Well Steemit - another day, another top trending article where someone new to Steemit has made $10,000 and is telling all their friends. In the few short weeks I've been on this website this seems to be the #1 recruiting model.
"Hey, there is this new website that PAYS YOU to write content!"
Now I don't have any problem using this model to recruit new users, in fact since coming to the site a few weeks ago I've already recruited a dozen+ people with that exact selling point "a website that pays you." But what concerns me is how will Steemit be able to survive long term if a overwhelming majority of their users are here to pull money out of the site?
For the sake of estimating lets say Steemit's user base has around 50,000 users today. If we are able to grow this user base to say 1,000,000 by 2017 - I would assume 900,000 of the 950,000 new users (around 95%) will invest $0 of their own money and simply pull out any/all available SD/SP/STEEM. Now I'm no mathematician but if we treat Steemit as it's own economy and agree that 95% of the population within the economy is pulling money out of the system and only 5% is putting money back in... well the numbers don't look good.
Now I understand that is where Steem Power comes into play - but really I only see this as a 'kick the can down the road' solution. It doesn't actually change the fact a overwhelming majority of users are pulling money out vs. a very small amount is investing money back it - it only delays this process over a 2 year time frame.
My impression is that we are working towards being able to spend Steem Dollars themselves from our smart phones (and in internal markets). As the community and paradigm expands, merchant adoption will become commonplace. Our economy may expand as the legacy economy contracts.
The Steem Dollars will more and more stay within our ever-expanding community.
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I think that in the long term a lot more people will invest in STEEM, they just don't know how or why or that it will be stable, yet. But over the next year or so people will start to see the benefits of investing.
And the way things are going right now STEEM and other coins could hold each other up without Fiat or Bitcoin. For example, Compuceeds is now traded on OpenLedger. There are people with Tens of Thousands and Hundreds of Thousands of Euro in Compuceeds. Once they all get on OpenLedger and start trading, some of them will turn their Bitcoins in to STEEM and then put that in STEEM Power. And if just 2 people put in $10,000 each, or 4 people put in $10,000 each, or 10 people put in $10,000 each, the price of STEEM would go up dramatically. And all the STEEM they put in to STEEM Power will be locked away not being traded.
So STEEM doesn't even have to be held up on Fiat or Bitcoin. As all the new STEEM and Steemit based platforms come out, they will all support each others economies back and forth outside of Bitcoin and Fiat.
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Hmm - interesting point there (and thank you for taking the time to write it). What still concerns me is that it seems for every 1 person that is willing to invest say $10,000 into STEEM (or SP) there are 10 people who are going to pull out $10,000 via posts/comments/curation. Perhaps additional steemit based platforms will help dilute this and additional investors will see the value in buying STEEM but until something dramatically changes I still question the current model.
I read an article recently that said this new user to Steemit was one of the top 5 biggest investors into STEEM with $100,000 recently put into SP. If that's one of the largest investors with $100k and easily $100k is pulled out of this site daily (if not more then that) - then I still feel like there needs to be more people buying/investing. Who knows, I could be wrong but again thanks for the contribution!
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Ok, so you are saying that every day or 2 maybe 2 or 3 people get $10,000 in STEEM Dollars that they can actually pull out that day, and over a few weeks or months many of them will. And that is both true, and necessary.
If STEEM could not stand up to people selling out it wouldn't last, but if you got to Bittrex for example, the Buy Wall is pretty thick. You could take 100 Bitcoins worth of STEEM (about $60,000) and cash it all out at once (losing money by not selling it slowly at higher prices) and you would only knock down the Buy wall about 3 pages and down about $1. If you were to take that same 100 Bitcoins and spend it on the Buy wall, it would send the price up by 5-7 pages, nearly Doubling the price.
There is a lot of talk on STEEM about Whales, but we have not even begun to see the effects of a single Whale. Whales make waves, that is why they are called Whales. What a Whale does is goes in to the market, drops $1,000-$100,000+ in the Market, jacking up the price. Then wait a few minutes, and sell about 1/6-1/4 of it for a huge loss, knocking the price down lower than it was before they came in. Then they use the money they got for selling all that STEEM (though at a loss) and use it to buy STEEM for even more than they paid before (again at a loss). Then they put all their STEEM they have for sale at different intervals ($6, $6.05, $6.10, $6.15, $6.20, etc) below the lowest Sell prices (of those that are left), then set up a buy wall with 1 or more Bitcoin, so that they buy price is locked in at the new higher Price.
There are now about 100 people with that capability here on this Website. And some of them might not even realize that they can do it. But STEEM is about to see some major Whale activity over the next year.
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well, you know that the price of steem could just fall to something like 10 cents. I think the price was something like 30 cents before the bullrun. The payouts would be lower so the money being pulled out and money being put into the system would be somewhat at balance.
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I just did.
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I think the hope is fiat will be seen as the true bubble. Then Pop. Crash. Burn. ATMs stop working or FED just devalues the USD further. Crypto makes sense and is becoming more practical. No more pulling money out. Keep diversified wallets based on the best technologies Crypto has to offer.
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I think when the user base grows, the amount of investors grows with it fast enough to pay for it. Only a few percent of the writers is able to break through to the top earning posts, and all the others will only earn small amounts. They (or at least a part of them) will find out they can make a quite steady income from holding SP and do some curation every day. Most will enjoy it and the earnings, when invested a bit are worth it. This means many will invest in some SP, and after seeing the result in daily income they will do additional investments. If the price of Steem goes up again, also many speculative investors will join.
I think many people will get addicted to growing their SP account and will invest regularly.
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With the time the wealth will be distributed pretty fair. Long term Steemit will be a game changer and already made history
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You can't create money without creating value. The content on steemit is not valuable enough to pay such amounts of money. No real money is invested into the system apart from some people who believed in it enough to buy steem power. The most majority of people only want to cash money out of the pyramid. Unless some investor with very deep pockets kicks in, all of this small fragile economy will collapse.
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Think of Steem Power as shares of a company like Facebook. You can either keep the shares of an early stage Facebook or sell the shares for dollars. Right now the market capitalization of Steemit is $200+ million so it allocates about 10% or $20 million in value to contributors every year or roughly $55,000 a day. Note: Of course Steemit is not guaranteed to be the next Facebook which currently has a value of $360 billion or 1,800X the value of Steemit right now. It can be another Myspace and flounder. That's the risk and reward. You just have to decide. But if Steemit does grow to be the size of Facebook why would you want to sell out so early? And even if people did sell out investors that believed in Steemit would happily buy in.
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The problem people have with thinking of it a shares is that companies are expected to one day pay dividends to their investors. Steem Power never pays dividends, it just mostly protects you from the huge dilution rate of Steem and provides you with perks within the system.
Since companies are expected to pay dividends eventually, people ask 'can it be profitable?'. While there are many ways for an individual to profit within Steem, the 'entity' that is the Steem system itself will never make profit. Instead it is an asset with an upkeep cost, paid for by investors via dilution.
Most people have no problem with assets that have an upkeep cost. Cars are the most obvious example, they depreciate very rapidly in value, cost fuel, insurance, tax to own, yet most people own them anyway. But the formally collectively owned model of Steem is something new and unique. It remains to be seen how people will value the benefits of ownership in this new social and economic network, and if it's enough to replace the prospect of dividends for investors.
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Sure I understand the concern and blockchain ecosystems are not a traditional companies so all this is new. Most companies validate their value from revenue/earnings and ultimately dividends. However it is not necessary for a company to validate it's value using dividends. It's the potential dividends that are important. Ultimately I assume companies will buy Steem to get exposure and reward consumers as a form of advertisement. Another example is real estate. Yes real estate is valuable because of it's potential dividends, but a lot of real estate does not cash flow. Bitcoin & Gold are other examples of commodity/assets that are useful and scarce, but don't have dividends. Steem Power are shares of an ecosystem that is not only a content-based & advertising asset, it's also similar to Bitcoin as a money/payments rail because of Steem Dollars.
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Steem and Steemit are really cool. What could make them go extinct is a superior technology emerging in the future. Just as Steem is challenging Bitcoin and the jet engine replaced the prop, so could X from the future come along and eat Steemit's lunch. Watch your back!
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That is a great point as well. Steemit could be the MySpace of next gen social media/content creation. There will always be the next big thing - question is how long can we last? ;)
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We have to keep in mind that, it is impossible to build a foundation, without going out and laying a few bricks. Steemit will survive as long as the Steemit community survives.
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US Federal Reserve has been going strong for 103 years now...
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If the user base grow 1 Million, Steem Dev should sell ad space and distribute the profit per SP shares, this way more demand to get Steem Power.
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But you are assuming that Steem will not generate any revenues through utility. I am sure many people here can list a few (adverts, market).
When Steemit grow to that size then the SP will be sought after because of it ability to influence the opinion of the network.
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Bitcoin is paying out almost a million dollars each day.. Still going strong. If Steemit really goes viral, $100k a day is not much, even if it sounds a lot.
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Great question! I have been thinking the same thing myself. As more people start joining up and taking money out, will the demand for new investors keep up with the supply of coins being exchanged for cash? Thank you for starting this discussion!
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It is in fact those kind of 10k posts that will make steem currency survive for a long time, more money = more people. So if anyone can bring more people to use steem, im sure they deserve it. Think about the reach and the publicity, we can get more content creators, investors, traders, everything, just give it time
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good question
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