the site boring.
I haven't bought ANY steem.
Me neither and I do feel successful here;-)
That means, maybe the system works just fine and it's just the users who are doing it wrong (and some getting everything right)... just like in life^^