I read yesterday this post about how blockchain-based economy can be a great innovation. I read many posts like that. Almost every day there are post about the blockchain revolution and the big role that Steem will play in it. I have not enough technical skills to see it, but I want be in that game anyway ;)
Well, all these posts usually lack in something, in my very humble opinion
Everyone here knows that... when did you know that the Steem currency had value? Right, it was when you exchanged it and received Dollars, or Euros (or whatever fiat you wanted).
Steem, as other cryptocurrencies, is valuable since there are people who exchange it for national currency (taking fees, by the way).
This is possible because the market believes that Steem can works, has good prospects in its business. What is its business? As far as I understand, that business - and the reason for the market says that steem as a currency has value - is a technology, the Steem blockchain with its qualities: speed, scalability, security.
I don't think, honestly, that the social activity around Steem (very little, till now) is the reason for the market believes in Steem and exchanges actual USD for Steem. The technology is that reason. A technology that can in the future replace the old one, the one currently used for transaction in national currencies all around the world.
Sure, the Steem blockchain is build on a social activity (the ETH is build on smart contracts, Peerplays is build on betting business, and so on), but it is not the social activity that create wealth: it's the technology and how it can be applied to every transaction ensuring speed and security.
Ok, probably I am wrong. Anyone can explain me why I am wrong? ;)
I think it is a mixture of things. Both the social side and technology behind Steemit are it's strong qualities. It's that mixture of things that existed that I think makes Steemit work. Blogging platforms and cryptocurrency. I have seen attempts at blogging and reddit type sites that used Bitcoin and other crypto to upvote and do many things that Steemit just has done right. I think Steemit is special on it's social site compared to so many other things in the crypto world because the social side is built in rather than relying on every other web app and site.
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probably you are right. but the market exchanges steem (for other crypto, not for fiat, btw) because thinks it will produce wealth in the future. it can come out of the social thing, of course, but it means advertising, and Steem has no ads at the moment.
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Steemit can be the media portion of all crypto currency. It is unique in that information is stored on the steem block chain. No other crypto can do what steem does, and thus this has value, arguably greater value then any other crypto currency as steem will have both communication and finance all wrapped up into one easy to understand and digestible package in the long run.
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sorry, I don't understand this. but thx.
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Steemit is valuable due to it being the future means of communication in a decentralized economy (the crypto currency economy).
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thx, it's more clear :)
I think I said the same thing, writing about a the fact that the market believes exchanges actual USD for Steem (via BTC, currently) because Steem has a "technology that can in the future replace the old one, the one currently used for transaction in national currencies all around the world". But if it is how I write, than Steem is just a financial tool.
Of course, "crypto currency economy" is an expression that can mean different things ;)
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Some Economics:
The market for value is set by what people decide to exchange in return for it. If Time and Energy are a basis of value, this becomes the foundation for people to decide what something is "worth" when computing their personal value equation.
Let's say Person A may had to spend X amount of time and consumed some amount of energy from food, and in return received some value, let's say fiat currency. So Person A has converted time and energy into transferable, stored time and energy.
Person A now faces a choice - how will they exchange their stored time and energy for something of value. Some of this stored time and energy will go towards survival - acquiring more energy (food), water, shelter and self-protection . What ever is left over can be exchanged for literally any other form of value, with the magnitude of the value received being completely arbitrary. Prices for things find equilibrium when you have a lot of personal value judgements clustering around a particular number, i.e. lots of people agreeing, based on how much of their stored time and energy they are willing to exchange for something, on what that something is actually "worth".
Steem has a dynamic market price continuum because there are lots of people continuously agreeing on what it's worth, and that's all that really matters. That market price is made up of everyone's value judgement of Steem, including but not limited to: it's use as an incentive to curate a social network, as a reward for content creators, speculation on increased future utility, etc.
There is never a "correct" price for anything, there is only the price that something is at every moment in time.
I personally believe that "fundamental" or "intrinsic" value does not exist - because value is always the sum of a group of individuals' completely arbitrary value equation. If you cannot know or predict every individuals value equation, then you can never derive a price, you must accept the price (and thus the implied value) as an emergent property of the thing.
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thx for your answer. I created a misunderstanding, writing "actual value", due to my not good knowledge of English. I meant simply "actually valuable". So your kind explication is probably the effect of my bad choice of words ;)
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It is a good question... and one I have considered for some time.
But what is "value?" And what is "money?" If you look at a 100 Euro bank note, what is it *really?" It's a somewhat attractive piece of polymer paper with the number "100" on it. It's only "worth" something because we-- as a collective-- agree that this piece of paper represents a certain store of value. The paper is basically useless. You cant go to the European Central Bank and get a bag of potatoes, or gold, or ANYthing. It's just an "instrument."
The social site known as Steemit makes Steem a little different because it creates a perceived "value added" to the currency... something most cryptos don't have. Value is also added when people like you start initiatives like Steemarket-- doing so creates an "economic reason" for Steem to exist... and that will add "value."
Value is a difficult to understand thing... because it is not necessarily connected to something tangible. You personally can observe that a bag of potatoes has "value" because you know food has a value to you. But what else has "value?" In your example of what is valuable about Steem/Steemit... consider that twitter is a HUGE organization, it has been around for 10 years, has a market cap value of 12 billion USD and has never made a profit. But people see "value." Consider SnapChat, which recently made its IPO here in the US... and was "valued" at 33 billion USD... even though the company doesn't even have a concrete plan for how to generate revenue. In other words, the idea of making a tangible profit isn't necessarily related to "value."
I realized, recently, that there is really very little difference between cryptos and fiat money... both are essentially "imaginary" and have value only because we come to some kind of consensus agreement that there's "value" attached.
Where does that leave us with Steem/Steemit? The much revered "blockchain" isn't really a thing in an of itself. By itself, it's like having a Ferrari in an igloo on the North Pole. So what? It's what you DO with it, what you put ON it, that matters. Whereas the underlying "engine" is definitely important-- as a piece of technology-- it's not going to matter much (except to a handful of hardcore developers) to anyone until I can go to the corner cafe and have a coffee and croissant in exchange for the currency... somehow.
I probably am not any clearer on this than you... but I think the social community, and the apps being built... and the creation of an "economic infrastructure" (steemarket, steemgigs, steemstore, peerhub, etc) becomes a crucial part of what creates the perceived value of Steem, thereby validating the utility of the underlying blockchain technology... in other words, we are building "roads" and "gas stations" that move that Ferrari out of the igloo on the north pole.
Afternote: I just realized I wrote all this from my new art gallery account... in normal life I am actually @denmarkguy.
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thx for your answer, even if I don't understand it - or don't think it's correct. ;)
(just for curiosity: why do you think Twitter doesn't make profit? do you think their ads are for free? Same thing for FB or Snapchat. They can create huge profit selling ads, or selling marketing services. That's why they are valuable and their shares find buyers.)
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Paolo, thanks for taking the time to respond! I forget myself sometimes... I have spent many years plugged into financial analysis.
So short answer: these companies are all "public corporations" (e.g. they have shareholders) and are required by law to publish their financial statements for public inspection. It is also important to remember that "receipts" just means all the money that comes in, where "profit" means what you have left over after paying for your office, employees and so on.
In the case of twitter, for example, the company had a net loss of 458 million USD in 2016, 521 million USD in 2015, 577 million USD in 2014, 645 million USD in 2013 (that's as far as I looked back).
Facebook is actually making money, and has been for four years now. But the bulk of their income is not from advertising, but from "add on services" like apps, games, financial services (like Facebook "send money") and such things.
In the case of SnapChat, they are a little more of a mystery, as they have only been a public company since March of 2017. However, it is known that the company started in 2011 and it wasn't until 2015 anyone even began to answer the question "How are we going to make money?" All they were doing was creating services and paying for things via venture capital funding. They now have an advertising model in place, as a result of which they are "only" losing an estimated 650 million USD a year.
The whole "social media sites is making millions of their users" statement is a bit of clever "lying with statistics." YES... they are "making billions," but you-- as an individual-- are NOT funding Facebook for $1000 (or even $100s) per year... in fact, your Facebook activity added maybe $5.00 to Facebook's bottom line for ALL of 2016!
Don't mistake, I am NOT a lover of big companies and social media using its members for profit... but I prefer facts to Internet myths.
You might wonder why these things are not reported accurately... well, psychology, I think. It's much easier to make a lot of people angry and start to make changes when you say "Social media takes MILLIONS from its users every year!" than saying "Facebook made $5 off me last year because I use their service."
Sorry for the very long answer, in the end!
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thank you very much for your answer! I have been a stakeholder for many years (not anymore) but even then I just knew the markets I was involved in.
I didn't know that Twitter and Snapchat were into the red, but it seems to me that it doesn't change the argument about "value": those companies are valuable since their investors and the markets think they will make a profit in the future, and that profit will come just from selling ads and services. So, in the end, the value of these companies is founded on a commercial business, exactly like the value of a newspaper or a television broadcast.
If I am not wrong (but I may be wrong, since I don't know the cryptomarket enough), the cryptocurrencies are valuable for the same reason: the markets and the investors think that they will make a profit in the future, and that profit - as far as I understand - will come from their blockchain technology and the possibility to use it for faster and more safe transactions. Where will the money come from, in that future? I think from the savings and from the competitiveness that faster and cheaper transaction will give. But, as I said, I don't know those markets enough.
As regards on Steem, it has a social community that basically is the engine of the blockchain (as far as I understand!). But, at the moment, the reason for Steem are tradeable for BTC (not directly for fiat!) is just that the market thinks there will be a profitable use of Steem blockchain in the future.
There must be real money, at a point! ;)
(Btw, I have never thought that social media made money from their users, exactly like television broadcasts don't make money from their viewers ;) )
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