So who is actually paying the Steemit bill?
(Source: http://www.entrypoint.cz/)
When I started here in early July, I was pretty sceptic. I had not known very much about Dan or BitShares, but the BitUSD pegging mechanism seemed unfeasible to me when I looked into it at the time, so I was negatively biased when I saw he is behind Steemit. In my view, you can't peg something with a market price of its own (USD) to something that has no real use besides pretending to "back" a peg and the "other uses" for BitShares seemed insufficient to me to give them enough value to sustainably back the USD peg (I still consider BitUSD to be a failure, though I've heard claims to the contrary, but that's nothing I care about and as for Dan, I'm a big fan now, after having read his contributions here).
Plus, I am invested in Synereo since ICO and was expecting them to be the first blockchain-based social media project to go live. That turned out to be helpful, because I am convinced, that the concept of "attention economy" I knew through them can be executed in a profitable way. So when I thought that Steemit was going that path, I eventually turned from sceptic to optimist. I actually turned to a full blown Steemit enthusiast, but not for financial reasons, but because I simply love to be able to get crypto-noobs interested in crypto and offer them a risk free way to get some first crypto-experiences. I also love Steemit, because it is no direct competitor to Bitcoin and is thus very inclusive, unlike other projects that "attack" Bitcoin or any other competing Altcoin.
Experienced crypto investors like myself would take the risk and profit later, when Steemit would have reached enough users to attract advertisers to pay for the attention they need. I knew it would not be easy, because (liquid) Steem is highly inflationary and I consider it more of an industrial commodity like copper and not a precious metal/monetary asset like gold or bitcoin. So you really have to need Steem Power to want to buy some Steem, because I was not willing to speculate that many people would just buy Steem to power it up to be able to reward others, as I did it for the tiny german speaking community. But I guessed that people who are used to pay for other peoples' attention (e.g. advertisers) would step up sooner or later and they would not care that Steem is copper and not gold, because they need it for their business.
Fast forward to today. In the past weeks, I had tons of discussions and I grew sceptic again, because in my impression, Steemit so far does not really seem to care about investors. It's all about content creators and about the "fair" distribution of rewards and whether whales are to blame for "dumping" or having "too much power". I could not care less whether whales dump or not, it's the lack of incentives to buy that has me worried, because to be honest, as an investor it started to feel like being the guy who pays the party and I was not really able to find many people willing to listen to my concerns. On the contrary, I had people with no real skin in the game telling me I was a nay-sayer and overly pessimistic or that I did not see how "investors" would come on their own, as soon as such and such amount of users where to be here and I was blind for not seeing that Steemit was the next Facebook. I also talked to a lot of people, who are extremely optimistic about Steemit, but oddly not enough to actually invest and they tended to not like it when I pointed them to that contradiction.
I also read what I could find and listened to Ned and Dan (most recently on the Tatiana Show), but I still don't feel that the problem I see is being addressed. For instance, the promotion field to me is a failure, because again, we seem to care more about people who want everything for free. Free from any financial risks AND free from adverts, so promoted posts are now in that little box noboby seems to watch, but at least the profane promotions are separated from the "valuable" content posts.
So I even headed back to Bitcointalk, a platform I had been so glad to leave because of its toxicity, to get some answers. You can say what you want about BCTalk, but at least it is not only happy talk there.
That's the result so far (I am Macno):
I actually really want this to succeed, so I hope someone is going to prove my scepticism wrong.
Maybe I am missing something or I am too impatient?
PS:
I propose the tag #investorsunite because we are important too :-)
Upvoted because you raise some valid concerns. I too invested in July, and I also get frustrated at the "everything should be free" mentality or the "we need everything equal and fair" line of thinking when they don't even agree on equality of opportunity versus equality of outcome or what "fair" actually means.
My feeling is we should all be more patient. This isn't like other pump and dump currencies. It's currently in a hyper inflationary period and only for investors who see the long-term value. Those who watch the price each day aren't investors, they are day traders. I've been as excited about Steemit when it was at $0.28 (when I first purchased), when it was at $1.00 (when I purchased some more), when it went up to near $5 (and I didn't sell) as I am now.
Is it possible no one will buy in the future? Certainly. To me, the main concern to any investor should be user adoption as that will drive the social media side of the platform which will then drive the demand for the coming marketplace for SBD and the advertiser influence. You may see the Promoted tab as a failure, but I see it as a step in the right direction and, being open source, anyone can make suggestions. If people aren't exponentially signing up, there's very little chance Steemit will put a dent in Facebook/Twitter/Reddit/Medium. The network effect is too strong.
That said, $0.01 reward for posting is better than anything anyone gets on the other platforms. I'm thinking long term and I think the Steem Power vested share idea supports those who also think long term.
Thanks! I completely agree with that comment and should have read it first, before I replied to the other one.
"To me, the main concern to any investor should be user adoption as that will drive the social media side of the platform which will then drive the demand for the coming marketplace for SBD and the advertiser influence."
I can imagine that and as I said, I might just be impatient. Maybe Ned and Dan are completely aware of all of this . The challenge is still that you have to make both happy, investors and users, because users are also not very happy if their rewards keep falling.
But I completely agree that 0.01 is better than anything else. I was joking with some Ancap friends that the worst case scenario would be to have some kind of Anarcho-Facebook where we have a censorship free platform and can throw Steem at each other just for fun. So I'm not scared, but I'd like Steemit to be much more than that (and I'd really like if investors where taken as seriously as whales, authors and users...).
The most important statement I have read on Steemit in the last 2 mo. I expressed this concern myself a while back. Hopefully, coming from a guy with more influence than me, someone will hear the bells!
Thank you soooo much! I had missed your article, caught up now, upvoted and added a few comments! So glad that we are at least two to worry. I was starting to doubt my perception...but it looks like it really is the elephant in the room.
Honestly, I mostly recommend people I know from other networks to post their photography and art here, but I usually explicitly recommend to not invest actual money (or a significant amount of time).
Steemit has to grow at least 10-15% a year in order to make up for its dilution and to be interesting for investors. So it's a speculative game, who knows maybe it will become as big as reddit or even bigger, as it also can provide other functionality.
well, in my impression, Ned and/or Dan sometimes doesn't sound very "inclusive" of Bitcoin, quite the opposite.
Same here when it comes to investment recommendations to people with no financial background. I never told anyone to do what I do myself (risk own money). What is more troubling to me, as a financial advisor, that I would not know what to tell a savy investor either. That's bothering me.
As for Ned and Dan and Bitcoin: ok, interesting. I will watch that. I had the impression that they both love BTC and Steemit would not even work without it.
My impression. They did it backwards..... They want the readers to pay. It makes zero sense to me, rewards should have been skewed more towards reading and making relevant comments. As it stands, a new user can read/love/and vote all day, but unless there is a highly unlikely set of circumstances they will never see $.001 SBD for their efforts.
Why the hell they want only authors? Makes no sense to me.
What do you mean by "paying"? If you don't attract people and give them good reasons to put Dollars or Bitcoin on the line, STEEM is not much more than Reddit Gold. It does not make much difference who gets the most Reddit Gold, does it?
If the "promoted" feature is such a failure, then why are hundreds of dollars per day getting burnt? Wasn't that the whole point of it? To create demand for our (us investors) product?
Imho "hundreds of dollars" is a failure. Do you use it or look into it? I haven't met anyone, but I'd be glad to be wrong. Plus: burning SBD is no incentive to buy Steem or is it? It's not the same as having to have Steem Power to get visibility.
The problem is imo that the Steem price is too volatile. There are only a few investors who want to buy Steem, power up and wait for 2 years bc Steemit is a really small start-up with a lot of competitors.
I see a pretty stable low vola...downtrend. Of course investors don't buy, but not because of volatility or competition (are you talking about Reddit etc or some Blockain project?), but because there is no investment case to be made, which is why I wrote the article. On what should an investor base his reasoning? Hype? Some metric of marketcap/user compared to Facebook? Well, I know how Facebook rewards their investors. On Facebook users earn nothing but risk nothing. Here it's users who earn and "investors" (it's more like greater fools) who pay - unless I'm missing something.
I see your points and from the beginning I've been mystified as to how Steemit could have any value without people investing money. But my understanding - and I may be wrong here because I'm new and not particularly "investor savvy"- is that there are 2 primary ways to invest in Steemit: time/content and money. I've believed that a large amount of the value of Steemit has to do with the quality of the content because the content will attract users and as soon as there is a critical mass of users, it's a more appealing investment. So by bringing valuable content, this is bringing an investment. Am I seeing things correctly?
I will also say that I've never spent this kind of time on any other social media. I do a lot of supporting of others' posts and commenting and as an author I know I'm not alone in spending many many hours on each post. I put a lot of myself in them so I sure hope they are helping!
The only social media plattform I spent more time on so far is the Bitcointalk-Forum, but it was not about earning anything there.
I also want to point to the funny fact, that people automatically seem to assume I am just putting profane money in this project. No, it's actually much (unpaid) time AND money. So now what?
As to your investment, I see your point. But maybe look at it this way: I myself could sit back and just "Invest my time" (that's actually what is happening, because I'm tired of spending time AND money, if "time" is also a "valuable investment" here). Imagine everyone was doing this? Who's gonna pay for the value you perceive in the content? I get better content elsewhere for free, just because there are some ads on the site I don't really notice and never click on. I neither want to be mean, nor hate, nor spoil anyones party. I just try to be realistic. I already made the cardinal mistake of "falling in love with my investment", because I really like the Steemit and I want it to succeed. I just don't want that love to completely cloud my reasoning and I know what I am talking about, because it keeps happening again and again.
Yes I understand. Financial investment is key here. Without good content there is nothing but without the money to back it, there is nothing either. Makes me wonder if all of us should invest financially even if in small quantity. Thanks for the food for thought!
What about seeing the investment as fixed deposit and the payment from upvotes/comments etc as a interest? But in that case investors need to "work" to get their investment back...
Well, I guess it works if you calculate your profits in STEEM. If I calculate in USD, EUR or BTC, I don't really care wether I get even more tokens or not.
Fabio, Thanks for this blog. I appreciate your thoughts and perceptive insights. I will be following our blog and hope to here more from you on related subjects going forward.
Thank you very much James212! Unfortunately my resumee of the discussion is that "yes, "investors" are paying the party".
Curious to hear what you think about this adding to the mix and potential of Steemit? I am on this team and think this will be a game changer for Steem.
https://steemit.com/steemit/@williambanks/this-is-a-real-game-changer
Wow! Thanks! Upvoted and followed!
Thank you very much for the information provided in this article. I is worthful for me. I am focused not so much in earning money. My primary intention is to post and to find someone who in can adress my opinion to.
Steemit is better than any private blog for this purpose. So I'm very satisfied for this moment. We will see wahat's going on. You never know.
now that the Steem Dollar has replaced Steem Power to promote posts, the incentive to buy Steem might be even less. I'm aware that people buying Steem Dollars also help prop up Steem price. but is it enough?
@ned and @dantheman need to develop incentives for Steem Power to become attractive, cos as you say investors are the fuel of the platform .
Upvote for raising a valid point. I've been wondering this for a long time now too and where the money comes from. I do not want it to become a place like facebook were it is flooded and you are bombard by adds that interfere with the user interface experience. Things like reddit gold or the small ads on top or on the side would be preferable. Also I really don't understand enough about mining bitcoins or altcoins to even fully understand how those have value you either though. So im not really one to understand crypto currencies in general. kinda frustrating having the lack of knowledge after I've read so much.
Don't worry, the Bitcoin/crypto part is actually pretty simple. Bitcoin has a simple selling proposition: being digital Gold, just as it was designed to be. It took years to get where we are now, still a tiny niche, but many have grown used to that idea and actually use Bitcoin that way so far. As for Gold: Imho there is no special reason it's gold and not platinum or iridium or whatever rare metal you could name. It's simply has become a tradition to see it that way, as a scarce "store of value".
It's with Steem, Steem Power and SBD that things get much more tricky. I've never seen anything like that. A kind of monetary token that is designed like an inflationary hot potato but has to support with it's price (the expression of the value people active in the market see) the rest (SP and SBD). That has nothing to do with other cryptocurrencies, it is much more complex, so don't worry there either.
Because it is designed that way and you only really need it to get in and out of the Steemit ecosystem, you need people to really want to get in to buy the Steem (you'll always find sellers if the price is high enough, so don't worry about too few sellers). Advertisers are an obvious choice but maybe I am missing other groups. So you have to be careful to give them enough incentives to pay to get your attention. Think of them as sponsors of the system, not as some nuisance like on Facebook. They don't pay you on FB, but they could do so here, by increasing the price of Steem and thus making the rewards you get more valuable.
Gold's value is actually quite practical, from an ancient world point of view, not many of the other metals you mentioned could be found on the surface, and gold, with it's resistance to tarnish and rust and ease of working, was a natural choice. It was easy to make things from, appealing aesthetically, and it lasted basically forever, unlike iron.
Ive read about more and understand it better now. The value goes up on each cryptocurrency based on the security of the blockchain created by the miners. value goes up the more rare each coin is for mining it.
I do like the idea of getting paid directly instead of the platform profiting from our data and I completely agree that the investors need incentive to invest. Yet I'm very mixed about the advertising still. Mostly because it so easy for entities who leverage money to take over a platform.
Once you let some of it in, then it seems to take over and dampen the user interface. It should be very clear and obvious were an advertisement is, I feel it is manipulative to hide the ads within all the other content. I was using facebook as an example earlier but I feel this has also plagued other social media platforms like instagram, twitter, youtube, and many other great platform that now have a dampened experience for me now. Reddit is still more or less classy with the way they do there adds. Craiglist is the most amazing to me cause I haven't seen any sacrifice in user interface to make more money. I believe though that there is a way to find a balance between these two things.