The Steem SCAM
I have been thinking for a while about the business model of Steem.
It's fishy! Too fishy!
Getting money for writing blog stories?
Sounds too good to be true!
It IS too good to be true!
Before I continue - a few disclaimers:
I have yet to withdraw any money from the site, but I don't doubt that I will be able to do that. If withdraw wasn't possible, then nobody would've been blogging for more than a week. The bloggers obviously kept blogging, therefore they really got some money.
Everything I write is all speculation. It's simply my theory. It is NOT a financial, or trading advice.
Why do I believe that Steem is a scheme?
I work as a software developer, but by education, I am an economist (sort of). I might not be anything special, but I know one thing:
To get profit, one must provide usefulness.
Look at your blogs. They are cool. They are interesting. They are personal.
But....
Are they useful ??
Are they valuable ??
They are not.
(Or at least - not in a way that can be monetized.)
There are a few possible ways to monetize on a site like that.
- Show advertisement (like youtube)
- Sell your information (like google)
- Use your locked money for trading, and keeping the difference (like a Roth IRA)
(your STEEM Power is technically a form of the STEEM currency - a.k.a. "your money")
But I don't think any of these is happening.
- We are obviously not seeing any advertisements.
- The information we put in is so disordered, that the only way to sell it is if it is manually processed first. This would cost more than the information itself is worth.
- Even if somebody was trading with your locked STEEM, the income of these trades can't possibly cover for the massive amounts of new STEEM that is being given to bloggers. Trading is profitable, but not that profitable. It is also risky.
So... If the STEEM creators are not winning from your blogs, then where do they take the money that they give you?
There is no free lunch... is there?
I do not know. I have no idea where that money comes from.
On internet, I found 2 versions.
- The money is newly printed/issued.
- The money is a tax on the traders.
Both of these are possible, and maybe both are true at the same time...
but...
There are problems with both of them.
If the money you receive is newly printed, SteemIt will eventually collapse.
That is because of 1 very simple fact:
Printing new money automatically devalues old money
Just research ANY country that has ever had hyperinflation. Printing new money made the old ones worthless.
When enough money are printed, the old STEEM value will be so low that there will be only 2 options:
- To stop printing new money (and therefore - stop paying to bloggers)
- To keep printing new money (and therefore - the value of blogs will drop very significantly)
In both cases all of the bloggers will leave STEEM and it will crash.
If the money you receive is tax on trading, than that means that the STEEM market is even more unstable than I thought.
Why would traders want to trade with a currency, that is not backed by any monetizable value, and even pay a tax on top of that?
Currently they do it for speculative purposes.
But speculation is only a short-term investment. It doesn't mean that they believe in STEEMs future. (And why would they?)
If that's all true, than why are we (the bloggers) receiving money?
While I believe that STEEM is a scam, I do NOT believe that the bloggers are being scammed.
We really receive money, without giving anything of monetisable value. Isn't that great?
People tend to see STEEM as some kind of Ponzi scheme.
In Ponzi schemes, investors are promised good returns from a busyness that doesn't exist.
It works as described in this picture.
STEEM IS NOT A PONZI SCHEME.
Steem is not a Ponzi scheme. While it looks a lot like one, a very key element is missing.
In Ponzi schemes the investors (you) actually invest.
They actually need to put money in the system.
You on the other hand, dear bloggers, have not invested anything.
You just made an account and started getting money.
So... if you are not being schemed, why are you here?
The answer - you are the scammers!
Let me explain.
There is one other type of scheme, that is also very similar to what's happening with STEEM.
It's called "Pump & Dump".
In pump and dump, the scammer creates attention towards a certain stock/currency, and makes everyone believe that the price is gonna go up. He already bought a lot of that stock/currency while it was cheap.
The people get interested, and start buying. The more people buy, the higher the price will go.
When the price reaches it's peak, the scammer sells ("dumps") all of his stocks and profits.
Later the false rumors get cleared up, and the price returns to normal.
Usually, the Pump&Dump scammer will "pump up" the price through social media, news, etc.
Coincidentally, STEEM is based on social media. The news about it are spreading really fast, because there are so many people writing about it.
We are the Pumpers!
We are driving the price up, by talking about how awesome STEEM is.
We will keep doing that, until the price reaches it's true peak, and it's time for dumping.
If I am correct, then we are all accomplices to the real scammers.
Thanks for sharing! Do you have the same opinion about Bitcoin? Do you think this site being over a blockchain could add any value on the content published here? Thanks and good luck again!
The reply to these questions deserves it's own post, but I'll try to fit it here for now.
Yes, Bitcoin has value.
It's value is a combination of subjective and objective value. The subjective value is the people's desire to have bitcoin (meaning that the more people want it, the higher price you'll get when selling it). The objective value comes from it's usefulness, outside of speculation. Many companies have started to accept bitcoin payments instead of just cash & bank transfers. Different countries enable the use of bitcoin in different levels. In Asia Bitcoin is especially valuable (objectively) because you can actually do stuff with it, and not just trade it.
Steem doesn't have that.
Steem's value seems to be subjective only.
Try to guess what will happen if people stop blogging about how great STEEM is (for whatever reason).
I think one thing the Steemit founders were concerned when launching it was the agreement with exchanges to guarantee the conversion between STEEM/SBD to Bitcoin. Maybe they believe this atachment could be seen as the minimum value of this platform.
DogeCoin has that as well.
In fact it has had it for quite a while.
Would you say that DogeCoin is valuable?
// good point, btw.
One more thing.
Some people will say that STEEM has objective value.
They will say that it's objective value is the social platform itself.
To them I say - https://steemit.com/ is a CRAPPY social platform!
What is good about steemIt?
However you look at it, it's only the fact that you get free money.
What is left if you take that away?
A crappy forum. I can make a similar one, in 1 day, with free technology (WordPress, phpBB, IPB, etc...).
I've been here for just over a week and already found a few bugs.
Another argument:
--> "But it's not the code that makes the social network. It's the people in it. SteemIt has the people."
Does it?
Really?
If you give money to make people blog, what kind of people will blog?
People who want that money, of course!
Without the money, non of the bloggers would've preferred this forum, over any other free forum.
In other words - SteemIt doesn't HAVE any users. It RENTS them.
I think blockchain has instrinsic objective values itself: immutability, descentralization (no owner) and censorship free. These factors made Bitcoin a trustful currency option and maybe Steemit creators believe it would work with content and social media too.
By blogging, we are technically "mining" Steem.
Problem is - mining is not a long-term thing.
Bitcoin is already on the slope of making mining less and less profitable by increasing the difficulty. If they didn't do that, they would have too much BTC on the market and this would lead to hyperinflation.
Sooner or later this will happen with Steem.
Steem will have 3 options:
You would certainly benefit from actually reading the whitepaper and understand the concept. It is found in the drop-down menu on the upper right corner.
Aha...
It's too long. Didn't read the whole thing. (I'm lazy now)
I skimmed through and didn't find anything that explains how they get actual, real money.
What do they sell, and to whom?
Explain it with 1 sentence, please.
You just said it: you're lazy.
Yep.
I am not motivated to read 44 pages about a scam.
I just don't feel like I'll get anything out of reading it.
Once again.
Please just tell me.
What do they sell, and to whom?
If you actually have any theory, no matter how strange it sounds, it will actually be a motivation enough for me to read the manifesto.
steempower is locked for 13 weeks so running a pump and dump takes 13 weeks so, probably kind of difficult. I think more of being rewarded for shares of Steemit, I can sell my shares of steemit or keep them because I can use them to power up and get more influence
either that, or it is a reward for not dumping the money before the actual dumpers.
You should read more posts on where does Steemit gets its money from... Only then ul know its not a Scam.
Enlighten me
So why did u use your cover art as steem is scam.. Lol ure funny bri
I used it, because I believe it. Simple.
i think steemit is a way to major pump steem coin and steemollar coin or simply a way to creat a major social site like facebook and profits will show up later
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