The first blockchain-powered social network, Steemit, is set to fork next week. Stakeholders – users – have apparently requested a change in the protocol. Steemit’s management with CEO Ned Scott at the helm, decided to go forward with the hard fork on December 6th, 2016. The community hopes these changes will help stabilize the project and make it more attractive for new users to adopt it. A hard fork might be able to do the trick, but Steemit might need more than that to surge again and beat its competitors.
The Steemit Saga
There is no doubt that the idea behind Steemit is powerful. Many would argue that the implementation was not as good as it could have been. Purists accused Steemit of actually being a centralized service as opposed to a pure decentralized blockchain, because its founders and early adopters had too much power over it. Additionally, other similar blockchain projects like Synereo are threatening its position. As a result, Steem, its cryptocurrency, plummeted in value since its peak at $4.34 USD on July 19th, 2016.
Can a Hard Fork bring Steemit back?
One of the problems that the hard fork aims to solve is the fast decline in Steem value. The idea is to rely less on long term participants. To this effect, the hard fork will not change Steem’s inflation rate. What will change is the distribution of that 9.5% inflation. Of that 9.5% annual inflation, miners and witnesses will get 10%, Steem Power holders will retain 15% and content creators will be credited with the remaining 75%.
Hard Fork highlights Community Engagement
The other feature that can be often overlooked, is community engagement. This fork is the result of a request from the community. This is probably the most important piece of this hard fork, and will serve to counter critics who claim that Steemit is not decentralized enough. Nevertheless, community led changes that are good to highlight the true power that the community wields, do not necessarily yield good outcomes.
Steemit’s Reality
From the value perspective, Steem is trading so low that a significant recovery might take longer than expected. There is no doubt that Steemit, as a concept, has tremendous value. Allowing content creators to capture that value and profit, is a whole different exercise. Maybe the hard fork will attract more users, especially because it will allow them to capitalize on value creation in a shorter period of time. Nevertheless, Steemit might need more than just an expanded user base to surge.
