A Few Observations on the Falling Price of Steem
As Steem continues to lose value, Steemit users change their habits.
I'm preparing an article on the reasons why the price of our currency keeps falling. In the mean time, I'd like to share a couple of observations, which I will be grateful if you comment on.
Articles are paid in SBD. Which means that the weaker the exchange rate is, the more Steem (and Steem Power) we will receive. This is the perfect time to invest in SP, if you both expect Steem to recover its value and want a bigger share of the Steemit pie (SP is like shares in our network).
The above stated means that the weakest our currency, the more incentives for optimistic authors to keep posting original content. However, there's a point at which no one will be willing to post for (almost) free. This moment will probably coincide with an "insane" exchange rate between SBD and Steem - something the founders of the network will do everything to evade. It's a form of hyperinflation, which devaluates Steemit at huge rates.
Optimistic whales want to remain whales (as compared to those powering down and preparing to abandon ship), hence a weak Steem is not something they really enjoy at the moment. They can influence the price positively by creating demand for our currency. There are two options - invest more money in Steem or try to keep Steem as SP in users' wallets (there's also the third option of offering a unique product or service, in exchange for Steem, but this is outside the scope of the current article).
Image courtesy of its respective (excellent cartoonist) author.
There's a non-conclusive experiment I've been running for the last two weeks. The first week I've posted all articles with 100% SP payout, while in the second week, I've opted to receive SP, SBD and Steem. I had several times better income in the first week, with whales and their bots almost consistently upvoting my articles. In the second week I had only two well paying articles, despite posting similar content, at similar hours.
Although non-conclusive, it wouldn't be surprising that whales and their bots would favor upvoting 100% SP articles, in the hopes of increasing or at least keeping the price of Steem up.
If whales prefer to keep all user earnings as SP in their wallets, this effectively turns authors into slaves ("working pro bono"; we now even have the option to "Decline payout".) for @dan, @ned and anyone seriously invested in the network, with the promise that if Steem eventually goes up, Steemians will be rich and influential on a multi billion dollar social network. Alternatively, the time of several hundred thousand people will be wasted on an interesting cryptocurrency experiment, while the authors can sell the domain for a couple of million, to cover any expenses accrued.
I'll be glad to hear what you have to say or add to the above list. As I said, I'm also working on an article on the reasons for the falling price of Steem, which I will post later on.
Check out my previous articles!
- DEK Photography: The Dance of the Internet Folk
- Wine Tasting :: Bulgarian Wines :: Zlaten Rozhen (Syrah)
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I offer Professional Translation and Editing Services in exchange for Steem.
It's difficult to say where the price will go, and if/when it will recover. If one is optimistic, then it makes sense to work hard now for the future rewards and benefits. Kind of like mining bitcoin in the very early days. Of course no one knows the future, but I like to think that the price will recover, at least to some degree. But when? In the meantime, I believe there will be rewards for those who stick around and work hard.
Interesting idea about the 100% SP payout experiment. I may look into that myself, see how it plays out.
It's my expectation that Steem will never raise much past $1. I'll soon publish the article I mentioned above, and will touch up on that.
Thanks for taking the time to read and comment!
What are the important numbers for a Curator... SP, Followers and Reputation.
I realize those that invested are more anxious, but those that do this to share and help a community may not be as worried.
It depends on how you view things. You may think of Steemit as Facebook, and perceive Steem as Likes. Or you can try to view Steemit in a way the founders presented it - as a platform owned by its users, where they get paid for original content.
Original content takes time and effort to produce, it's not like reposting a cute kitty video a million times (which only makes Zuckerberg richer and rarely the original author).
What you are asking is for people to drop greed over substance, most users joined for making money, what you wish them to is invest however greed will always win its only the players who invest more are paying the bills of the many and loosing value, paycoin had the same proposition in pegging the coin to the market rather than setting a set price, those who jumped in first and quickest to leave reaped huge rewards from then onwards it was a long slow death. Market traders will only step back in when they see a final floor and a real raise and market sentiment changes again.
I'm not asking anyone anything, I'm trying to sum up the current situation of Steem and Steemit. Everyone has the right to either invest their time or leave the platform.
I guess that Steemit is mostly to be regarded as an experiment right now. That's how I see it at least. It is meant to be driven by inflation and growth, which in the end is something akin to nothing :) If the Steem eventually is used in other kinds of transactions, it would actually be able to work, and people are working on that in apps and markets and video-streaming. That might be a way to create some substantiality behind it. But who knows? There is already a problem with scalability as the inflation of the Steem is fixed. That means that the more signing up the less to share. Falling Steem-prices makes this even worse. From that it is also quite natural that people who want the platform to succeed might prefer content that does not add to the devaluation of the Steem.
You still have your copyright of text and photographies, so it is possible to move or maybe reuse the content on other of the new emerging platforms like Yours (bitcoin-based) or Synerero. For now I just put the Steem back in the system (Steem-power) and watch what will happen.
Yes, that touches on my point, that we don't offer anything unique in exchange for Steem. Also, there aren't services using Steem, in order to reduce its volatility to levels similar to Bitcoin (even if the price is completely different). It's also worth noting that inflation is built into Steem, as more and more will be created over time. The 10:1 split, mentioned in the white paper, is more akin to redenomination of currency - removing trailing zeroes, for simplifying calculations to human readable format. Unless I've got something wrong with their explanation, this will have no effect on Steem's (hyper)inflation.