Steem is special for a blockchain. It delivers a working product used by end users and competes against old school social media companies as on open market driven approach. This is special because pretty much any other blockchain I know of is providing some sort of experiment or solution that is still in developement and hence speculative in nature, meaning we don't yet know if it will work and how.
- Bitcoin. Designed as an end to end currency has to go through development life cycle and be used by a large portion of society before it can become both store of value and currency.
- Ethereum: Great platform but so far no real applications that have shown to use it effectively with end users in a way that provides advantages over company approaches
There is nothing wrong with this; it is simply part of the development cycle of these techs and projects. We as steemians are just lucky we get to use this tech already in our daily lifes.
Steem is being used every day
Steem on the other hand is making money for bloggers commentators and other social media activities.
Significant is that while we have high transaction volumes vs other blockchains like bitcoin and ethereum these transactions are done by real end users. What I mean by that is examples like @sweetsssj who does not seem to be the averge crypto nut like most of us boys out here.
We can compare Steem to other social media solutions
So currently :
- Steem has about 100k active monthly users and $250m market cap
- Facebook has about 2B active monthly users and 485B market cap
- Twitter has 328M user and market cap of 14B
What are social media users worth?
Lets look at the market cap and divide it by the amount of active users. I have simply pulled the market cap from Google and divided this by the amount of active monthly users.
Steem: 250m / 100k = $2500
Facebook : 485b/2B = $243
Twitter: 14b/328m = $42.68
Snapchat: 17b/255m = $66.67
We can see a very high divergence between Facebook vs the other guys and Steem users are valued about 10x as much as Facebook users.
Steem user are 10 times as valuable as Facebook users.
According to the metric above, Steem users are as valuable as
- 10 Facebook user
- 40 Snapchat users
- 60 Twitter users
At first glance this may be un-realistic however there are a few factors that make it clear why Steem users must be more valuable:
1. Growth Potential
Steem is in its infancy relative to these other social media applications with only 260k users vs a few hundred Millions and Billions. As such Steem has a lot more growth potential and that is represented in the market, since the market does like growth potential like nothing else. It is almost impossible for FB to grow 10x while its possible for Steem to grow 2000x if it comes close to usage as Facebook and market cap (500b/250m = 2000).
2. Reward System with real value
Steem has an integrated reward system that is financial and infact provides a whole financial system. All social media sites have reward systems but they are NOT liquid value. This improvement can only be done with the technology of a blockchain and is an order of magnitude improvement over anything else we have as reward system. A Steem upvote is certainly 10x as valuable as a Facebook like to me. That of course is more of a believe of mine, but if true would mean that Steem given similar functionality should be worth about 10x as much as the other social media sites even without growth potential (i.e. 2B users would be worth $5T.
3. User growth
Steem is proven which is shown by actual users and sick growth. One year ago we had 20-30k users. Now we have close to 300k. That is 10x growth in a year. If this goes on we are at 1M in one year. That would also mean that the market cap of steem has to grow by 10x to 2-3B. Take a look at the growth that @penguinpablo has shown with his data. Now check your account and project what it means for you personally. If the number is not impressive maybe you should buy more Steem. The actual growth and the growth potential of Steem is worth at least one order of magnitude.
4. Users own it
There is one key difference between the market cap of Facebook and Steem. Steem stake is owned entirely by users, while for Facebook it belongs to funds, investors and Mark Z. The value we create here goes directly back to us, or to the people we interact with that provide value to us with their social media activity. This is a much more effective and productive incentive structure and I believe is also worth an order of magnitude in terms of value.
5. Best Coin & Financial System
Steem has perfect connection between its different currencies and seperation and is an entire financial system that can replace the $USD and lots of banking and even bitcoin. It is the only blockchain I know with an effective stable coin (SBD) a great stake coin (SP) and the normal liquid blockchain type currency. This is much better than any other blockchain and way better than fiat money, likes and company shares. While the Steem coins are all directly connected (ultimately they are all Steem) they provide the perfect separation to do stable value, stake and rewards. I think this aspect is least understood and realized so far.
There are tons of other benefits but I wanted to focus on these most significant and structurally different aspects of Steem and its design.
It is not just the money
Money is always important, but to me personally the intangible things Steem has created for me really shows me that it works. A great example is my friend @surfermarly which I introduced to the platform. She has created content I would never have seen and this has led me to meet her in Vegas to celebrate just that and meet other steemians .
The joy these sort of things have created for me far ought weighs the value of my account to me.
I think Steem is cheap
However this article is about financial value in the eyes of an investor. I think Steem is quite cheap at the moment because I have listed at least 3-5 aspect that improve the value of Steem compared to other social media investments by an order of magnitude each.
- Steem has the potential to grow 2000x if it reaches the size of facebook
- Steem has a financial reward system that will trump any existing social media app with rewards that are no more than a virtual thumbs up
- Steem is currently growing 10x per year
- Steem is owned by users vs investors which should create better incentive to improve and innovate
- The potential to also be a global currency system due to its coin separation and super fast blockchain
So overall just one order of magnitude higher price than Facebook is way to cheap for Steem in my opinion and it is fairly likely that we will see a steem price of $10 within a year or two.
The most important thing to monitor will be usage and user growth which we can easily monitor (i.e. by following @penguinpablo). We can keep the comparison of market cap per active user as a benchmark to understand if Steem is currently cheap or not.
I would be very interested to hear your thoughts on the value of steem and its users.
Please upvote and share this article if you like it and comment if you have some thought about what I have written.
Thank you for your attention