Why Steemit is Keeping the Price of Steem Down
I've recently published an article, arguing that the value of Steem is not directly related to Steemit. The founders of our new social network, @dan and @ned, could've chosen any fiat or crypto currency for their project.
Some of you pointed out that there are charts, which show a direct relation between the number of users, posts and the price of Steem. This data is undeniably true, and will remain valid until more and more businesses adopt Steem as a currency of exchange - for example, I'm now offering my professional translation and editing services in exchange for SD, and there is already an eBay-like site, which accepts Steem, as well (do list any services that you know of, in the comments!).
As more and more services start using Steem, investor confidence will increase and so will the currency's price. At the moment, 1 Steem is worth approximately USD $0.50. People are publishing content and receiving (from what I've stumbled upon more frequently) anywhere from SD $0.01 to SD $250 (0.02 to 461 Steem or USD $0.01 to USD $225, at the current peg of USD $1 for SD $0.9).
Let's imagine the following. Steem goes up in price, and 1 Steem is worth USD $10, instead of the current $0.50. That's a 20 time increase in its value. So now, the same articles on Steemit would be worth SD $0.02 to SD $5000 (0.04 to 9220 Steem or USD $0.04 to USD $4500, again, at current peg of USD $1 for SD $0.9).
How many of you believe that an origami or mocaccino article is worth USD $4500 dollars? Don't forget, that's USD $4500 per day, as we see at least one of these articles daily. I'm not certain there are Pulitzer prize winners, working at these rates. Our content is not at all that unique, as compared to what's available on the net.
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"Unique" is actually the key word here. The price of Steem will never go up, unless we offer something unique in this currency alone. For example:
- Weapons-grade plutonium
- Cheap stolen merchandise
- Information of interest to the industrial or government sectors
- Illegal services, etc.
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As far as I'm aware, there's one major advantage of Steem over other cryptocurrencies - no tax for micropayments. Which may turn out to be a good way to launder illegally obtained funds, and hence increase the currency's price.
In the mean time, Steem will stay where it is, with the occasional hiccup, when a big investor tries to sway the market in a direction, which is favorable for him. For example buying huge amounts of Steem to drive its price up, thus convincing others to buy as well, and then selling at its highest price, effectively taking the money of everyone, who have fallen for his bait. Tricks like these further reduce confidence and the price of Steem.
Let's imagine something else. A new unique product or service is offered only through Steem. Someone suggested talking to J. K. Rowling and her publishers, to have her next Harry Potter book offered in exchange of Steem only. Chronologically:
- Steem price goes up, as millions of fans buy magical Steem.
- We get paid more for our articles, while this lasts.
- Steem price goes down to original values, as J. K. Rowling and publishers exchange Steem for a fiat currency (that's not magical at all, really).
So here's the second problem of Steem (and any cryptocurrency, really) - it's not widely accepted, and therefore we can enjoy high prices only for a short period of time. It's not by chance that Bitcoin's price went up - in addition to being used for illegal activities, there are now thousands of physical locations, accepting this currency. You get paid in Bitcoin, you pay for food with Bitcoin - no need to exchange, hence a more stable currency.
Let's imagine one more final thing. Steem becomes extremely popular and is used around the world. At a price of $4500 per article, how much time would it take for Steemit to become the biggest network, with the largest amount of publishers, seeking huge easy incomes? And if Steem authors make an easy buck, why would the milkman sell his dairy products for SD $1, when everyone is now making SD $5000? Yes, inflation will certainly kick in.
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To sum up everything so far - Steem will never become a valuable currency, unless we offer something unique. At the moment, its price is driven by the Steemit hype. Which is quickly fading, according to the market. And if we, by some chance, find something unique to offer in the long term, then some of us will become rather rich, before inflation kicks in.
Check out my latest articles:
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I offer Professional Translation and Editing Services in exchange for Steem.
Steem never dies, it just born. I don't think it is fading.
I never said it's dying. I said it won't go up in price, until we offer something unique.
Interesting post but must admit I don't know enough to make a professional evaluation. Good luck
Steemit will rise as the need for steem rises as you stated in your article. Steemit will be the face of crypto currencies as well as "The" social media platform for these reasons, enabling the market price to eventually rise. Now lets think about this..
Steemit is a social networking platform without limitations that enables traders, businessmen, home-makers, blacks, whites, russians, etc.. (Anybody in the world) to not only promote their idea or business, but also making a living while figuring it all out.
Steemit has the most up-to-date information on almost all crypto-currencies as well as hot topics around the world giving a "Steemit Education."
Steem Power allocates voting rights to those whom show improvement in the steemit blockchain. This is huge because voting will soon be decided by the blockchain and who better to be used as the voting platform than steemit?
Blockpay allows all merhants worldwide to accept most cryptos including Steem, SBD, and Steem Power.
Steemit puts a profile with the user/voter/bank and allows decentralized guardianship over accounts.
I could go on and on, but only time will tell!
I <3 Steemit! :D
I like your enthusiasm, and I hope you are right.
Steem Power is like owning shares of Steemit. The blockchain is not influenced by this. Maybe I didn't get your point? I've not heard of Blockpay, but if involves conversion from cryptocurrencies to fiat currency, then it only adds to cryptocurrency instability (price fluctuations). I also did not understand your final point.
The more users the less everyone earn per article. If steemit becomes mainstream top articles won't earn more than 50$ and that's if the price goes up. If the price stays around 0.5-1$ per steem then steemit won't even be able to handle all the new users.
The reason why rewards per article are so high today is because the community is small and power is concentrated.
Isn't that the function and purpose for steem power? Is the end game not to establish smart communities and putting a value on people, not money..? If steemit were to be infiltrated with enormous amounts of users then wouldn't it be ideal to lead people into a new belief system ( as to a new monetary system devoted to who you are ) and allowing others to grow with the community who are still further behind in the realm of steemit?
I'm asking because I am curious myself. I just see crypto currencies as an understanding between 1 or more parties with an agreement of exchange..
What is 'THAT' refering to?
"That" referring to a "small/smart community" based on a point system that re-generates ideas between the network as well as maintaining a specific instruction through function and log.
I understand your point - you are saying that we have less users and articles now, so articles get more upvotes at the moment and a better payout. If the there are more users and articles, each article will receive less upvotes and income.
But I disagree with this statement.
They way Steemit "works" at the moment is that users upvote articles from authors, whose articles usually get upvoted. That's how they get the best curation reward. This is also the reason why there are thousands of minnows and only several hundred dolphins and whales. This is also the reason why good content remains unnoticed. I've proposed a solution to this problem (it's on my blog), but the developers either didn't see it or didn't care about it.
Since author rewards are fixed at 75%, the only thing that will be reduced, if more users register on Steemit, is the payout for the curators. At a certain point, the income will be so low for minnow curators (it is already, by the way, but the hype is still here), that new registrations will simply seize. Also, as minnow authors increase, there will be less and less minnows who get "whale loving", which will be another factor to reduce registrations.
To sum up, given the current way the system is set up, the more expensive Steem is, the richer the dolphins and whales and the less interested the minnows will be in Steemit.
Daily rewards including curation rewards is a pool with a fixed number of steem. The only way to increase rewards is to increase the value of this pool and so increase the price of steem.
If the price of steem stay the same , the daily rewards in the pool stay the same so if the number of users increases everyone will receive less rewards.
I think the current pool amount is about 150 000$ daily for about 5000 user daily. That's about 30$ per day per user.
Now imagine there is 1 000 000 users daily and the price of steem doesn't increase, that's 0.15$ per day per user.
So can we not increase the size of the pool by adding value to steemit with a variety of content and goods to the platform.. Eg)
goods, services, virtual stores ( a virtual and physical world ), certificates, achievements, ideas, etc... Basically anything you can put a price tag on adds value to the platform (smart assets), all which can be traded for steem power and allowing steem to grow as a smart city. Steem Power would act as a key or ticket whereas steem or sbd would be used to obtain those "keys or tickets"
How about for every dollar that is used to cash out deducts 1 steem power?
This would deter me from cashing out and also enable more users to figure out how to pay with something other than cash or card.
Idk..Just throwing out ideas!
I'm not certain I understand: