The Steem Killer: STEEM As A Currency

in busy •  7 months ago 

There is a situation that is rarely talked about on here yet could pose a major threat to Steem. In fact, it could be the biggest threat this blockchain could face if it became successful.

That threat is the idea of STEEM being a currency.

I know this seems like an odd thing to say but it is something to be mindful of.

Let us follow the course of action as it is expected to unfold. During the first quarter of 2019 the SMT protocol will be released. We already have a number of tokens being distributed on here with more certainly added.

Now, suppose this protocol is successful for content creators and we do start to tokenized the Internet as was originally intended when they were announced. If you really think about it, there is a lot of content out there to be monetized. Steem has a monetization system that is shown to work.

If we reach that point where the SMT penetrates the content market with anywhere near the degree of success the ERC20 had with the ICO market, we could ultimately see hundreds of billions of dollars in value created on this blockchain. It possibly could morph into trillions if some big names join the party.

Of course, this would be a wonderful thing. It does potentially create a major problem that we are seeing across the world of cryptocurrency.

It comes down to governance and having the ability to take over (read sabotage) a network. We see this with Bitcoin and the fact that a few miners have most of the power. Naturally, Steem uses a different system but the same potential threat exists.

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Source

Steem solely as a currency to conduct transactions for what is built upon it would be catastrophic. This would mean that taking over the entire system would not be very expensive. Why? Because currencies are not stores of value. People convert their currency into other assets to protect and grow their wealth.

This is something that Ethereum could face. If it ends up as the gas for all that is built upon it, presuming it converts from POW, those coins could end up in the hands of people with ill-intentions; governments for example.

Hence, STEEM needs to be more than just a currency. It ultimately needs to be a store of value. The idea is to get people to hold the coin as opposed to using it. Again, this might seem counter-intuitive but look at where wealth is throughout the world. Even in the crypto world, the idea that the tokens of what is built on a block chain being worth more than the native coin is not foreign.

Fortunately, Steem does have a built in system to protect against this. It is called STEEM Power and it is a genius idea. Powering up means that people are creating a store of value with the coin. As more of this is done, the amount floating freely on the open markets is diminished. This makes it a lot harder for people to get their hands upon.

Consider it this way: There is just under 300M STEEM issued right now. Over the next couple decades, if the chart I saw was correct, that number will about double. At the present price, the total market cap is about $240M. Thus, for about 3 times the total amount of Elon Musk's fine by the SEC, one could exert enormous influence over the network.

Obviously, this is not possible at the moment since 60%-65% of the STEEM available is locked up as STEEM Power. Certainly this could be powered down and sold. To start, it would take a more than 3 months to fully do that. The other thing that I see is that one is not going to be able to get people to do that for under a dollar. A situation like that would certainly push the price higher.

The other challenge with breaking SP out of people's hands if there is incentive to keep it there. People are rewarded in a number of ways for investing in the network. While not often mentioned, powering up actually protects the network from attack. This only strengthens with each SP that ends up in a wallet. It does not hit the open market.

We can see why it is crucial for STEEM to be in the hands of people who are committed to what is taking place here and have a long term view. Strong token hodlers provide a defense for the entire ecosystem. This is only compounded when the SP is then delegated out to applications that are building upon the network. Under this scenario, not only is the SP used to stimulate growth, it is also being utilized by the ones who protected by a stronger STEEM.

Many are creating projects where they are trying to figure out how to make people want their coins, use them, but not have everyone dump them. Essentially, they are looking for the answer of how to make their currency valuable. As I see it, this is not likely simply as a currency. Money tends to be for transactions, not stores of wealth.

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https://cointelegraph.com/bitcoin-for-beginners/what-are-cryptocurrencies

As I look out at the major tokens we see some of this in action. One reason I think Bitcoin will be a major player is because the name gives it the store of value. The idea of digital gold is being embraced. Ethereum, as I noted, could be in trouble. Litecoin, I do not see much of a defense there since it was set up to be digital silver but there are other options. Hence, that is nothing more than a transaction coin in my view.

Steem has that built-in defense. Yet it is not something we can take for granted. It is imperative that everyone power up when they can afford to. I know there are many where STEEM is income for them. That is also a wonderful benefit to this blockchain. However, for those who are not dependent upon STEEM to pay basic bills, powering up at every opportunity only strengthens the system. Imagine what things will look like on the open market if 80% of the STEEM in existence is powered up.

People often scoff at those who buy STEEM and power up. This is a crucial aspect of the long term viability for this blockchain. Taking coins off the free market is always a good thing. Just look at what happens when companies announce stock buybacks. The market goes nuts because it means increasing the value (on a per share basis). It is a similar situation although not the same because coins do not represent ownership or entitle one to any profits. However, they do adhere to the laws of supply and demand.

Last night I moved a bit of money around to buy some more STEEM. It is around 11 months since I did that but I think it is time. There are many advantages to it in my view so adding to my SP hodliing helps in a few different ways. Adding another 1,000 SP, give or take, will help to remove some more from the open market while also increasing my stake on the blockchain.

And that is a win for all of us who are hodling STEEM.

In my view, there are at least 11K people who have a serious interest in this idea. Those with 500 SP or higher, if the price approaches triple digits, are looking at a nice chunk of change. It certainly is nothing to scoff at. These are the ones, in addition to other accounts that see the vision, who will want to keep this in mind.

As we know, an investment in STEEM is an investment in oneself.


If you found this article informative, please give it an upvote and resteem.

Please note none of this is to be consider financial advice. This article is for informational purposes only. Seek out the proper counsel before ever making a financial decision. I am not that counsel.

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I agree with you 100% the need for people to power up their Steem if they can afford to.

Anything below $1.00 I believe is a good buying opportunity, and I am currently adding what I can to my SP

  ·  7 months ago (edited)

Instead of a store of value you could see Steem as a store of power or a kind of stock.
If you a buy a substantial stake in Steem you have the power to support the steem ecosystem, to support certain authors, artists, movie makers, etc. and thereby, you increase the incentive for these authors to publish their content on the steem network. This in return increases the value of your Steems.
Steem can also be seen as a kind of stock as you get dividends (=curation rewards) dependent on your activity on the network and (potential) capital gains.

In my opinion a store of value has to be expensive to be created. That's why I think that, in the cryptoverse, only Bitcoin (proof of work) can take that role.

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This is exactly why I think it's only a matter of time before large corporations start investing in Steem (like they now all have social media departments)... purchasing Steem to basically power people's opinions or content ($1000 upvotes for whoever creates the best Pepsi video) and then power down when you need that money back, it's truly a win win situation. I absolute see scenarios where Political parties hit Steem hard every 4 years.

steempower is like the oil of the smt's world.. You can use as oil or you can make thousands of different item from the oil itself.

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There's a project that would enable people to transact using voting power, that's something I'd like to see more in this ecosystem. It would encourage people to hold more SP and use the voting power as a currency.

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i think there are a lot of options to look at with voting power and RC's in the future to earn extra steem for powering up

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For sure, but the tech I'm talking of will enable you to pay for anything via upvote, making Steem Power way more valuable. And not just pay for things, but upvote street artists and such, all they need is steem account and visible QR code that can be scanned.

I've considered this also. I suspect at least initially the SMTs will trade mostly in Steem. That should add to the value of (at least some) of the SMTs AND Steem, because every single one that is used to fund an SMT is gone but not forgotten from the market. The easy way for an SMT to thrive is to see the Steem price rise.

I certainly think it could be a win for both.

currencies are not stores of value.

I don’t think this is true. Many people see Bitcoin as a store of value.

I personally don’t think that USD currency is a store of value, but people in Venezuela or Zimbabwe probably do.

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People in Australia don't use the USD as a store of value either... it's usually stronger than the AUD, so people hope to buy it low and sell it high, but the exchange fees, etc are often too high for that kind of gamble. For the last 20 years property has been the main store of value, but we're starting to hit that tipping point where it could come crashing down at any second... taking the AUD with it.

Good post

So informative. Still learning about crypto currency and how it works. Thanks for the information. It would be wonderful let it get split like stocke so informative. Still learning about crypto currency and how it works. Thanks for the information. It would be wonderful let it get split like stock does.

There you have it folks. Power up! Taskmaster knows his stuff. He also seems to be a cat person 😉

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Great article !

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Interesting concepts but having STEEM as a currency helps those in the ecosystem create a way of life. As it has been said, STEEM is creating entrepreneurs which need means of transacting which make the system created interesting. However, we are leaving an important factor out of the equation; SBD could be what we need there and with its intention to remain stable, it creates great opportunities inside and outside the ecosystem.

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Great info. Thanks

Great info. Thanks

Who scoffs at powering up... that's basically my entire investment gameplan!?!

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