The Steem streets: Looking for a place to invest

Steemit is a very attractive platform for the small content creators, the struggling artist or the musician, the authors and a whole range of diverse writers. It is also very attractive to those battling, those looking to cover bills, the unemployed the struggling. For many, there is almost nothing to lose but, a lot to gain from being on Steem.

But, what about the investors? I am not talking about the first ones in, I am talking about the new investors who may be looking for a crypto space to buy into. Is it attractive?

Yes, trending is a joke and all of the spam and low quality content doesn't help the view but, are they things that large investors care about? Do they care about the spam or the quality of content at all? Would you?

If I was a large investor I would likely not care as much about the user base (other than it growing) and would concern myself with the other end of the scale, the governance. That is the place that has the greatest potential to either maximize my value or, destroy it as it is they who can make the decisions on the blockchain changes that will affect the mobility of value. It would be their behaviors that would make or break my investment.

Now, essentially we are all investors here at different levels if we hold Steem Power, which, we all do otherwise our accounts are immovable. But, if a very large investor was coming in, even though they have stake, they are still at the mercy of the decision makers, the witnesses, the board of directors.

In a company, that board has the express goal of maximizing shareholder value and, if they fail to do so, the board is relatively easy to replace by shareholder vote. Here however, that boards own votes count and they are among the largest votes on the platform. A stake based board where the board members can essentially choose if they are there or not is a risk to the investment.

The next thing I would have to look at is the behavior of that group and if I observed that the board who can almost vote themselves in through collusion was acting in their best interest as shareholders over the groups best interest, that would likely be a deal breaker as it would mean that my investment could be severely limited to increase their investments which might not be anywhere near as large as my own. Imagine trusting 10 million to someone who s trying to maximize their own 500,000 at any cost. The cost might be my ten million.

The passive curation returns of 20-30 percent are great but, the coin is still subject to the same pressures as other coins and could plummet to zero. Add the risk of a board who are not bound to act in my best interest and, the risk is similar to any other coin on the market perhaps. The difference with other coins is that the governance and their members are not visible in the same way. Does this make me more or less likely to invest into a coin other than Steem?

Perhaps more as it seems less risky to invest into something that seems decentralized in comparison to Steem which puts all of the behaviors on display. Good and bad. I would assume that if I was a large investor, I would do my due diligence and hire someone to explore viability for investment. What would be found? Are the witnesses acting in the best interest of the community (shareholders) or, in the best interest of themselves? If my expert looks at the behaviors of other large accounts, would they be acting for longevity or a short game? I would have to look at these kinds of things to weigh the risk exposure of my investment.

The attraction of having a real community to back my investment is very appealing however, if the governance over the code is being deliberated upon by people primarily interested in their own investments and motivated to maximize themselves, that is going to fall heavily in the negative. My stake would give me a voice however, 5 million vests only gives me a chance to affect the positions from about 15-20 in the witness list which doesn't give much of a voice. Once I was invested in, the top witnesses may listen but, there is no guarantee, and I am not invested yet.

The next thing I would look at is the sustainability of the platform behaviors themselves and whether the actions of the community are the kinds of things that would likely build a support base.That would include things like how the community deals with bad actors and system abusers who limit the growth potential. If there was one user taking too much stake or, one group of users taking too much, that would affect the future stability of the platform. If they were obviously negative and too large for the smaller community to deal with, I would look back to the largest accounts and the governance.

If the accounts charged with increasing shareholder value were passive or even supportive of harmful actions, that would throw up even more flags adding additional risks to my investment. If there are some accounts that are growing largely unchecked and those accounts also happen to be governance accounts, more flags again as there would be a conflict of interest between the position of work for the shareholder wealth and maximize personal wealth. The incentive for potential corruption is high.

I don't have millions to invest but I wonder if Steem is a large investor attractive platform. Yes, there are large investors here but, many of the largest accounts are early adopters, miners or bought 6-7 cent Steem. Steem is 3 dollars now which means in a stake based platform, to have the same say as someone who bought in (and didn't grow since) at 7 cents, I would need to buy 40 times as much in dollar value. Meaning, if they spent 100,000 last year, I need to spend 4 Million today. That is a significant difference. But, it is a difference that doesn't matter to the same when buying another coin as it is not stake based, it is just market based and it is liquid.

This is not really my area so now, I open it up to the audience to discuss so I can learn. What other factors am I missing or considering poorly in regards to my investment?

Taraz
[ a Steemit original ]