Do you believe that Witnesses are getting paid too much to run the network? You're right! Here's why:
For some of you, this may be all the explanation you need. For those of you that can't read my mind, allow me to clarify my position on the matter.
Transaction fees.
On the Ethereum blockchain everytime you want to make a transaction there is a gas fee. You can choose your own gas fee, but the lower you put it the less incentive miners have of processing your transaction. Considering that Ethereum is having major scaling issues and the network is totally backed up, I usually will pay more than the recommended gas fee just so I don't have to wait as long.
The recommended gas fee is based on bandwidth. If the smart contract you want to sign is very large it costs a lot more to place it on the blockchain. I've paid anywhere from $0.03 to $2.50 for a single transaction. Smart contracts can get very large and complicated given the task at hand.
One of the big selling points of Steem is that it has no transaction fees. This, of course, is a lie. Transaction fees on Steem are hidden in the form of inflation. We pay block producers (witnesses) to create blocks and they get paid for making the blocks. This dilutes the value of Steem, forcing the entire community to front the cost of transactions, even if you don't make any.
On the other side of the coin, you might make the argument that Ethereum also gets diluted from inflation going to the block producers. Also, only 10% of the inflation pool goes to the witnesses on Steem. 100% of the inflation pool goes to the BPs on Ethereum.
The dynamics of Steem blockchain make it much more efficient compared to Ethereum at the cost of centralization. On Ethereum all nodes must validate every transaction. On Steem we trust witnesses to produce blocks independently. We trust that the fear of being voted off the platform is enough to keep them honest. Considering Ethereum's scaling issues, I would say that the rewards of our system are currently worth the risk.
Back to Bandwidth
So, if transactions on Steem are "free" how do we stop users from attacking the system and flooding it with useless transactions? As shown above, each account is allocated free bandwidth that is directly correlated to how much vested Steem they have. The more Steem Power you have the more bandwidth you get.
As you can see, I have 1.32 Gigabytes of bandwidth and I've only used 91 Kilobytes so far. That's the problem with Steem. It's so underdeveloped that there isn't anything cool I can do with this free bandwidth. As dapps and SMTs continue to evolve on the platform there will be more and more ways to actually spend our bandwidth.
Ramifications of actually being able to spend bandwidth.
Once we can actually spend our bandwidth it's going to give huge incentive to buy and hold Steem in the form of Steem Power. I've even suggested that we need to be able to delegate bandwidth separately from our SP. This would allow us to create new accounts instantly because there would no longer be a bot incentive to create new accounts and use the free delegation. More importantly, it would allow us to delegate bandwidth to the projects we believe in without losing any Steem Power on our upvotes.
Make the witnesses work for their money.
More useful dapps need to be created that actually use bandwidth. Also, Steem needs to add the functionality to help us along in this respect. Currently, users can only spend bandwidth in the form of text and pictures. Also, there is a 5 minute wait between blog posts and a 20 second wait between comments. These limits make it very hard to actually spend bandwidth. Hopefully, SMTs add the functionality that we so desperately need.
Limitations
Clearly, the posting time limits exist to stop bots from constantly spamming the network. However, as I have already suggested, I believe there should be a place where anyone can post to the blockchain without these limitations.
Being able to post information to the @null account would be extremely useful. It means that any account would be able to post every block (every 3 seconds) in a place separated from Steemit bloggers. This would be a place to store information for dapps that operate on Steem. For example, what if I made a chess dapp on the blockchain? Wouldn't it be nice if moves could be made every 3 seconds instead of every 20? I think yes.
Also, services like this would be accompanied by legal unregulated gambling. Anyone would be able to bet on the outcome of an event without a middle man taking a cut. The middle man "house always wins" business model will become a thing of the past. No middle man is required. Having the middle man is what requires regulation in the first place. This is one of the reasons why Ethereum and Bitcoin have already been deemed to be not securities by the SEC. There is no central authority to regulate. Regulation is impossible.
Conclusion
I may have gotten slightly off topic a few times, but the truth remains. Once Steem bandwidth becomes spendable the value of it is going to skyrocket.
Return from Steem Bandwidth: Extremely Undervalued Resource to edicted's Web3 Blog
