STEEM Is NOT Steemit. STEEM Is More Valuable Than Steemit.
Say this out loud:
"STEEM is not Steemit."
The cryptocurrency STEEM, which powers the STEEM blockchain, is separate and distinct from Steemit, the social media website where you are probably reading this article. In this post, I'm claiming most users of the Steemit.com website are confused about the real value of this blockchain (though not of the value of Steemit.com).
Try saying this out loud:
"STEEM Is More Valuable Than Steemit."
That's a little more difficult to say, isn't it? Most of us love Steemit. We love the relationships, the conversations, the education, and the value it brings to our lives every day. That's all true. As I linked to in my #SteemitIsToMe: Relationships, Reputation, and Rewards post, I still think the currency of steemit isn't Steem Power, STEEM, or SBD (it's relationships).
My claim here does not contradict that position. We have a good grasp on the value of Steemit. We point out things like Alexa ratings all the time. We rave about it to our friends, pleading with them to ditch Facebook, Medium, Reddit, and Twitter. We repeat the slogans we saw at signup about rewards and getting paid.
Steemit certainly is valuable on many different levels.
BUT WHY???
Pause for a moment and ask yourself the deeper question. This is something I talked about last year with regards to cryptocurrency valuations in general with the Bitcoin Pizza challenge. On May 22nd, 2010 someone bought a pizza for 10,000 bitcoins. Today, bitcoin, as a currency, works much worse than it did then. Value is subjective and determined in the moment of transaction.
Steemit, from a purely financial/monetary perspective, distributes value because investors and speculators choose to buy the STEEM token. Investors and speculators drive all the financial value we see here.
SBD above 1 USD?
That's investors and speculators.
STEEM price pumping?
Investors and speculators again.
The market cap of the STEEM cryptocurrency is currently $1,048,779,049 USD. That billion dollars in value is just a transient idea, but it comes from investors. The reason some people aren't using other more established social networks and coming here to start from scratch is because they are getting paid in tokens of real value for what was previously something they did for free.
Just like most other cryptocurrencies, new STEEM is being created and distributed every day.
Figuring out how much new STEEM is actually going out is quite tricky and involves a formula like this:
new_steem = ( ( virtual_supply * current_inflation_rate ) / ( 10000 * blocks_per_year) ) * content_reward_percent;
My very rough calculations show around ~2.28 STEEM per block or ~65k STEEM a day which has a rough value of $273k.
In comparision, 1,812.5 new BTC were created in the last 24 hours which is over $2M.
I've already talked about why I'm such a fan of Delegated Proof of Stake (DPOS) blockchains Like STEEM, so I'm not going to waste time rehashing the POW vs. DPOS debate, but here's a summary:
Thanks to @kyriacos for this image (which is great), but it promotes the Steemit logo, not the STEEM logo.
Other blockchains and cryptoCURRENCIES are struggling to actually function as currencies:
ETH:
And STEEM:
BTC barely works. It can't keep up and yet more inflation (in USD terms) is happening there than on STEEM.
STEEM is an amazing cryptocurrency.
Zero fees.
3 second block confirmation times.
Energy-efficient DPOS algorithm.
Built-in, on-chain governance.
Account recovery (unique to this blockchain).
Time-locked savings via smart contracts for SBD and STEEM.
User-friendly wallet addresses (instead of complicated hashes).
Did I mention zero fees?
STEEM is an amazing cryptocurrency by almost any measurement. From a purely technical perspective, I'd be hard-pressed to find something better.
So why is it ranked 36th and not number 1? Well, that's not an easy question to answer because it involves a deeper dive into network effect and, again, the subjective nature of value determined by many individuals in the moment of transaction.
One possible explanation is that STEEM, the cryptocurrency, is getting confused with Steemit, the social media platform.
They are not the same thing.
Investors create all the financial value we enjoy here. When it comes to bitcoin mining, I see few people complaining about who gets to earn some of those 1.8k newly minted BTC because the expectations are super clear: whoever buys hashing power gets proportional rewards for what they paid in, based on the current difficulty. For STEEM, the expectations are less clear. As I talked about 6 months ago, from this perspective, it's difficult to clearly define things like self-voting as scammy behavior or a rational ROI strategy. I have my personal opinions about this which is why I've only self-voted 1.1% of the time in the last 90 days.
There's a lot of discussions about rewards pool abuse, unequal distribution based on content quality, and scammers manipulating the system with bot armies and thousands of fake accounts. It's all certainly a concern which deserves much of our attention if we want to improve Steemit, the social media site, and the claims it makes about being rewarded for your words.
That said, imagine, if you can, if the social media side of the STEEM blockchain went almost entirely away. Imagine if all we had was the currency itself with clear expectations about new coin distribution. Maybe it would all go to stake holders or maybe it would be a random distribution to existing addresses. The point I want to drive home is this:
STEEM, the cryptocurrency, would still be far superior to other cryptocurrencies even without Steemit.com.
Steemit, the social media site and how it interacts with newly minted STEEM distribution, is almost a distraction from the value of STEEM, the cryptocurrency. When we focus too much on the reward distribution and not enough on the STEEM blockchain itself, we create confusion for investors. They hear "scam!" concerning abusers on the social platform which distributes new STEEM and equate that to concerns about the currency.
The STEEM blockchain is valuable by itself, and its reputation is worthy of defense and promotion.
If we lose sight of that, we may harm the financial value of both STEEM and Steemit.
Takeaway:
STEEM is not Steemit.
STEEM Is More Valuable Than Steemit.
What are you doing to promote STEEM, separate from the value of Steemit.com?
Steem is the blockchain, Steem is the coin, SteemIt is the Front-end UI, so in a word, Steem Rocks.
Agree with this, Steem has a very bright future, however this correction will probably go deeper. I cover STEEM and SBD in my latest blog post:
IMPORTANT Coin Updates 2 (BTC, SBD, GNT, STEEM, XVG) https://steemit.com/bitcoin/@benkalashnikov/important-coin-updates-2-btc-sbd-gnt-steem-xvg
We are steemians :)
I agree with you.
I actually don't necessarily agree that STEEM by itself is useful. What makes STEEM useful is the ecosystem that STEEMIT create around it that gives its usefulness. One can come up with other unique characteristics that make other alt-coin unique like ADA, XRP, IOTA, etc.
It's the ecosystem. Alone, STEEM would just be one of the coins out there that competes for people attributing value to it. To me, there can be so many supplies out there for other coins that it renders the argument that each coin has a finite supply obsolete.
That said, if we can work hard and make this ecosystem better, STEEMIT won't be just the only manifestation of the usage of STEEM but there will be other real life scenario that can leverage STEEM capabilities.
I listed the characteristics in the post which make STEEM, by itself, better than most other cryptocurrencies. I think we can evaluate things purely within that category. Of course we can also look at the broader ecosystem (and we should), but I still it creates confusion for investors looking just at characteristics they want in a cryptocurrency.
Have you looked at the steem backed dollar?
Great post I am new to all of this and this really helps me understand what Steemit and steem are.
Great article. Sometimes I need you guys to "put it on the bottom shelf" so I can understand it better.
Thanks!!
Great article
While the internet has broaden a lot of horizons, it is also true that not all the information is valid. Also, articles from news venues can be quite bias as well. Truth is found through experience.
Stories of people's real life experience and perchance you find more knowledge you were searching for in the first place.
Thank you for sharing your experience, it motivated to buy steem coins at https://blocktrades.us/
this post is amazing amazing amazing!
What's quiet a bold claim. Steemit.com allows users to easily transfer and use SBD and Steem, without the user-friendly UI, most non-tech people wouldn't even bother with Steem!
Sure, the Steemit blockchain can stand alone without Steemit.com, but who would use it? Without usage, there is no value.
Do "non-tech people" drive the value of the STEEM token, or is it hardened, seasoned, cryptocurrency trading professionals with extensive technical knowledge of this space?
There is no such thing. It's the STEEM blockchain, not the "Steemit" blockchain. This common confusion is the problem I'm describing.
"Without usage, there is no value" makes sense in terms of Steemit, the social media site, but when it comes to global payment networks, the technical capabilities of the system have huge implications for the future (often considered "priced in") valuations. Like the bitcoin pizza example. It wasn't used as currency at that time so 10,000 bitcoin barely bought a pizza. Now it's used globally. Usage does mean value, but you don't need social media content for the STEEM blockchain to be useful as cryptocurrency due to its technical properties as cryptocurrenccy compared to other options.
That was the point of my post.
Awesome article. When I was looking to get into something besides bitcoin I recognized the points you have made here with steem. Steemit was just a bonus that helped to solidify my decision. IMHO BTC will continue to hoover around 10k and people will find potential in other coins like Steem.
So glad to hear this explanation is helpful for investors looking to make decisions about future value. For me, STEEM is a long-term hold with lots of potential, especially when it supports the Smart Media Token ecosystem we'll have in the future.
Great points @lukestokes thank you very much for the explanation. I see it similar, that it is a very nice perk, that are closely related. As of right now, they are so closely linked because it is its' most commonly used/referred to instrument for steem. Steemit is a (very nice) fringe benefit, added value, "gravy" benefit as I see it as well. I was sold on steem in hearing an explanation of it from stan larimer talking about basic blockchain concepts, and steem's abilities already in place to handle massive transaction loads. Steemit is a tool that has generated in the exchange of the crypto of the future in my opinion. Very helpful, stellar points, I am very glad I came across the article!
Agreed @lukestokes ! SMTs will make the entire Steem Blockchain to be understood much more, which so many projects that will flourish after it! Hopefully SMTs are on the next block and starting soon!
Regards, @gold84
first of all,thanks for such a wonderful information and i really appreciate your post.
bitcoin market is crash now a day but steemit is more valuable in future and steemit make the market up and no other coin crash this.i believe it <3
keep sharing this type of info and update the market i appreciate u sir <3
@sibtainali
Thanks for this article @lukestokes It is a helpful tool for understanding something I have felt about this platform and currency. As a member of a few content industries at different times, the content/attention game has needed some working on.
Not sure... I think BTC is the better play right now and altcoins will be a bit bearish why BTC takes off. The liquidity pool of BTC & higher volumes mean a nice rebound (perhaps).
That's been the usual play where alts stay down as BTC skyrockets and then when BTC goes flat, traders get bored and buy up all the alts. I have a feeling this rebound will bring everything with it together since everything went down together. Wait and see, I guess.
That seems like a reasonable prediction. And you were proven out to be generally correct.
The first thing that I do when introducing STEEM to someone is explaining that SteemIt is not STEEM. Reason for this is when Steemit goes down they start complaining that STEEM is shit and not working properly.
Yes, that's a really important reminder also. Even if Steemit.com (the social media site) is having trouble, STEEM is humming along nicely.
But the main use of steem is as steemit.com, outside of that, there arent much uses for the steem token. Its the same issue with all other coins, they dont have real uses yet and on top of that, they have zero product out there to support their coin.
Steem atleast has a social network that employs the steem blockchain. In that sense, so as long as steemit survives, steem will always have some value.
I think you're still using a utility theory of value instead of a subjective, "in the moment of transaction" theory of value. I can respect that and talked about it here 4 months ago: Do Cryptocurrency Speculators Fear Utility? I think there's a balance between the utility helping create the story which supports the subjective theory which actually drives the decision to buy or sell.
I just read your article, and if I get your point, you are saying that there is both an objective and subjective value. The difference being the future value.
Is that correct? If so....
You are correct that objective supports the subjective, and I see that, but I'm talking about the long term results of all these coins, which is how people are pricing in the value.
We have a lot of future value baked into these coins, of which we assume some sort of future utility thats worth more than its existing utility. And as you said, speculators become investors at some point.
Where do we stand with the steem blockchain right now? I think it has limited use at the moment ONLY because we haven't found much use for it yet. HOWEVER, I think there is massive potential for its use in hundreds of applications. The problem is discovering that usage.
Fair enough. However, again, Bitcoin has way more "value" in terms of market cap than STEEM and yet STEEM (just as a currency) has better features and thus better future potential utility value from a technical perspective. Again though, it's the network effect of perception that gives any currency value. Either way, STEEM has a lot of upside, and I'm excited about that. :)
I can 100% agree that STEEM has a lot of upside. There is a host of potential for this blockchain above all others. I think we need to capitolize on that aspect because this coin generates its own attention that is worth putting effort into.
What about busy.org, eSteem for Android, Steepshot.io, d.tube, chainbb.com, zappl.com, and dsound.audio? I'm sure I missed a few, but you get the idea...
While I agree with you that Steem is definitely MASSIVELY undervalued as a currency compared to the unbelievably less-efficient BTC, ETH, and LTC, I feel like you're selling Steemit short. The problems we face now with the way Steemit works pale in comparison to the potential that this nexus of blockchain technology, digital finance and social media has.
The cultural dominance of Facebook, Twitter and Google (through YouTube) over the past decade-and-a-bit has proven the power and significance of social media. In parallel, the explosion of the fintech industry has demonstrated the importance of virtual money in theory and practice.
"Bitcoin" and the first generation of cryptocurrencies it's often used to refer to in the media is, in my view, valuable the way an antique vase or car is valuable. You'd never actually use it for fear of depreciating its value, a value based entirely on what it represents and how much others are willing to pay for it. Pure speculation.
The Steem blockchain has a working application (yes, Steemit) used by tens of thousands of people around the world and generates enough money to actually be some of its users' main incomes. Yes, this is because Steem itself is an incredibly well designed currency, but so are Ripple and Stellar Lumens and many others. Steem has value because it's being used IN PRACTICE in a SOCIAL MEDIA PLATFORM. The two biggest innovations of the 21st century so far, together in a package and (as of yet) mostly undiscovered by the masses.
Don't sell Steemit short. Even if this site doesn't end up being the final iteration of blockchain social, even if it does become the GeoCities or MySpace to some future blockchain social platform's Facebook/Twitter, Steemit is the proof-of-concept and a vision of the internet's future.
This is a common challenge for many. If someone says "X is better than Y" it does not mean Y is crap or not valuable. I tried to make clear in my post how valuable Steemit is and how most of already understand this. I've spent a year and a half writing articles about this.
What I think we are doing is undervaluing STEEM by only talking about the value of Steemit. Your Ripple/Stellar examples don't work as well for me because they are centralized and don't have built-in, decentralized governance like DPOS controlled by the community. The key point here is the investors in the STEEM token generate that income you're talking about, not some intrinsic "value" of the content itself. There are no ads here. There is no income. It's just like bitcoin in terms of "pure speculation" only we have a much better story to tell ourselves because of things like Steemit, DTube, Utopian, etc. The utility value we can see informs our speculations about future value. Utility value is important, but I still think it's just part of a story we tell ourselves.
I'm definitely not selling Steemit short by comparing it to STEEM. What I'm hopefully doing is realigning our understanding of value by correctly understanding how valuable STEEM is, given our understanding of the value of Steemit.
I haven't read much of your other stuff, only stumbling across this article today. You're not wrong that X>Y does not mean Y=0. However when you said:
"Steemit, the social media site and how it interacts with newly minted STEEM distribution, is almost a distraction from the value of STEEM, the cryptocurrency. "
I definitely read that as a dismissal of Steemit. Moreover, being that Steemit is the flagship app of STEEM, it's hard not to tie the value of one to the other.
In your article on utility, you said:
"When [the hype around a cryptocurrency project dies away, and we're left to evaluate its actual utility at accomplishing stated goals], speculators turn into investors. They turn off the wishful thinking and start making more rational comparisons to other players in the space both inside and, importantly, outside the cryptocurrency scene. "
So is the value of STEEM right now a function of its utility, as you implied there, or pure speculation with a slightly better story? Isn't the fact that a currency used mainly to assign monetary value to internet content has any value at all an assertion of its utility?
I suppose my main disagreement with you it that STEEM is objectively more valuable than Steemit. The two are, at least right now, inseparable. And when the inadequacy of BTC, LTC, ETH leaves them in the dust, STEEM will probably experience a new speculative bubble based on both the superiority of its blockchain and the success of Steemit.
I think what this article is trying to articulate is how the stated goals of STEEM (and Steemit, the company, if you go by Ned Scott's statements at Steemfest) isn't about the social media site, Steemit. Most (myself included) didn't get this right away. They think, "Of course the Steemit social media site is the main product!" The reality, I now think, is closer to this being a reference implementation for what's possible on the STEEM blockchain and just one part of the vision to tokenize the web. The focus of Ned (from what I understand) and his company is to build out Smart Media Tokens to accomplish that tokenization. STEEM is the blockchain that will do that and it will be done without Steemit (the website) even having an interface to deal with SMTs directly to begin with (from what I understand).
So I'm still doing the same comparison. I'm comparing STEEM, the cryptocurrency, with other cryptocurrencies. I don't necessarily have to compare it with options outside the cryptocurrency space because that would be redundant (they all share those same benefits, for the most part, against fiat currencies).
The fact that the STEEM cryptocurrency has utility outside of just being a cryptocurrency which includes supporting social media activities (user account creation, content creation, voting, etc) is a bonus.
Today, STEEM is used (and thought of) by many as a social media blockchain. If they just thought about it as a cryptocurrency alone, they might value it much higher than they do now, based purely on it's technical capabilities as a cryptocurrency.
OH okay gotcha. I think it would have been more clear if you’d emphasised the “tokenising the web” part from the outset. I definitely agree with you that that aspect of the STEEM technology is going to be immensely valuable. In that context, yes Steemit can be seen more as a proof of concept than THE Steem product.
@lukestokes
Since starting out on @steemit I have manged to get a fair understanding regarding the platform and later realised the value behind the coin.
I am fundamentally driven by the ethos and philosophy behind steemit, and the idea of sharing not only on a creative level but also on financially too, which has helped so many people through education, interests and just generally a better understanding of what people around the globe hold dear. This in itself makes this platform special, in that it brings people together on a more existential level, and also almost forces positive experiences since generally it is positivity that is rewarded.
Also inspiring to see people now being able to generate an income, where before they had no means of supporting themselves or their families.
I do believe that @steem the coin itself is highly under valued, based on the functionality behind the coin and I think we are in for some huge gains.
So I plan to continue stocking up on @steem coins in support. Will continue writing my little posts whether I earn 1 cent, I am thankful for a place to have my say and stand the chance of earning something for it, no matter how mundane it may be, lol
Great post, stay blessed
Well, here's a little upvote for your comment here. Thanks for contributing. :)
Thank you.
It's pretty crazy to think about (which I guess means I'm down the rabbit hole) but you are totally right. I'm pretty emotionally invested in this place, but when it comes down to it the Steem blockchain, and Steem itself has much more value than Steemit. Still I really like it here, and I don't want it to turn into just another crypto to be bought and sold. I have plenty of those. I like being able to be rewarded for my posts, and for my hodling.
Take the red pill! Join us down the rabbit hole! :)
Haha, I'm on it, see you there in a few ;)