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Steem is not a charity. We can rule out any chairtable good will from the vast majority of people using Steem. This goes for any cause, nevermind people receiving the benefit of a free university education. They are already well looked after by traditional beneficiary programs. By virtue of acceptance already have a decent ticket to success and a second rate charity cause at best.
Unless it can clearly be demonstrated how this will help Steem, it isn't even in Steem's interest. It will just be another account trying to get more Steem, the same as the rest.
Most accounts benefit Steem in one way or another. Onboarding people who earn scholarships has limited value for the blockchain since they are onboarded as feeders. Would the receiver be required to promote Steem? These promotions likely have little value, especially when you look into what Steem is.
Steem is highly speculative. Most growth has been wiped out and it could get worse. Students need money based on a very specific schedule. They cannot just hodl and hope.
Further rewards can be negatively impacted by upset individuals. The last thing Steem needs is more stuff you cannot downvote for moral and ethical reasons or more accounts that have to be protected from attackers.
Perhaps putting money in something safer like companies graduates work in or commodities would be more responsible.
Blockchains can be used for education. Steem can be used for blogging or posting finished assignments. It can reliably earn students something like beer money, but even that makes me a little squeamish. Not only do I need my beer, but I wonder the value of only onboarding students. Facebook quickly mved away from them. The youth don't have money.
Thanks for the reply! There's a lot to reply to, there, so I apologize in advance if I don't address every point.
Steem is not a charity any more than the US Dollar is a charity, but both can be used for charity and investment - which is what an endowment is.
What I describe here doesn't onboard anyone as feeders. It onboards them as investors. They don't start "feeding" - as you put it - for 10 years, and even then they continue to invest and leave their base investment untouched in perpetuity.
There is a case to be made that people who are already on the blockchain would benefit from donating to a charitable cause like this because it will help the blockchain by potentially on-boarding people - both investors and users. Students may have no money, but they eventually become working professionals, so there is long-term value from on-boarding (and retaining) them.
But that's not what I was describing here. I was imagining here that a university endowment would use traditional fundraising mechanisms to buy into the blockchain at a rate of $2,500 per year for 10 years. And the endowment's account(s) would be owned by the university, not by a student.
From the blockchain perspective, you're absolutely right that it would be just another account trying to get more Steem. Which is why I described it as a "use case" in the title. But, as I point out in the article, universities have communications professionals and computer science departments and creative departments for fields like music, literature, and art, so they are very well positioned with the skills needed to go after rewards. I stayed away from implementation details, but the university would have to have some sort of mechanism in place for managing posting and voting authority for the endowment account(s).
On one hand, you're right that there is a lot of risk - as I acknowledged in the conclusion. On the other hand, though, much of that risk would be naturally mitigated through dollar-cost averaging. I think it's a matter of fiduciary responsibility for university endowments to have investments in their portfolio that run the gamut from high-risk/high-reward to highly-conservative. So, this would presumably be just a small part of their overall endowment funding, which is another form of risk mitigation.
Thanks for your detailed reply. To be clear, I wasn't solely criticizing your opinion, but just the general idea that Steem is some sort of magic economy that can solve all problems.
Using Steem for an endowment fund actually hasn't been discussed much and it is an interesting idea. I understand that endowment funds are non-profit. Rich people donate to them to get tax write-offs, instead of the money simply being given away, the profits are used as investments.
There are just too many issues to get past despite the risk for crypto in general. Will the government let endowments invest in crypto? Probably not in America. Is Steem even a good first one to consider? Not only is it ranked 90 and not rising, but there is too much voting to be done to perform well. I could see an endless debate over what to post, what to curate etc. Perhaps delegating all of it with clear guidelines and at a specific rate would get over this. Maybe people will pay more to borrow from a university, that's their choice.
As for things to do with Steem, that is a definite advantage. But does it need to be attached to an endowment? Educators and computer programming students can easily post or develop for Steem and even make some pocket money while they are at it. It's a great testing environment and they may even make enough money to buy snacks. However, with the price of Steem being low, this isn't the best time to advertise how much you can earn with Steem. Even the developers are second-guessing things and everyone is trying to get funded with a proposal.
Then we have the issue of corruption. Would students and alumni be compelled to use Steem? Is it right to tell students to do their assignment on Steem when the university or professors make money from this?
There are so many avenues for abuse and corruption here. It makes a professor forcing students to buy his book seem simple.
Okay, students follow all accounts on the class list. Every week you must upvote and resteem the course-tutorial post, lab-post and the lecture post and leave an insightful comment on each. Additionally, you must create your own post setting the class account and university account each as 10% beneficiaries. This is 10% of your grade with a bonus of 10%/7%/5% for the 1st/2nd/3rd best influencers. FInally, if we catch any of you downvoting or saying anything bad, you are suspended and your grades will suffer. Time to fundraise...um I mean learn.
Thanks for the reply!
Many of the points you raise could be issues with or without an endowment, and with or without Steem. I agree that there's potential for abuse there, but I'm not sure if the existence of an hypothetical endowment exacerbates most it. If Steem ever sees mass adoption, most of those risks will exist, regardless of any school endowments (in fact, they do already.).
As to Steem as a first cryptocurrency, a reason a school might want to make that choice is that the concept does not rely on an increase in Steem's price. I'm not aware of many others where the school wouldn't have to depend on the value of the token to rise. Of course, you're right pointing out that the corresponding drawback is that it's not a completely passive investment.
I want to highlight two important points from your reply that are specific to the endowment concept:
(i) Is there an inherent conflict in interest in asking unpaid students to perform support activities for a school endowment? On one hand, students are asked to perform unpaid fundraising and volunteer work for school-specific things like music, sports, and equipment all the time, but on the other hand, it's not lost on me that the @phillyhistory project wound up donating their account to a non-profit institute outside of the school when their project wrapped up in 2018. I don't know the full reasoning for that. It might help if the endowment is structured as an independent external financial entity, separated from the school by a so-called Chinese wall.
Of course, if appropriate, the school would have the option to limit support activities to paid faculty and staff.
(ii) Would regulators permit it? This is why I had the prominent disclaimer to consult legal and financial professionals. I couldn't begin to guess. I would hope so, but that could be wishful thinking.
I think your idea is better as a token of its own. There are already several charity tokens in existence and once SMTs come online you can leverage ICOs and its own inflation design for your purpose. However, Steem is like a universal social media platform that is co-owned by all users, as such it is a business. There are two parties, curators and authors, and curators invest in STEEM and share it with authors only when authors prove that they have contributed value to the network.
Authors are worthy of a share of STEEM only when they make the network and thus STEEM itself more valuable. Steem is very much a for-profit design and charities can actually cause downward pressure on its price. How so? If STEEM rewards were going to a college student fund, those students would be having to sell off the STEEM to compensate the schoool in the currency of their choice, resulting in downward pressure to the STEEM price.
The price of STEEM is the most important thing here, because Steem is first and foremost an investment as a commodity money and a business for those owning enough of the network to be concerned with its price and liquidity. So, Steemians would want to know how value was returning to Steem, not just, potentially, a decade later but immediately.
Charities benefit from tax deduction rules, and businesses would rather donate, deduct and receive social recognition for being charitable than just give it all to the government. I think the flaw in this idea is that I see no incentive model for the Steem network itself, certainly not an immediate benefit.
There are charity designs that work because they drive adoption, immediately. For example, let's say you made an SMT and motivated caring people to contribute value into your SMT and the inflation went toward students. Some Steemians might contribute STEEM toward your mission if via the SMT inflation it onboarded many college students regularly.
Let me provide an example... Let's say you created "Essay Token" as an SMT and people could spend their STEEM to obtain "ET" that they could stake and curate posts from students presenting their essays to the community. In turn, some campus adjacent shops agreed to accept those tokens for reduced price on their products. This benefits students living on a tight budget and benefits the businesses by likely adding traffic to their shops and some STEEM can even be earned from the ICO and general exposure to the whole of the Steem community.
I think something like this ultimately needs to become its own token, not a project taking a considerable chunk out of the reward system, which is competition-based for the sake of building network value. Charities doing things like spamming the blockchain with "Support The Whales Request #194,813" with the same copy pasta on all the same posts just isn't helping Steem grow, its parasitic in nature. I'm not saying that charities are not good things, they can be, but I think they would do more harm than good to Steem by trying to siphon out value from the universal reward pool unless they are providing immediate value to Steem in some way.
Thanks for the feedback!
I considered the idea of using a token, and it is certainly an option. It would be up to the institution that was doing the implementation to decide on that. I don't have a preference one way or another, but an institution might-well prefer to use a branded token, or a token that's tailored for the specific purpose.
However, I think there are some relevant points that mitigate the risks that you describe:
(i) The concept is not just a charity. It's also an investment. As an investor, the institution would have the same incentive as every other stakeholder to protect the value of the blockchain. They would be just as trustworthy as any other blockchain user. If we want to say that we can't trust a university to post worthwhile content, we may as well say that no one should use STEEM because everyone might spam it.
(ii) Under this concept, the institution would not be withdrawing any funds at all for 10 years, and when they start withdrawing, it would be on the order of 8% of their stake per year (and that percentage would continue shrinking). This small portion should not represent any kind of threat to the blockchain, especially since the concept is to continue fundraising and investing, and (coincidentally) the cost of tuition is on the same order as the new funds that would be invested. Thus, the university's stake in the platform would grow continuously.
(iii) As noted in another comment, the fund would be owned by the university, not by students. Further, withdrawals would be performed on an orderly schedule, not whenever a student happened to experience a cash crunch.