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.
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:
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.
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.
STEEM is not Steemit.
STEEM Is More Valuable Than Steemit.
What are you doing to promote STEEM, separate from the value of Steemit.com?
Luke Stokes is a father, husband, business owner, programmer, STEEM witness, and voluntaryist who wants to help create a world we all want to live in. Visit UnderstandingBlockchainFreedom.com