Why All Should Consider Buying Some STEEM

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We often talk about the idea of buying STEEM and the opportunity/risk that it presents. Many like to structure the conversation in such a way that people are led to believe that Steem is failing. After all, the price has dropped more than many other cryptocurrencies with the ranking on coinmarketcap.com drifting lower.

At one point STEEM was ranked 3rd, then it dropped into the 60s. Surely a trend like that has it on the path to zero.

Here is a prime example of how pricing action does not tell the story. There is no denying the fact that STEEM did drop a great deal. We also cannot overlook the fact that the ecosystem had some issues, led by Steemit Inc. The publicity that entity drew only helped to further the downfall.

When looking at the situation with Steem, the aspect that should jump out at everyone is the inflation rate. Now, before going any further, I must mention that one needs to get rid of preconceived notions about this. Inflation in the crypto-economic world is different from the fiat world. Under this scenario, we are actually issuing money and not debt. We also see the newly "minted" money going in the hands of individuals as opposed to being funneled through some institution.

Here is a chart that @fyrstikken create a couple of years back. It spells out the inflation rate over the next 20 years and puts numbers to it.

https://steemit.com/re-calculated/@fyrstikken/the-inflation-of-steem-over-the-next-30-years

As you can see, the amount of STEEM produced from inflation increases to 2023 and then starts a journey downward. This is where the reward pool comes from. Each week, we have roughly 500K STEEM in the reward pool from inflation. This is split up among the different vested interests on here. Part of that goes to pay the inflation for those who power up. We have Witnesses who are paid out of that. And finally, content creators and curators also get new minted STEEM for their efforts.

So far, none of this is really Earth-shattering. That is, until you start doing some math.

Yesterday, I posted about the idea of Tribes and what is being developed by the PALnet team. By putting together a mechanism that allows for communities to gather in one place, with a variety of social media options available to them, we face the possibility of seeing rapid growth once the idea is promoted.

How big could this be? Here are a list that I found that compiled the largest Reddit categories.

1. funny — 19,895,474 subscribers

2. AskReddit — 19,510,110

3. todayilearned — 18,981,496

4. worldnews — 18,977,231

5. Science — 18,932,710

6. pics — 18,886,430

7. gaming — 18,413,642

8. IAmA — 18,097,375

9. videos — 17,973,194

10. movies — 17,824,982

11. aww — 17,433,245

12. Music — 17,051,188

13. blog — 16,507,239

14. gifs — 16,321,999

15. news — 16,218,736

16. explainlikeimfive — 15,705,452

17. askscience — 15,634,059

18. EarthPorn — 15,529,380

19. books — 14,732,532

20. television — 14,730,352

21. mildlyinteresting — 14,477,756

22. Showerthoughts — 14,344,618

23. LifeProTips — 14,254,907

24. space — 13,998,772

25. DIY — 13,915,297

26. Jokes — 13,829,496

https://medium.com/@davis1/the-31-biggest-subreddits-f95c1f1f5e97

Those are some large communities. Will Steem every see numbers that big? Only time will tell.

One thing we can say is that even with communities that are 1/20 the size, things will get very interesting regarding the price of STEEM.

There is one major point to all this that is the true caveat. To do anything on the Steem blockchain requires Resource Credits. The way one gets Resource Credits is by holding Steem Power. That is it. If one wants to transact on the blockchain, SP is necessary. There is no way around this.

As of today, to do any volume of activity on Steem most likely requires 50 SP. One can get by with less but the options are limited.

Now look at the reward pool. Do a bit of simple math and divide the 26M STEEM by 50 SP and you quickly see leaves 520K accounts. Sounds like a lot except when you consider, for a "failing" blockchain, we already have 45K accounts transacting daily. Also,if we put it in comparison to the other numbers, we see how precious this currency could be.

Certainly, there is the possibility that a feature is added where Resource Credits can be leased or delegated out. While that will help the end user, the bottom line is that SP is still required for those RCs. Someone is going to be holding them.

Of course, the numbers I am putting out presume that the newer accounts take all of the reward pool. We know the SP available from that is much less. The Witnesses are getting paid out of there. We have accounts already earning SP which are not going to suddenly stop. There are also applications that are earning curator by rewarding their followers.

All of this puts STEEM in their wallets.

Which reduces the amount available for everyone else. Here is where the supply and demand aspect kicks into action. Once communities start to form and some outside interests get on this blockchain, the need for STEEM will increase. At present, there are more than 100M on the exchanges so purchase is always an option. However, as we know, many users are not going to join a social media site and lay out money. It simple does not happen; not to start anyway.

Hence, this is going to fall to the applications to help the newer users along. This is what will provide upward buying pressure. At some point, the more successful applications/communities are going to require the SP to expand. There is no way around it.

At the core, STEEM is always going to be in demand as the user base grows. Since we were stagnant over the past year, things looked bleak. With some of the recent developments, that is not always going to be the case. We will see the number of users grow once we get the on-boarding situation cleared up and some of the newest ideas begin to filter through the development world.

I believe this is a point that many of the larger accounts understand. There are a number of Orcas and Dolphins who buy STEEM when the opportunity presents itself. Those people understand the simple mathematics of this ecosystem and what a declining inflation rate means down the road.

There is no way to avoid this core fact: SP is required for any account to transact.. Thus, when there are 2-3 million accounts active, the amount available gets very scarce. STEEM will become a scarce currency.

Those who are on here now, with the present price of STEEM, have the opportunity to increase their stake. It is something that anyone who is in the position to do so should consider. Going through the numbers shows that even 250 SP will put someone at a level that will be tough to attain down the road.

One other point that I feel is very important in all this. What is being designed by the PALnet and Steem-Engine teams all operate on Steem. They did not fork the blockchain to create PALnet. Unlike Whaleshares and other projects that went off on their own, this team is developing on Steem. Anything done on those platforms filters through to the Steem blockchain.

Hence, we are looking at more activity on Steem, something that moves us closer to the network effect.

Hopefully, those reading these words give consideration to the potential that Steem presents and how having a decent amount of SP in an account will really put on in a good position.

Things are starting to happen at a fast pace.

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