All posts tagged currency

  • Backchannel story: ‘The Social Network Doling Out Millions in Ephemeral Money: Steemit’, October 2017

    A feature story for Backchannel. Excerpt below.

    The Social Network Doling Out Millions in Ephemeral Money

    Steemit is a social network with the radical idea of paying users for their contributions. But in the crypto gold rush, it’s unclear who stands to profit.

    Backchannel story: 'The Social Network Doling Out Millions in Ephemeral Money: Steemit' by Andrew McMillen, October 2017. Illustration credit: Lauren Cierzan.

    Every time you log onto Facebook, Instagram, or Twitter to share a photo or post an article, you give up a piece of yourself in exchange for entertainment. This is the way of the modern world: Smart companies build apps and websites that keep our eyeballs engaged, and we reward them with our data and attention, which benefit their bottom line.

    Steemit, a nascent social media platform, is trying to change all that by rewarding its users with cold, hard cash in the form of a cryptocurrency. Everything that you do on Steemit—every post, every comment, and every like—translates to a fraction of a digital currency called Steem. Over time, as Steem accumulates, it can be cashed out for normal currency. (Or held, if you think Steem is headed for a bright future.)

    The idea for Steemit began with a white paper, which quietly spread among a small community of techies when it was released in March 2016. The exhaustive 44-page overview wasn’t intended for a general audience, but the document contained a powerful message. User-generated content, the authors argued, had created billions of dollars of value for the shareholders of social media companies. Yet while moguls like Mark Zuckerberg got rich, the content creators who fueled networks like Facebook got nothing. Steemit’s creators outlined their intention to challenge that power imbalance by putting a value on contributions: “Steem is the first cryptocurrency that attempts to accurately and transparently reward…[the] individuals who make subjective contributions to its community.”

    A minuscule but dedicated audience rallied around Steemit, posting stories and experimenting with the form to discover what posts attracted the most votes and comments. When Steemit released its first payouts that July, three months after launch, things got serious.

    Cryptocurrencies like Bitcoin are only worth whatever value people ascribe to them, so there was no guarantee that the tokens dropping into Steemit accounts would ever be worth anything. Yet the Steem that rolled out to users translated to more than $1.2 million in American dollars. Overnight, the little-known currency spiked to a $350 million market capitalization—momentarily rocketing it into the rare company of Bitcoin and Ethereum, the world’s highest-valued cryptocurrencies.

    Today, Steem’s market capitalization has settled in the vicinity of $294 million. One Steem is worth slightly more than one United States Dollar, and the currency remains a regular presence at the edge of the top 20 most traded digital currencies.

    It’s a precipitous rise for a company that just 18 months ago existed only as an idea in the minds of its founders. More than $30 million worth of Steem has been distributed to over 50,000 users since its launch, according to company reports. It’s too early to know whether Steemit can hold onto its users’ interest and its market value. But its goal—upending a model built by social media giants over decades of use in favor of a more populist system—is significant in itself. By removing the middlemen and allowing users to profit directly from the networks they participate in, Steemit could provide a roadmap to a more equitable social network.

    Or users could get bored or distracted by something newer and shinier and abandon it. The possibility of a popped bubble looms over every cryptocurrency, and the bubbles are filled with both attention and speculative investment. Steemit’s value is based on money that its founders have virtually willed into existence. Fortunes could vanish at any moment, but someone stands to get rich in the process.

    To read the full story, visit Backchannel. Above illustration credit: Lauren Cierzan.

  • CNET story: ‘The Man Who Virtually Has It All’, March 2013

    A feature story for CNET Australia; excerpt below.

    The man who virtually has it all

    A 30 year-old Sydneysider has amassed a small fortune by trading virtual items for real cash in the online game Entropia Universe. What next, though?

    Zachurn "Deathifier" Emegen in Entropia Universe, pictured as part of 'The Man Who Virtually Has It All' story for CNET Australia, March 2013

    In game, the nearest moon to Planet Calypso sits huge in the sky, framed against a blanket of twinkling stars and space clouds. Surrounding mountains tower above and oddly bendy palm trees sway in a gentle breeze. It is beside the teleporter located at Camp Icarus, Planet Calypso’s seaside outpost for new players, that I met with Zachurn “Deathifier” Emegen, leader of the Dark Knights society and one of the wealthiest men ever to play Entropia Universe.

    With a few quick mouse gestures, Deathifier — a tall, handsome avatar clad in shiny red armour — had spawned a Quad-Wing Interceptor, an impressive and expensive-looking aircraft. He then added me to the vehicle’s guest list and invited me to take a seat inside. Our destination? Treasure Island.

    Deathifier is the owner of the 25-square-kilometre plot of in-game land called Treasure Island. He purchased it for US$26,500 in December 2004 and set a Guinness World Record for the largest amount spent on a virtual item. We had to take the long air route, though, because Entropia Universe game developer MindArk had, without notice, disabled the teleporter that allows new players to travel between Camp Icarus and Treasure Island with ease.

    My pilot wasn’t pleased about this unexpected change: he’s reliant on hunting tourism for much of his income, and if players can’t easily get there via teleporter, he’s missing out on potential Project Entropia Dollars (PED), the in-game currency that’s tied to the United States dollar at a fixed exchange rate of 10-to-one. (Treasure Island cost 265,000 PED in 2004.)

    In real life, outside of this vast virtual planet and its two continents, Deathifier is David Storey, a 30-year-old Sydneysider who has been playing Entropia Universe for almost 10 years. Throughout that decade, behind the screen, in-game investments and earnings have comprised the bulk of Storey’s income. With help from a handful of silent partners, whose identities he has never revealed, Storey has invested over US$1 million into the game. The $26,500 Treasure Island purchase broke even in its first year, thanks to Storey’s tireless development, salesmanship and marketing, both online and off.

    At first, this is a strange concept to get one’s head around. This man makes a good living by spending his work week inside a computer game, a space more readily associated with fun and entertainment than commerce and profit. While Storey piloted the Quad-Wing Interceptor south-west across vast oceans and jagged mountain ranges toward Treasure Island, my avatar sat in the gunner’s seat — the aircraft is armed and able to shoot down opposing vehicles if necessary — while we spoke over Skype.

    I asked him whether it’s been difficult to separate the fun from the business side of the game. “They’ve always been intertwined,” Storey replied. “At some points, it’s been more for fun; at others, more for business. More recently, I’ve transitioned more toward business, because the fun elements have declined, so to speak. The core gameplay hasn’t changed in 10 years.”

    To read the full story, visit CNET.