How The Rising Price of Bitcoin Is Likely to Effect Steem (and other cryptocurrencies)

^{Cookies and coffee while he works his crypto. That's how you know he's a pro.}

Yee-haw, everybody! It's beginning to feel like the starting days of the California Gold Rush, where every man and woman with a saddle and big ambitions headed down to chisel in the rock, sift through the dirt, and wade into the mud for real winners.

People (and by people I mean those of us who haven't essentially had an interest in crypto from the beginning) are beginning to catch onto bitcoin. They may not fully understand it, but they do understand that, at least for now, it's valuable.

But how does this change in interest affect other cryptocurrencies? Does it at all? Below are two graphs representing Bitcoin and Steem over the same period:

....Less than persuasive for any correlation between these two currencies, at least in the short term. But then look at a graph of both over about a year:

Still not exactly linked, but somewhat more persuasive as far as a correlative argument for the longer term. However, there are a few things to keep in mind, here. The first is that Steem is an inherently inflationary cryptocurrency. That is, an amount of Steem is always generated every day. Bitcoin, on the other hand, is an inherently deflationary cryptocurrency. That is, there's a finite amount of it. So when the price of Steem is even in the market, what's actually happening is that the worth of each unit of Steem is going up. This is a pretty subtle point and easy to miss.

Think about it. If I have only one apple and it's the only apple for miles, you might be willing to pay a pretty penny (but maybe not). Let's say a dollar (expensive apple). Now if I had ten apples instead, each apple would inherently be worth less, right? In fact, conventional thinking tells us that they should each be worth about a tenth of the original apple - about 10 cents a piece (.10 dollars). But what if people are willing to pay 20 cents a piece?

That would mean that the worth of the apples as a whole has risen, since added together all ten apples are worth 2 dollars, twice the amount of the original apple.

This is an overly simplistic example in order to prove my point, but you get the gist. That Steem is going up at all over time is inherently related to Bitcoins rise, though the graphs seem to tell a different story. Like I said, a new Gold Rush. West, ho!

How do you like them apples?

Follow: @jenkinrocket

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