Is Steem Running Out Of Steam?
As I’m sure everyone has noticed by now Steem is moving lower by the day. Since I’ve started on Steemit in January it has already lost more than half of its value. What is concerning to me more than the sudden drop in value is how fast people want to buy the dips.
Generally, in a bull market you buy the dips or in an otherwise healthy market. You don’t want to do this with something that is not stable and never was. When a trend is bearish or you are in a bear market buying the dips is also called trying to catch a falling knife because the price cuts right through you and continues lower.
I have heard that some of the whales are powering down and cashing out, I don’t know whether this is true or not. I would venture to guess that there may be some truth in it. But, the real issue that people need to understand and I’ve said this before, Steemit needs outside support to function. The Steemit ecosystem cannot sustain itself when its product is external.
To break this down, Steemit creates convertible currency that you can change into fiat currency. In order to allow this conversion Steemit must present value externally to do the conversion. There has to be an external acknowledgement that Steem is worth X amount of fiat currency that is agreed upon both inside the blockchain and out. That being said, if there are no investors willing to put more fiat into Steemit then the Steem currency cannot sustain any kind of value.
Depending on how much external interest Steemit gets (and Steem) is how high in terms of dollar amount they can go. In reverse, if investors leave or become not interested the currency will go lower. How low can it go? It can go to zero. The US dollar used to be backed by gold and was taken off of the gold standard to float in an effort to quicken the pace of the economy and the velocity of money. When it was on the gold standard it may be able to lose value but not total value because it had a backing by gold. Now that it is backed by faith it is a different story. Faith can certainly go a long way but you can also lose complete faith in something. When you lose complete faith in something what value does it then have?
Crypto currencies (most of them) are backed by a Peer to Peer faith. The blockchain technology guarantees a trust in terms of the transaction but the peer to peer faith is what allows the block chain to maintain its value. This is both good and bad but it’s still a very new concept.
I’ll be the first to admit that I can’t predict the future. I’ve actually checked out a few so-called psychics on YouTube who are saying to buy Ethereum and seem pretty sure about it. Then again most of them thought Hillary Clinton was going to be president. It’s really tough to make future predictions but we can still learn from our past. If something is too good to be true it probably is. There is without question a value in having a decentralized media platform like Steemit as an alternative to the Twitters and Youtubes out there. However, when we let our greed get the best of us we usually end up falling into a trap. Be cautious people!
Image source: Asvrr.org
Think of it like this. Goldman Sachs thinks crypto has real value. If they didn't they wouldn't bother expending so much time and money to seize up the Poloniex exchanges to drive crypto prices down. In fact, the entire establishment financial sector thinks crypto has real value - which is why right now they are pushing congress to regulate cryptocurrencies at a time when they are advocating for every other part of the financial markets to be DEREGULATED. These forces are driving the prices of cryptos and STEEM in particular down, even at a time when there is a massive influx of users to STEEM including many high-visibility names. Steemit has been getting plugged by popular independent news shows in the last few weeks, shows like Jimmy Dore, Jordan Chariton, TYT, the Rubin Report, Redacted Tonight, and many of the viewers of those shows are flooding in to STEEMIT as we speak.
But at the same time the price is dropping. What does this mean? I'll tell you what it means. It means the value of STEEM is going up, while the dollar cost is being artificially depressed. In other words, it's a reverse bubble. Time to buy STEEM, because unless the old establishment is actually capable of ENDING the use of cryptocurrency altogether, all they are managing to do is make is temporarily cheap to buy STEEM and other currencies. Those prices will inevitably shoot back up because STEEMIT does have real objective value to a consumer base that wants social media that is not filtered or censored. The crypto investers that have spines are the ones that will end up at the top of the food chains. The ones who sell when prices dip will end up losing big. This is what always happens in a speculative market. As it should.
Survival of the fittest, baby.
There are basically two kinds of users on STEEMIT. The first is here because of how much they can sell STEEM for. They are here trying to figure out what to post in order to get lots of STEEM so they can turn it around for USDs. Those are the people replying with comments like "yes it's all very scary and what should we do next?"
I'm the second type of STEEMIT user. I'm here because Facebook and YouTube are censoring content and I don't believe in using censored or filtered social media. I'm not leaving, and frankly I want all the first type of users to leave. All they are doing is clogging up STEEMIT with their fumbling attempts to figure out how to post "content" that will earn STEEM. If they would leave, the people who actually have worthwhile content would be able to share it and I would be able to find it without having to wade through a sea of garbage posts.
I think that the people going after the exchanges and trying to regulate them is to take tax revenue. Goldman sachs is just buying the rumor and selling the fact, I don't think they could care less if cryptos died tomorrow. What I am trying to convey in my article is that the markets (both crypto and equities) have been rising together. When the equities corrected so did the cryptos. Everyone is posting their crypto charts showing the next rise when the next fall may happen if the equities correct for the 2nd time. This first correction that we has was nothing compared to what is coming. Steem is not a stable currency and never has been, you can just look at its chart to see this. In order for Steemit to succeed it needs to bring in exterior investment, the p2p environment within steemit is currently not enough to stabilize Steem. I'm hoping that the devs have a plan on turning things around. We shall see soon enough.
GS is fighting cryptos for the same reason it has been propping up the petro dollar for decades, because it is all in for the USD. Everything it has depends on the value of the USD and cryptos are a direct threat to that.
Steem currency was designed to be based on the value of its content, period. Many users have come here because they want a crypto that is easy to obtain just by posting. It's a new thing and some people with not a lot to say but a whole lot of time to say it are flooding this place with mediocre junk and upvoting stuff for various reasons that have more to do with gaining influence and increasing the value of their own posts than with the actual value of the content. This is what is creating the value bubble, and yes it will burst. Good. Because when that happens, all the people who are here trying to game STEEMIT with low quality nonsense will loose interest and leave. They will move on to the next way to get something for less work, and that will leave STEEMIT to users like me who are here because of what STEEMIT is.
This is also why you are ultimately wrong. STEEMIT does have intrinsic value to the world, it's just that people who are currently talking about lack of "STEEM value" don't understand what STEEMIT's value is. The sooner they get frustrated and leave, the better, and I'll be here to buy up their STEEM for cheap.
this is absolutely true, and thats what investors are looking for to grab the opportunities and used to buy the deep feom. week hands.
and also for the first steemit users, so right about it, though i am also here to get some steem and make a daily bread i still won't lie to admit my hate for Facebook, i rebel against it, when i joined steemit last year October and saw how decentralized it is, it took me February to check my Facebook and just update for old time sake.
facebook and google sells our private data to companies and also uses our data to run ads that really is a bad thing to talk about.
Good article. You raise very valid and serious concerns we need to heed.
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Good post, these are some major concerns I've been hearing these days that definitely needs to be addressed if anyone on this platform wants Steemit to continue forward!
It doesn't help much, but I'm going on full 100% powerup for at least the rest of the month probably longer. There is no point in selling now that it's down. Just because someone is a whale doesn't mean they are smart. Maybe they got on early, maybe they just post cute cat pictures, maybe they just post other people's work.
My point is, Steem has been growing considerably and the quality is here. They just need to update the system so people can sort by language and tweak it a bit more but that will come in time. Abandoning now will be a regretful decision. Bullish on Steem 😺
I believe there is a lot of truth in what you just said... The value of steem will continue to diminish day by day because a lot of people in steemit are hear to get money to convert to other fiat currency and this is not healthy for the value of steem..people need to start buying more of steem for this situation to change.
Nice exposition. Its time we head back to the drawing board
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