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RE: Steem explained by an economist

in #steem6 years ago

Superb economic summary of Steem and Steemit!

You engage your readers with critical information, without taxing their attention span.

Consequently, you leave room for a sequel post, where you delve into the macro-economics of Steem's valuation.

What are the hopes and dreams, fears and doubts, that cause people to buy and sell Steem?

After all, Steem had an immense valuation from Day 1, even before it had a single application or user.

That valuation was derived from the hopes, dreams, fears and doubts, pertaining to Cryptocurrency generally, but more importantly, to the world conquering vision underlying scalable tokenized social media.

In particular, Steem is a first-mover in utilizing the scalable and speedy DPOS consensus mechanism, that allows it to engage vast members of the general public in ways that mirror and rival centralised platforms.

Couple the speedy DPOS motor, with the ingenious onboarding of new users for free, paid for by the INFLATION algorithm, and you can completely reenergise the social media space, such that, although I'm not a financial adviser, I suspect Steem is vastly undervalued.

One fear that does depress the Steem price is the threat posed by rival DPOS platform EOS.

Current social media platforms, which will not want to share ad revenues with users, will be ill-equipped economically to compete with a future tokenized social media world in which all benefit of interacting with brands will accrue to end-users, with no manipulative invisible middlemen.

Steem is a genius platform, and although competitors like EOS, do decrease it's value by similarly targeting tokenized social media domination, Steem's first -user advantage is such that if stakeholders are wise in growing the user base, the ultimate Steem value could be stratospheric!

Eyes on the prize, Steemiams! 😎

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Thanks @rodneysreviews for your detailed response. There is certainly potential to write more economic posts relating to Steem. You have given me some ideas.

I think many people hope that the price of Steem is going to blow through the roof, which it may but it is also likely to correct itself. Rising too quickly is not really a good thing as that increase is most likely based on speculation rather than the actual value of the platform.

A concern people may have is that Steemit sounds to good to be true. Some people promote Steemit as a platform where people are just running around giving each other money and everyone gets rich. Absolutely not true, as I explain in this post. Rewards come from a rewards pool which by creation dilutes the stake of all those that hold Steem. Rewarding content comes at a price. If the wrong content is rewarded, the platform loses value and price falls as investors lose confidence.

The Steem platform is a genius idea but it is an idea that can be replicated so there will be competiton. At the moment, Steem is in a great position but complacency and bad decision-making could open the door to competitors. If the platform grows as described in the white paper, it will be very difficult for competitors to catch-up.

One of the reasons why I wrote this post was so I could have something for potential investors to read and will hopefully be encouraged to invest in Steem. We all have a role in growing the platform.