☜❶☞ In network Steemeit in crisis?

In may 2016 the beginning of the social network of the new generation Steemit. The founders Steemt Dan Larimer (Dan Larimer), his father of Walls Larimer (Stan Larimer) and Ned Scott (Ned Scott), has positioned its product as a decentralized social network of new generation, free from the rigid censorship of Reddit and Facebook.

Steemit based on a decentralized blockchain is the platform of Graphene II. On this platform based network Bitshares. Validation and mining of Graphene II combo – delegated POW and POS (validation is performed by the witnesses for whom the voice of the members of the network). According to the co-founder of the network of Dan Larimer, speed limit transaction platform – more than 100,000 transactions per second, which is comparable with the performance of Visa and MasterCard. Steemit is not entirely decentralized, but rather a hybrid system. All the transactions are in the blockchain, but the published content is stored on conventional web servers. Financial system Steemit consists of three cryptocurrencies:

• STEEM – user token or token
• STEEM POWER (SP) –token-action
• STEEM Dollar (SBD) – credit token.

What was

After the news about the remuneration of the users at the end of June, began the rapid growth rate STEEM.

1 to July 20, the market capitalization Steemit rose from 18 million to 392 million dollars, and for some time the ecosystem Steemit was the third by market capitalization, after the networking Bitcoin and Ethereum. Peak price is the main cryptocurrency, STEEM, reached 4.5 dollars per unit. Success has not prevented even the scandal of hacking of accounts and theft of users ' funds in mid-July. We must pay tribute to developers, the problem with the hacking was quickly resolved and the stolen funds were returned to their owners.

Awareness of the system increased dramatically. Users are attracted by the opportunity to earn without investing. All that was required from the participants is the creation of your content and commenting on others. Sharply increased payments of remuneration to the members of the network.

This caught in the network of a large number of new participants, including well-known media persons, such as Rickard Falkvinge, Roger Ver, Charlie Shrem and others, created a secondary network effect.

July 20 in Steemit there were 10,000 members, and on the 20th August the total number of users exceeded 60 000 people.

However, after reaching a peak, began a decline that continues today.

Only 4 weeks of August, the price STEEM fell by 40%.

What happens to Steemit?

Overvalued market. After the news about the remuneration of users in early July appeared some excitement. Social network with 10,000 users was estimated at 392 million dollars. Of course, such capitalization can be sustained only with the explosive growth of the number of users, otherwise the price was bound to fall.

The number of users growing, but the growth rate is not even enough to maintain capitalization at current levels.

Offer coins. More than 90% of capitalization is concentrated in the Steemit SP tokens that are not sold in the market and users can convert them just by using the Power Down procedure, which takes two years once a week Power Down converts the full amount of SP on the account, divided by 104 (52 weeks*2 years) and the payment of it in STEEM.

Liquid STEEM is the sum of SBD convertible into STEEM and the number of Power Down. In the past three weeks, the amount of liquid STEEM increased from 2.84% to 3.96%. This means increased supply of liquid STEEM on the market by 61% in three weeks.

This increase in liquidity suggests that owners of large accounts ("whales" in the terminology Steemit) mass start Power Down. This process will continue in the future, although the impact in the future will decrease.

Demand for coins

The content produced by users Steemit remains specific. Attention is focused on the topics of cryptocurrencies and the ideas of anarchy. Recently, the "whales" are trying hard to change this distribution in the direction of greater diversity, but in the short run it limits the growth of the user base.

In addition, in the last two weeks there has been a fall in the number of active participants (hosting the posts and commenting): from 8 to 14 August, 21 000, with 15 to 21 August, 16 000. However, this decline may be due to the active struggle of the developers with bots automatically voting for prospective posts.

The negative aspect is the increased demand for stable token-SBD – this is another evidence that "whales" do not send your SP on the maintenance of content, and accelerated withdrawal from the ecosystem Steemit.

What will happen

Social network Steemit is still in beta stage and its economic model is constantly undergoing changes. Since the problems described above in the near future will not be solved with high probability fall in the price STEEM will continue in the short term. This, however, does not prevent to participate in the work as a content Creator, because it does not require investment, and about half of the compensation is paid in a SBD – stable tokens, the price of which is tied to bitcoin and the dollar.

Cheap STEEM can be used for the procedure Power Up – conversion STEEM in SP with the aim of enhancing the capacity in the voting and the reputation of the user, but it is advisable to buy upon reaching the bottom, as the depreciation continues.

Some critics Steemit compare its economic model is a Ponzi scheme, pointing to the inflationary nature of STEEM, but in this case, the financial system, for example, the United States also can be compared to a Ponzi scheme.

Ecosystem Steemit built on stimulation of consumption - policies pursued by many developed countries. The difference is that Steemit is a very small ecosystem. Even if the economy of a small country – the sea, Steem can be compared with a home aquarium, and the negative processes in small ecosystems are evolving much faster than in larger ones.

The collapse of the value Steemit is a crisis comparable to the crisis of Ethereum, the only reason for it lies in the economic model of the network. Can the system withstand this test of strength, will show the near future. 

Source of information:  https://bits.media/