This was a comment posted on the latest video on my YouTube channel, which is my Introduce Yourself video -- which, by the way, was very fun -- thank you all for being so positive and responsive! I love the comments, questions, and the overall optimistic attitude.

The comment left on the video brought up a common concern that prevents people from joining steemit:

Now, James Bond is a subscriber to my channel, and also @bitcoinmeister, and is an active member of the crypto-community in general. He has his own YouTube channel which you should check out. I think it would be fair to say he leans towards Bitcoin-maximalism -- as his comments in Adam's live chats typically consist of trying to get people who exhibit "weak-hand syndrome" to sell him their bitcoin lol.

I'd like to address the notion that Steemit is a Ponzi scheme, and also address the argument that if nobody bought into steem the price goes to 0.

First: Ponzi Scheme

A Ponzi scheme is defined thusly

A fraudulent investment operation where the operator, and individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources.

This does not at all define how Steemit operates, as I understand it.

To start, payouts are generated according to the protocol and distributed from a pool between 3 kinds of Steemit users: Content creators (75%), Interest on Steem Power holders (15%), Seem witnesses (10%).

Therefore, Steemit does not qualify as a Ponzi scheme because users are not paid returns based on the capital from new investors; rather, they are paid as an automatic procedure of the protocol, whether or not there are new investors producing new capital.

Second: If Nobody Buys It, Steem Goes To 0

The argument is: if users simply cash out of Steem, it would crash to 0.

Answer:

Yes

This is also true of Bitcoin, or any other cryptocurrency... or any stock asset... or any metals asset, including gold... or any fiat currency... etc. etc. etc.

The nature of a financial asset is that it has some degree of liquidity: you have to be able to trade it for something in order for it to have value. That's... actually the whole reason that money has any value in the first place. And if everyone cashes out of any financial asset or currency, its value goes to 0, because that's the organic market setting the price of the asset as worthless.

This is not so much an argument against Steemit as it is an argument for a Resource Based Economy, and I don't think that a Bitcoion maximalist really wants to argue for a RBE.

But, to be fair, that's me putting words into 007s mouth, which I don't want to do.

The point is that if Bond believes that the potential of cashing a cryptocurrency out of existence means the crypto is a scam, then he must think that Bitcoin is a scam to be logically consistent. That might cause some cognitive dissonance. :)

However, I can easily prove that Steemit isn't a scam from personal experience: I have used the site, I haven't made any financial investment whatsoever, and I have cashed out hundreds of dollars without permission and generated an account worth almost $550. If that's a scam -- I'll take more scams, please!

Anyway, what do you think about this? Have people ever told you that Steemit was a scam? What sort of worries have people expressed to you when you brought Steemit up to them?

Follow me @shayne