Is Steemit bound to stagnate and stifle its own user adoption?
Maybe this has been discussed before, but if so, anyway, here is my take on it.
There are some interesting dynamics at play in steemit which are similar to Bitcoin Mining.
Bitcoin Mining Dynamics
When there are too many Bitcoin miners (and/or there is too much hashpower in the network), mining becomes more and more unprofitable, so miners leave or switch off their hardware. However, when too many miners leave, mining starts to become profitable again, and miners join in once more. A balance is achieved. In Bitcoin, this is exactly how things are intended to work.
The dynamics are very similar in Steemit, only on the social level.
Steemit User Activity Dynamics
When many new users join the network and actively participate, it will (without further outside investments into the platform at the same scale) become harder and harder for everyone to get a $$$ piece of the cake. This may make many users (who are mainly in for the $$$) lose interest in the platform and leave again.
Now it may become easier again to get a $$$ piece of the cake, and more users may join in once more.
The Dilemma
This is good of course, however, it seems that there is a sweet spot of an ideal number of users, past of which steemit can't grow. And this is ought not to be an intended effect of the surely well-meaning inventors of this platform.
The various stats lately seem to prove my point:
See more charts e.g. at https://steemle.com/charts.php
The Conclusion
In my opinion, this dilemma can be resolved if and only if steemit becomes a valuable social media platform in itself where the $$$ disappear in the background and become a less important factor. In this aspect however it must compete with the already strong network effects of the other longer established social networks out there.
Your thoughts and opinions? Discuss!
More users = more demand for Steem. More demand for Steem = higher Steem prices. Higher Steem prices = higher payouts.
So it's not true that more users means the pie gets divided into smaller slices. The pie grows as users grow.
The reverse is also true.
Given this, there should no limit on the number of users that can be supported and fairly compensated.
How does "More users = more demand for Steem"? How is it that "the pie grows as users grow"? Doesn't that require influx of investment capital?
New users want to have influence here. They want a voice. They want their voice to be as loud, or louder, than many other folks here. They also want curation awards.
To have influence, and to earn decent curation awards, they must have Steem Power. To get Steem Power, they must get Steem. To get Steem, they must buy it or earn it. Buying it is often easier and faster than earning it. So, many will buy. I did, and I know a great many others who have also.
So, many people will buy it so that they can have influence.
And, it doesn't take a lot of people buying to have a huge influence on price. The liquid supply of Steem is very limited. 97% of Steem is currently tied up in Steem Power, so only 3% is available to be readily bought/sold.
Then we agree after all that it requires influx capital, we only disagree to the extent it will happen. Yes I know users are definitely incentivized to invest. But damned if they do, damned if they don't. The discussion of this aspect will require a follow-up blog post.
I don't think of it, as you do, in terms of "investment capital". I think of it simply as "demand for Steem", with that demand being driven mostly by a desire to be influential rather than a desire to earn a return. People want Steem Power, and will buy it, for the same reason that people want and buy tokens or "powers" in video games.
Neat analysis. I don't know about the technical/growth aspects but agree that a shift in emphasis from posting for rewards to sharing quality content is what this site needs. It feels like I'm encountering sales pitches everywhere!
Excellent post!