I've been doing a lot of thinking about Steemit and I had some questions. I don't know if I've fully answered them and I could be completely off base but if you're interested this is what I came up with. Feel free to correct me or add to my thoughts.
The first question I had was, where is the value being created in Steemit? I came up with two answers. Speculation and content creation.
Speculation
This is the ease one. The first 300 million was entirely speculative. My guess is that most of it is not from active users of the site either. Although I would assume many signed up after they bought in. Which is a bit backwards, but you gotta be first in and first to bail out when things to south in crypto currency speculation.
Content creation
It bothered me that many posts on here make it seem like everyone is going to get rich simply by posting and upvoting and owning a lot of Steem Power. These actions will create a lot of great content and add value to the site but, and this is a big but, views, upvotes and posts don't create that much value. Few people are willing to pay for blog content. This is why social media sites exclusively rely on the advertisement model to monetize.
The money we are earning is coming from other steem investors who are less active or less successful at posting and getting upvotes. This will continue to be true until advertisement begins. When someone or some company is willing to buy steem in order to purchase advertisement space (front page posts).
It seems to me that right now what we have setup is a race. If you don't try to win you will be left behind and your steem will be used to pay those who did try. I think it is the hope of the creators that we will never reach the point where people are left behind and see that they have lost money. Instead I think they want this to build fast enough and long enough to attract advertisers. If market places grow around Steem this could also be a source of value for the currency.
This led me to the conclusion that, while there have been great posts, none of them were worth 300 million dollars. Hopefully in the future we can do some things that will make us worthy of this valuation.
Of course in the future, with more users posting, my content will be worth almost nothing compared to all the amazing posts that will drown in money. Meanwhile my mediocre typo-ridden, probably illogical, posts will get mostly ignored. Which is fine I guess, as long as I'm not paying to much to be ignored.
My second question was, what would this site look like with advertisers paying to dominate the space? And would this create a negative feedback that drove away users?
Honestly I don't know exactly how this would look but it strikes me as a bit dystopian. Should I pander to Apple Computers or Walmart in hopes they will upvote me and I'll get rich?
I, for one, welcome our new Steemit overlords.
Keep in mind that the $300 million market cap isn't really a great representation of a cryptocoin's value since this can be manipulated if there is low liquidity - keep in mind that STEEM is only currently traded on one exchange.
Also, I would say that there is a sort of multi-level marketing aspect to this whole operation and while I like this concept I am a bit skeptical about the rewards model this site implements. Certainly all those posts earning hundres or thousands of dollars can't cash out right away or the value would plummet immediately which is why the devs needed to create the concept of Steam Power which prevents one from getting their reward immediately by promising greater rewards for holding.
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I am skeptical too. Lets say the initial offering of Steem had not been bought into at all by the bitcoin community. Then Steem would only be worth something inside this website. It would more accurately represent the value of the content we're creating here. Blogging on the internet isn't worth much. But we did buy into it and in doing so gave it a perceived real world value. To justify that valuation something of equal value must be created here.
Ya, I hesitated to call this multilevel marketing or a pyramid scheme because I don't completely understand it yet. Having its own currency makes things complicated. But it certainly has aspects of that.
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