The Future Growth of Steem. Value Increases Require Successful Social Networking & Functional Utilities Based on Steem.

in steem •  2 months ago

The significant drop in the value of Steem that has been seen over the last few months can be somewhat attributed to the drop in the value of cryptocurrencies in general over the period, but there is another important factor involved here too. Steem is a utility token, not just a method of value exchange and the factors involved with the social networking aspect of Steem directly influence the interest investors have in buying and holding Steem...

As you can see, the price of Steem has dropped from around $7USD to around $1USD in 9 months:

steem sep 2018

While Bitcoin has dropped following a similar pattern over the same time period, it has retained its value far better than steem, only dropping down roughly 50% over the same time period:

bitcoin sep 2018

Why has Steem dropped so much more than Bitcoin?


While this is not a simple question to answer, due to the many factors involved. It is likely that a large part of this is due to the reality that:

a) The design of Steem guarantees that a significant percentage of the money used to buy into it as a token will gradually seep away into the hands of both the posters on the Steem blockchain and also the Witnesses that run the blockchain - resulting in a gradual drop in value without continued investment.
b) In order to sustain this model, ever more investment needs to come into the system from users who gain value from the blockchain and who therefore are happy to pay into it and for some of their investment to go to others.

In the last year we have seen very little obvious changes and improvements to Steemit.com and while we now have a date for SMTs and other key changes to be launched (early 2019), this needs to materialise before investors are likely to get excited about it. The difficulties that new Steem users often have in both understanding the system and in attracting a level of post reward payout that they consider reflective of their efforts, compounds the issue and is part of why user retention levels on Steem are so low.

Without a sustained growth in user activity, we will not see the type of sustained ignition that investors are looking for.

Many have posted already on the topic of 'whales' using the reward pool as nothing more than a machine to generate profits for themselves, with no consideration for how this may influence the growth of the network and its Public image. I think we are now seeing, partially, the result that is inevitable when those with the most power in a system do not recognise important details of the system and what growth factors are needed. The situation is not unlike a gardener failing to understand that it is not enough to just pile in fertilisers and then try to take as much food as possible from the soil - he/she also needs to nurture and work with the whole eco system around if optimal outcomes are desired. There is a chance that the planned 'Community' features for Steem will make the issue of 'whale exploitation' a bit less significant, we shall see!

Positive Changes From Those with Vision


Despite the somewhat bleak current state of the network in terms of token value, there are promising signs coming from many directions. Now that Steem is over 2 years old we are starting to see some apps, schemes and businesses springing up that really demonstrate some of the strengths of the Steem blockchain, beyond a simple method of blogging and getting paid. For example, here are some of the projects that I am excited about currently and that I recommend keeping an eye on and supporting:

  • Steempeak - A next generation social networking site that uses the Steem blockchain in the same way that Steemit.com does. The features on Steempeak are leagues ahead of Steemit.com and it works quickly too. It greatly improves the experience of networking and engaging in the Steem community, so as more people learn about it, I expect it to greatly aid in the growth of interest in Steem in general.
  • @oracle-d - A marketing project put together by @starkerz and @anarcotech that brings top writers on Steem together with businesses and groups who want to market their ideas to the world and gain traction with the search engines (SEO). The idea is that companies/groups can buy several hundred thousand Steem tokens, hold it in their wallet and then use it to upvote the writers that produce blogs to review and promote their products/work on the blockchain. Steem has a good profile in Google, so having a good number of blogs written about a topic on Steem can produce great results in Google for the project in question. Not only this, but if the price of Steem goes up during the marketing period, then the marketing company can actually MAKE money from their marketing instead of it costing them anything! Pretty ingenious!
  • @promo-steem - Another project from @starkerz and @anarcotech that rewards Steem users who creatively promote Steem, bringing in traffic, new users and investment.
  • @fundition - Fundition.io is a crowdfunding platform based on the Steem blockchain that offers ZERO fees! This is a first in the world of crowdfunding and has the potential to draw in a lot of attention from the world and also investment into Steem. Now we can combine a large community of people with the ability to easily transfer money to each other and reward projects through upvotes - plus present projects in a modern way, such as has been successfully done on traditional crowdfunding sites already. I already blogged about Fundition here.

All of these projects creatively add value to Steem in novel ways that, when combined with planned changes to Steem itself, in the form of the new Community features and Smart Media Tokens - mean that there is a very real chance that Steem will truly be launched into a new level of success soon - maybe in the next 6 months.

I don't make predictions for crypto prices as there are so many potential variables involved that to do so is a waste of breath in many cases, but I remain confident that the moves being made now will pay off soon - as always with Steem though, the real level of success depends on all of us and the decisions we are making on a daily basis!

Wishing you well,
Ura Soul


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Hey @ura-soul! Really appreciate the mentions of our projects in ur blog! It’s great working with u so far and thanks for ur envolvememt and contributions in them so far! We really believe that steem has potential, it just needs people to realise that almost every single project on it today is based in a socialist mentality of getting rewards for adding very little value and certainly not encouraging any investment at all. I hope that people will follow our example and especially if prominent steemians such as u wrote about there ideas we will see more mechanisms set up to bring investment into the steem eco system

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I agree value needs to flow in!

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You are welcome! I think the 'leaky' nature of Steem means that no matter how much investment comes in, the amount that is paid out will always reflect that investment amount. So yes, it is very important that the community provides value for investors in some way and ideally in ways that are novel and unique to the platform. Anything that leverages the power of the community into a win/win/win situation is .. well.. a winner! :)

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Certainly. At the moment it’s a win/win/ lose. I know the tide is changing, and our community will be coming up with ways to create value and require investors to hold the steem token in order to access that value

Very much appreciate the support for what we've been up to @ura-soul. We believe in the power and the potential of this blockchain, and want to do our bit to add value to it. To have prominent Steemians like yourself supporting what we do is a great motivator. Thanks man.

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You guys rock! Naturally, you guys would get support from the best!

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You are welcome! Keep up the good work!

Just started using SteemPeak today! This is my first ever comment on it

image.png

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Nice! Oh, it has a night mode already - just saw it in the settings.. Even better!

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SteemPeak has so much potential and I'm trying it out right beside Steemit.

BUT

It still only has two interfaces both of which I find unusable - grid (wall of noise) or massive great pictures way too big to scroll through.

All I want is Steemit list view in dark mode. Most of the other stuff I already had with more info on Firefox. And I want to see small size clean lists of my comments and replies - just like on Steemit.

When it gets a list view like Steemit, I'll switch over in the blink of an eye. But at this point it just doesn't work for me.

www.frot.co.nz

Without a sustained growth in user activity, we will not see the type of sustained ignition that investors are looking for.

It is funny to look at it this way, purely looking at the design we need a continious stream of new users buying steem for the value to go up as there will always be people who sell steem because they need it or simply wants to do something fun with their earnings.

I am glad to see promo-steem and @oracle-d in the list of getting sustainability to the network!

Great article! Resteemed, all Steemians should read this.

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Thanks!

I still have trouble understanding the mechanics of Steem...

The design of Steem guarantees that a significant percentage of the money used to buy into it as a token will gradually seep away into the hands of both the posters on the Steem blockchain and also the Witnesses that run the blockchain - resulting in a gradual drop in value without continued investment.

In the "real" world, is this what we call inflation? A word which few people truly understand. As I understand inflation, it is simply caused by printing more money by the central banks. Who get to invest first with this new money (they created out of thin air), and as this money passes on out into the economy, each successive "investor" (user) makes a little less off their investment than the prior user due to inflation.

  • Total "worth" of a currency (marketcap) divided by total amount of currency = the worth of each individual currency, be that a USD or a Steem token.
    • If we took away the market factor, and our tokens were "static" in regards to the last equation, would an investor in Steem still lose value?
      • Yes there is inflation (additional printing of tokens), but some of that inflation shows up in everyone's wallet, even on delegated SP.

I guess one reason this believer in gold and silver, likes fiat Steem better than fiat dollars is at least I gain a little bit from inflation (printing of more currency). If I hoarded a paper USD in 1916 when the US Treasury turned over our economy to the central bank, I would have seen that USD lose value and it's purchasing power only be about $0.03. The central banks have basically robbed 97% of the value. Hoarding paper currency from any central bank is a losing proposition due to inflation.

  • I think hoarding Steem is perhaps less of a losing proposition, looking from the perspective of removing the change in value due to the market.

Am I missing some basic piece of the puzzle in my thinking?

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Without a market, there is no way for the price to change, except for creating new tokens - which would always result in the price dropping (Except where tokens are destroyed). As long as new tokens are created and distributed to others, an individual's own holdings will be devalued. At least, that's my understanding ;)

While the price of Steem hasn't been the best, make no mistake the intrinsic value of the Steemit ecosystem has increased. This value will be reflected in the price eventually once crypto projects are valued on anything other than speculation.

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I completely agree with what you said here. Price and value are not the same thing, value can be high and yet price low. As with steem currently.

What makes me confident with steem is that BTC just influence its price a lot and so it seems like steem will have a bright future regardless of the current situations and problems it is is facing @ura-soul

Steem is now less than Dogecoin Marketcap. I don’t get it.

Posted using Partiko iOS

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Dogecoin tends to have large peaks every year or so and then fizzle out again, I'm not sure exactly why!

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I looks like that.. I need to do more research

Posted using Partiko iOS

We are in a real, small renaissance period for Steem, there are a lot of promising projects on sight.
I personally would love to see that oracle technology implementation and canceling SP to regulate whale behavior on the network, but anyway there is so much potential on this blockchain, we shouldn't be just glued to the fact that UI is not so good, as people often state it as a number one problem.
We should think long terms :)

You are always great. I like your writing the most.

Will steem value high at the end of this year?

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Hopefully it goes to $1

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