STEEM As Money? STEEM Has Something No Other Cryptocurrency Has....
There is great debate about which token will end up being "digital money". For years, that was the title handed to bitcoin yet many are realizing that the pace of transactions and the cost simply does not make it feasible for those everyday purchases. Even litecoin, which is a faster network with less fees does not fit the bill.
The reasoning is simple. Visa conducts roughly 25,000 transactions per second. Bitcoin is able to do 8; litecoin can handle maybe double; ethereum 25. Even bitcoin cash is only in the high teens. Therefore, none of these are feasible to be used as money.
As a comparison, the steem blockchain is known to be able to handle 10,000 transactions per seconds with many believing it can handle 100K already.
For most, this is no surprise. Number of transactions and speed of blockchains have been discussed by myself and many others on here. It is one of the reasons many of us are bullish on STEEM. High speed network and ZERO transaction cost could make STEEM an ideal candidate as "money".
That said, steem is not the only high speed network out there. Hence, 100K transmission capability is not unique to it. Bitshares can also process an equal number so that could fill the role too (from that perspective). So what is it that makes STEEM unique?
In my view, one overlooked aspect of STEEM is the fact that it is the only cryptocurrency that I am aware of that has a built-in passkey recovery system. Let me write that again: STEEM is the only cryptocurrency, to my knowledge, that has a built-in passkey recovery system.
That should boggle your mind.
Think about what happens when your wallet is entered by another. In the physical world, someone is able to take your cash and it is gone forever. Credit and debit cards, of course, can be re-issued and they are often protected against loss above a certain amount. In the crypto world, if someone enters your wallet with the passkey, everything in there can be taken. Even worse, if you lose your passkey, the account is lost.
With STEEM, this is not the case. Yes someone can hack your account and change the main key. This will give that person complete control over the account, at least, temporarily. However, as long as one has the original posting key (everyone needs to copy their original posting key somewhere safe...the is the way to get back your account), the passkey can be recovered. Couple this with the required time to power down or cash out SBDs, and you can easily see how STEEM is the safest cryptocurrency at the moment.
This is a very important point to bring up. Security is one of the major obstacles to mainstream adoption by cryptocurrencies. When one takes care of his/her coins, it is a major issue trying to understand the security aspects, especially for someone new. Hence, most are put off by this.
Of course, there is the option of having them on an exchange but that defeats the purpose of decentralization. Centralized exchanges can get hacked which offsets the advantage of crypto. In fact, from that standpoint, one might be better off in fiat since, at least in the US, those accounts are protected by the FDIC. Exchanges dealing in cryptocurrency are under no such program. There is a chance an exchange will offset a loss as long as it isn't too widespread. However, as people in Mt. Gox learned, exchanges can go under leaving you with nothing.
My belief is that since steem is a specialized blockchain, STEEM will be a token used for its original design. However, one thing about technology is that it often morphs into something that the original developers never intended. Could STEEM be more than just a cryptocurrency designed to disrupt the social media market? Is it possible that the world's digital currency is right under our noses?
I do not know the answer to these questions. Nevertheless, I can tell you that STEEM has a unique safety feature that does not exist in the crypto world. In fact, it does not exist in the world of fiat without the banksters, which is playing right into their hands.
The security aspect could put STEEM ahead of all others in the digital money race. Few are considering it for this reason yet society might agree.
Food for thought during this Christmas season.
If you found this article informative, please give it an upvote and resteem.
Pictures by Google Images.
Very interesting. But reading, it seems that the key feature is the required time to power down or cash out SBDs. Steemit has created a system that, by many points of view, is more safe than other cryptos... But it has some problems. It is safer also because your funds can't be speedy stolen.. Because your funds can't be speedy used. You have a reasonable time to intervene and restore situation.
Now let's step back, one moment.
What is one of the key equilibriums in every form of money and crypto? It is the equilibrium between usability/freedom and safety.
Blockchain tried to change this equilibrium allowing the decentralized safety of blockchain - that allows a greater using speed and freedom and provides great safety.
Steemit simply moves in this equilibrium. This safety has a clear trade-off: as I said above, your funds can't be speedy stolen.. Because your funds can't be speedy used. You have a reasonable time to intervene and restore situation. By this point of view, steemit has created a sort of safe-deposit box: you can cash out.. But slowly.
So, we can simply say that steemit as free money is safer than other crypto, maybe. But it isn't a safe money, because money for definition is liquid. It can be used everywere. And steemit? 3 months to power down is not the definition of "liquid and available money". "3 days for cash out" is not immediate availability.. It is a safety measure that you have to ignore for everyday use. You have to hold an amount of steemit/SBDs immediatley available, maybe on exchanges or on every other services that guarantees immediate payments.
So, thank you for this very interesting post, but i have many doubts that this "slowly-available" form of steem can be considered as a more efficient form of money. No doubt that, as crypto, it is a safer way to protect your funds. But as money, in my opinion 3 days or 3 months to cash out are a problem.
That's a valid point.. but consider this... your Steemit account is where you keep the bulk of your money.. every day you earn SBD from your posts... transfer that money to a "hot wallet" and you now have liquid currency... yes it can be hacked and stolen. But the biggest part of your investment is safe in STEEM power...
I agree @davedickeyyall.
If you compared STEEM to fiat, most people do not walk around with all their money in cash in a wallet....most of it is in a bank and often transacted out to pay bills.
Incidental purchases (coffee, Big Mac, rolling papers) end up on credit/debit cards...there is no reason why we might not see similar cards in the future...perhaps tied to steem.
Yes, of course. But the automatization of this process (you pay today with your SDB because I am sure they will arrive in 3 days) means that you have to wait 3 days, then exchange them for STEEM, then exchange STEEM for fiat value or other crypto unless you don'have a STEEM-100%backed system.
This means that you have to do 2 trades SBD --> STEEM; STEEM --> SOMETHING ELSE that creates more devaluation risks for users. You have two operations that are a source of risks, not only one.
Also considering that waiting 3 days in a so volatile world like SDB market is very dangerous, even more than wait for the average Crypto transaction.
This doesn't mean that I am bearish about this project, but in my opinion SP is not money and SBD is even more dangerous for sellers than Bitcoin or STEEM. Because you have greater devaluation risks (another trade to exchange SDB in STEEM and, before of this, 3 days to wait).
This problem could be at least in part solved by creating a free market for SDB similar to STEEM or other crypto markets, with crosses to FIAT or other crypto...
One major point you bring up is the desperate need for steem/fiat pairings. The fact that you have to go from STEEM to something else before going to fiat is a major drawback. Like you said, it increases the risk.
As for the volatility, we will see if/when that settles down. In general, that is one attack on crypto that cannot be disputed...the volatility of the tokens makes it difficult to conduct commerce. Over time, it should lessen a bit but it might not. That is why Bitshares created the pairs that are held at a dollar so that merchants can price stuff accurately.
For this entire arena, we are so early that it is hard to tell what will unfold.
Yes, of course we still are in the early phase. We don'k know what kind of regulamentation we will have, we don't know how will crypto-markets evolve in the future, and we don't know what kind of developement will affect crypo protocols and token management.
Here we hare having some theoric talks, we are triyng to predict the
unpredictable...
Lol @ rolling papers 👍👍😂 good call
Of course, that is a shout out to you...
Or are those budgeted into your spending like the electric bill? LOL
No... but weed certainly is... $450/ month
As I have written above, in my opinion Steem Power is more similar to an investment. 3 month to cash out is really too much, and SP creates the possibility to get new cash flow with network influence and upvotes.. Just like a financial security
I like that it takes 3 months.. it forces me to save... which only makes me more in rewards..I only invest what I can afford to so powering down and cashing out isn't really a option until it's life changing money... in which case I got 3 months
I perfectly agree. Slow cashing out is a good resource to give stability to steem network - although it cannot control market volumes and it cannot completley bring down the steem supply in the market, particulary in moments of panic selling on exchanges.
I was simply pointing out that you cannot consider Steem Power as money, because its concept is very different from easily-available store of value. It is something different, more similar to "investing" as you said
Everything you say is true. There is a tradeoff between security and speed. Decentralized is not as fast as centralized. Therefore, we need to take a hard look where the capability to handle large number of transactions is going to come from.
As for the power times for redemption, there are a couple factors I would like to point out. To start, SP and SBD have the requirements, STEEM held in the account as that is liquid and transferable in the moment. And SBD is only a 3 day wait if you want to cash it out...we have the ability to transfer it to another which means purchases can be made. Finally, there are a host of transactions people make which they know about more than 3 days in advance. My electric, internet, insurance, rent, phone, and other bills are known. I also have an idea of how much I am going to spend a week on lunches, gas, and other expenses.
While STEEM isnt the total solution, there is no reason why I cant foresee people having some STEEM in a wallet on a phone for "walking around money" while having other steem set aside for bills (if it evolved into true money that is).
Yes, this creates a difference between narrow and broad money. I have considered this possibility.. What I was pointing out is that this system is a bit obvious. Increasing steemit safety by slowing its cashing out time is something that can do any crypto. Bitcoin too, for example, would have a new rule (via hard fork) that forces users to wait some time before of being able to spend received sum. By this point of view steemit is not a tecnologic evolution. It is simply a different balance of this tradeoff using blockchain.
Obviously, we also have to consider the other aspects such as steem volatility and similar problems for using steemit as money. I agree with what you said in your reply, i am simply saying that we have to consider the difference between STEEM narrow money and SBD broad money.
By the other hand, steem Power is more similar to an investment in my opinion. 3 month to cash out is really too much, and SP creates the possibility to get new cash flow.. Just like a financial security.
Try to withdraw a bigger sum of money from your bank. Or to send some money to a different continent.
Those are two great points.
I imagine getting more than $10K cash out of a bank on a given day is not possible. And if you want $50K, cash, call ahead.
The other continent is something few like to discuss. I guess because so few of us actually deal with overseas money personally. However, in talking to people in the US who are from other countries, it is a nightmare (and expensive) for them to send money home.
It will be interesting to see how this all plays out. STEEM has attributes that make it very attractive...it is just a matter if the general public eventually picks up on it.
Surely less than 3 months required for SP.
The 3 days required for SBD are a different question, but still we have to consider that SBD are broad money, non narrow money. For everyday needs, you anyway have to hold some liquid STEEMS. So, this is a very hard question to analyze....
The main benefit of SP is that protect you from making stupid moves while listening to mum's basement crypto experts with no skin in the game. At least that's the way working for me. Besides rewards, of course.
I perfectly agree. Slow cashing time seems to be a great thing to give stability to steem network - although it cannot control market volumes and it cannot completley bring down the steem supply in the market, particulary in moments of panic selling on exchanges.
It protects you from doing some stupid things and forces you to adopt a long-term vision, that is very important for the evolution of steemit network.
We also have to consider that the utility of steem power to get new cash flow by using influence and upvotes gives the possibility to calculate the fundamental value of a STEEM token, that is very important to create the theoric possibility of a market stabilization near to this theoric value.
I was simply pointing out that you cannot consider Steem Power as money, because its concept is very different from easily-available payment instrument. It is something different, more similar to a form of medium-long term investment/(maybe)store of value
Great comment....you are correct.
Too many believe what the talking heads on TV (who have no idea what cryptocurrencies are all about) are saying and follow what they say.
It is really sad.
And part of the reason I am torn by the elite versus the populous. While I cant defend the elite, the average Joe simply makes it too easy for them because he fails to pay attention to anything that is going on and believe what is on TV.
Exactly , Steem has safest wallet in the world..and no transaction fees..these are best advantage of steem..... but the main problem now...is that we can not buy steem directly from bank account...we need to buy bitcoin and then convert it into steem,,, lot of money got waste in that process....i have heard about CEX.io and changelly but they have limits......so in this sector steem needs improvement.....as always nice post @taskmaster4450 ..thankyou
A very valid point @kartiksingh.
That is a major drawback at the moment. STEEM needs direct conversion from fiat. I am not sure the central exchanges are doing it....since the steem blockchain is a decentralized exchange, I can only hope someone adds to the code and adds that in.
hope ...this will change soon..
Hard to tell when things are going to happen. I just know there is a lot going on.
And someone mentioned something like that could get some developers hopping to create it.
We just never know where a solution will come from....that is what is wonderful about the ability to innovate on the blockchain.
I'd like to see things like "SteemPay" cards and "localsteem.com". There is no reason btc should have an exclusive in those markets. I do believe it will come eventually, just a matter of when.
I agree with kartik that we cannot buy steem directly from our bank account. This is very frustating to me. I have to wait for Xfers, an internet banking so that I can send money to coinbase and you know the process. I wished I had made an account with Bittrex earlier.
@Zappl (and others are working on it). https://steemit.com/steem/@zappl/getting-steem-and-sbd-traded-with-fiat-pairs
This is why (in my mind) Steem is already at 100usd!
Me too....
So you are like me, @skytrex, working on STEEM going to $200? LOL
There is no reason it shouldnt follow up on multiples!
This post is like all your posts. Very useful
Don't forget I'm a beginner .... I've had a lot of questions in my mind: why is there a better coin than another?
... I'm still looking for the answer.
But now I have some knowledge of security, and I know why Steemt is using several keys.
thank you ... @taskmaster4450
To start, do not separate out a coin (token) from the blockchain. That is crucial when looking at different coins.
What is the purpose of the blockchain?
What is the talent involved with that project?
What are the characteristics of said blockchain?
With STEEM, along with Bitshares, one big advantage is speed of the blockchain. The transmission times are some of the fastest out there. BTC and ETH are struggling with their volumes of late because they cannot handle but a few transmissions per second. So when discussing functionality, this is an important point to consider.
STEEM has the speed, security, and use in terms of being a disruption to the social media/content creation market. This is why it exists. To me, that is a big arena which can net tremendous results.
thank you ..@taskmaster4450 You're drawing me a way to search.
. now i have to find a lot information about :
What is the purpose of the blockchain?
What is the talent involved with that project?
What are the characteristics of said blockchain?
.... it is good
Asking these questions is how you tell a good token from a "shit coin".
If it doesn't really solve a problem or at least make significant steps towards doing so it is bunk.
ofc you can still make cash off of bunk coins if there is a market for it (crypto kitties) or if you can spot a coming pump and dump.
This is what I'm dealing with as a business owner in terms of using bitcoin for sales...
Bitcoin is no longer practical for everyday use. Still a great SOV, but you really need to move a few thousand dollars worth for it to be worth it.
The cheapest fee right now is about $5.00 but it might take weeks to confirm. Some are saying that it could be stuck in limbo forever (or until LN, Schnorr sigs or Liquid come online).
Thanks for posting that @zoidsoft.
I agree with you about BTC.
None of that is a problem if you are sending $50K to a supplier overseas...it does make it difficult to buy a book online. SOV and larger transactions (in terms of dollars) is where I see BTC ending up.
Buy a house, boat, or car...btc is great. It isnt very good to pay for your gym membership.
That is food for thought...
I've been doing a lot of reading and security is always a point that's brought up. Especially with exchanges getting hacked on a regular basis... as long as you stay powered up you are pretty much safe.. that's a great benefit.. another quality post as usual good sir..
Yes being powered up protects you on here...unless you go weeks without logging into your account.
Of course, as was mentioned about, it does not make it very desirable if you need the money now. There is a trade-off for that security. However, how often do we encounter stuff we spend on that isnt known? All our bills are pretty much standard on the amounts and time. One only needs a bit of STEEM on a mobile wallet for walking around money.
The fact that Steem is the busiest blockchain, has next to no utilisation of its potential, at the same time as the fact it can have applications built on top of it, as well as the ability to restore accounts means that it is destined for great things.
a) It can b e used to transact
b) there's not immense adoption at the moment
c) there's a small market cap.
The other token that is likely to have a bright future on the same line is EOS. I wrote a post last night how scalability is everything.
Steem is destined for fantastic things.
I agree 1000% @holoz0r.
My view is that STEEM will be a top 10 currency because of what this blockchain offers. You are right about having the most traffic and, yet, this blockchain isnt even working hard. Ethereum is close to the same number of transactions and that blockchain is zapped (and not zappl zapping lol).
The potential on here his massive.
As for EOS, I am not in that one but I have a load of Bitshares (another Dan blockchain). It seems be is simply building better mousetraps (or is it micetrap)....
The next fork should put steemit on target to chase after Reddit and lure a ton of those people over since we will then have the "communities" feature which is being modeled, if I understand properly, after subreddits.
The for 4 months of 2018 will be very interesting for STEEM.
Dan's behind EOS as well. I feel I've missed the boat with BTS, but I am all aboard the Arise ICO built on top of BTS.
Your content has been consistently insightful, intelligent, and easy to consume. I look forward to continuing to read it as we watch an ascent of Steem up the marketcap, to match its utility. :)
The Church of Dan: STEEM, BTS, and EOS.
I understand about BTS but I feel the train is just getting started, Yes it is up 10x from 5 cents...but this is nothing. BTS is easily another 100 banger from here.
I feel the same about EOS as you do about BTS which is ridiculous. Even at $10, EOS is still a steal.
All of these, in my opinion, is going much higher. These blockchains are simply too good and offer too much. Plus, unlike many, they have a lot going on.
Stuff It, I just got some BTS :)
I think you will be a very happy camper with that.....
Even @stan keeps talking about the goal of 1000 fold from the 5 cents range...since we are only at a 10x, I can only conclude, he sees $60....
Not bad money for $.60.....
If it hits that, then my small investment will be a pretty large one. :)
Woah. Learned a lot here. The transactions per second...I knew nothing about before reading this. I am so new to crypto currency, it is tricky to understand. Kind of mind blowing!! Thanks, as someone new I find your blogs really helpful. Merry Christmas to you and yours <3
Thank you for the comment @karenfoster.
Yes there is a lot to learn. However, just keep reading and learning. It will come. None of us knew about this when we first encountered it.
I try to write posts that help people learn stuff they didnt know about steem, crypto, tech , and what is going on with it all.
I really do hope it helps people who are reading.
So much reading to do! Glad I am here:)
They do help a lot.
Price will be at 10 dollars in 2018
As I just wrote, my projection is $100 by the end of 2018....
I have $10 by St Patrick's Day.
Yes, I also have more confidence in Steem as time passes, I think it is a sentiment shared by a large part of the community.
The high cost per transaction of BTC and the excessive duration of the operation, make other cryptocurrencies such as LTC have a lot of flow due to a BTC-Altcoin-FIAT triangulation, but in this transaction it is quite usual to lose money. In addition, with such a high rate, it becomes impossible for the BTC to access people with little capital (which is a huge market, practically all countries outside of Europe and the USA), making it impossible to use it on a daily basis.
It will be necessary to be attentive to the market, and not underestimate the new cryptocurrency that may appear during the course of next year.
Very true @vieira.
We are very early in this game and a lot can change. For years we heard how Bitcoin is digital money and, to a degree, it is. However, it does not appear that it will be everyday digital money. Therefore, something will have to step in. Is it a known token, one that will be developed, or, I as ultimately believe, a combination of many tokens being used for many different purposes?
The last thing you said is what is having, at least from my perception, more prevalence today, after all, it is a decentralized trading system, it does not have to be reduced to just one cryptocurrency.
But it is still a very new market, there are still many surprises and unknowns, as well as many possibilities.
I've heard of a mobile wallet that is in the work a while ago. That and fiat paring are the first steps in order for steem to become actual currency . And if SMTs will be easily exchangeable into steem, then we should prepare for lift off :)
It appears the SMTs will have the same properties as STEEM in regard to the built in security (from what I understand).
FIAT pairing is crucial yet I havent heard of anything about it outside of @jerrybanfield mentioning it. I wonder if someone is working on it.
Zappl Inc are working on steem/fiat pairing:
https://steemit.com/steem/@zappl/getting-steem-and-sbd-traded-with-fiat-pairs
Yes I recall that now after seeing that post again.
Those are outside exchanges which will work...I still would love to see something on the Steemit internal exchange.
Oh I see, but outside exchanges would still be useful for the near future