Thanks, @gavvet, this is a well-thought-out and detailed analysis, which does a good job of introducing the relevant issues, and then addressing them and how they apply to Steem. Fwiw, my (somewhat simpler) analysis is as follows:
I would say it can be quickly ruled that Steem is not a Ponzi scheme, since a fundamental characteristic of all Ponzi schemes is that no value creation takes place; the entire system merely moves existing value around (in other words, there's no independently desirable product or service that brings users/victims into the network). The same is true of pyramid scams.
This is what differentiates pyramid scams from MLM (multi-level marketing) businesses such as Pampered Chef, Young Living, etc. A legitimate MLM business has an independently desirable product. Some MLM businesses are scams, and the way to detect these is to determine whether the product is actually independently desirable, or the product is simply a prop intended to legitimize the pyramid scam. Making this determination isn't always easy, but a quantifiable heuristic is to measure whether new participants are attracted primarily by the valuable product, or whether they're attracted primarily by the opportunity to make money.
Steem has an independently valuable service, which is content hosting and curation. Moreover, users are primarily attracted to the platform by the content, not the opportunity to make money (most people wouldn't attempt to use Steem to make money if they themselves didn't enjoy viewing its content). It's even nicely formatted! Thus Steem is neither a Ponzi nor a pyramid scam.
You answered it best.
I see your point, mine does seem a bit "overcooked" by comparison.
yep, that's exactly how they make the distinction.
If MLM (which I did in my younger days. Both 'boots on the ground' and online in the 'AOL days') would adapt the blockchain into their business modal, they would have something.
Thank you @modprobe That was a really nice post.
There is still a chance though that the Steem currency can get hit hard and go to zero (or close to zero) but I imagine that the company would come up with a creative way to offset that for members.
Like anything there are always risks but thankfully people can get involved on Steemit without investing any money. I actually like the format on Steemit more than Facebook!