What if I told you that I had a Bitcoin, and it was for sale? What if you told me you wanted to buy that Bitcoin, but I said I was auctioning it off instead? You'd probably think I was an idiot jackass. Who in their right mind would try to do something that stupid?
Auctioning a Bitcoin would be like setting up your own temporary exchange and then trying to get people to trade on it with a liquidity of 1. Not only that, anyone who wanted to buy the Bitcoin would have to buy the entire thing: all 100,000,000 Satoshi. In addition, if the bid didn't reach a high enough value the seller could simply refuse to sell.
Who in their right mind would be a part of something like this? Why wouldn't they just go to an exchange to buy the Bitcoin? The value of Bitcoin is established across multiple exchanges. Tens of thousands of Bitcoin are being bought and sold every day. Why would anyone ever be willing to bid on crypto?
And yet, this is exactly what we see every day here at Steem: Whales are auctioning off their votes and acting as if the value of their vote needs to be figured out for some reason (greed). It's a vote. It's no different from anyone else's vote. Stop auctioning off crypto, jackasses.
The point of an auction is to determine the value of a rare item that is in high demand. Also, the value must be arbitrary and determined by the competition. You aren't going to see a gold bar get auctioned off. Even if it's rare and in high demand, we already know the value of gold. It would have to have historical significance to be worth more than regular gold. This is why we see auctions for things like art, antiques, and sports memorabilia: because they are rare and the value is determined by the collectors.
The mere existence of bidbots on this platform is a slap in the face to everyone. It is a constant reminder that there are far more developers trying to leech value from Steem rather than bring value to it. Not only do vote auctions attempt to sell crypto for higher than it's value, but the direct vote buying/selling services also skim much more off the top than they should.
No worries, I have a plan: Something that will undermine every single vote selling service here. That won't be difficult considering the ridiculous markup these services charge. The answer? Decentralized vote buying/selling: A free market that determines exactly how much a vote is worth.
At first, I was wondering if I should incorporate auctions into this system. Not only would this be an extra complication, but the more I thought about it the more I realized it was a terrible idea for the reasons described above: no one's vote is worth more than anyone else's vote. $10 from a whale is worth just as much as $10 from 100 other people. The trending tab doesn't play favorites.
What is the value of a vote?
This is a very interesting question; one that would be much easier to answer if our broken curation system was abolished. A vote becomes worth less to the buyer as the age of a post moves from 0 minutes to 30 minutes. The ineffective curation mechanic ensures this. In addition, sellers want to sell votes to posts that haven't been upvoted yet but are 30 minutes old. This ensures that they will receive maximum curation from the vote while also selling their vote (win/win). Seriously, it's so broken... I'm going to exploit curation until it finally gets thrown in the garbage where it belongs.
There are two other factors I can think of that push and pull the value of votes in a certain direction:
Exposure
I'd like to think that votes are actually worth more than their value because you can pool them together to get someone onto the trending tab. This variable is called 'exposure'. A vote is worth it's value plus the value of exposure to the trending/hot tab. This factor increases the value of buying votes.
Cashout
The second variable in this equation is the 'cashout' variable. This variable increases the value of selling votes because it allows you to turn the vote into liquid funds immediately. I haven't sold my vote in a long time, but when I did it was a pretty nice feeling to just get the SBD instantly delivered to my account.
Push/Pull
- Exposure increases the value of votes by increasing the demand.
- Cashout reduces the value of votes by increasing the supply.
So far, exposure seems much stronger than cashout. This makes sense, because exposure is an investment while cashout just gets the money to you a week faster. However, the truth is we don't know the value of a vote because these vote selling services are introducing high friction into the market. How can you know how much a vote is worth if the bot selling them is skimming 15%? Given this metric, we know that a vote must be worth at least 15% more than it's value, or users wouldn't buy them.
The same can be said for vote selling. Users are willing to take a loss in order to get the funds now instead of in a week. We live in a culture that encourages instant gratification. Users are willing to pay for those dopamine hits.
The one thing that is certain is that auctioning off votes is simply a greedy cash grab to exploit the buyers who don't know any better. Auctioning off a vote is the logical equivalent to auctioning off any kind of crypto. We don't need an auction to find value; we need a decentralized free market.
This is why I want to create a service that allows anyone to buy/sell votes in a decentralized manner; completely cutting out the middle man of vote bots once and for all. After that I will even go so far as to undermine vote buying altogether. As a JavaScript newbie, I've got a long road ahead of me.
Return from Bid-Bots are Nonsensical and Exploitative to edicted's Web3 Blog
