I have to admit I've been mislead by some steemians who used to compare reddit or facebook market cap with steemit. Let me tell you something. It would be completely useless and a waste of time to compare both.
The definition of a market cap according to google is : The market value of a company's outstanding shares. This figure is found by taking the stock price and multiplying it by the total number of shares outstanding.
Sounds familiar right?
However a share is very different from a crypto currency unit because a cryptocurrency is actually usefull and there are a lot more ways to create demand for it than a share. A share in a company is useless, you can't use it for anything. People say crypto is speculation blabla but I would argue it's a lot less speculation than a share because a share has no utility whatsoever, you just sit on it and wait for someone who wants to pay more for it.
The upside for a share is very limited while the upside of a crypto unit is unlimited, as long as you have new use case for the currency the value will increase. A company can't increase its profit or innovate forever and so that puts a limit to how much it is valued.
What does this mean for steem?
It means that the marketcap of steem could be higher than facebook or reddit with a fraction of their users.
It also means that steem will be able to handle millions of users just fine and that reward will have no problem to stay consistent. I always had this misconception that the more users steemit will have the less rewards everyone will receive. I knew the price increase would compensate but I thought it would never be enough to handle millions of users ( because I had in my mind put a limit on the steem marketcap but as we've seen above the marketcap of a crypto is basically unlimited as long as there is new use case for the currency)
Let me show you one example:
reddit market capitalization is $400 Million
reddit daily active users is 1 Million
steemit daily active users 3500
This means that if steemit had 1 million users today the price would have to be 285 times higher ( 1M/3500) for people to earn the same amount of reward .
So the price for 1 steem would have to be $ 45 which is very realistic, here is what's interesting.... If steem was $45 today that would put its market cap at 10,7 Billions . So this means that steemit could have the same amount of users as reddit but with a much higher market cap ( reddit market cap is $400 Million)
Now imagine if steemit had 100 Millions users, this means that the price of steem would have to be $4500 per steem for people to earn the same amount of reward that they earn today with 3500 users.
$4500 per steem would put the marketcap of steem at over 1000 Billions. ( Current facebook marketcap is 330 Billion )
This means that steemit with only 100 Million users ( facebook has +1.5 Billion users) could have 3 times the market cap of facebook. Actually it could have a much higher marketcap with a lot less user than 100 Millions it all depends what use case steem the currency have. But as you can see it's meaningless to try to compare other social media valuation with steemit, because steemit has nothing to do with a traditional company.
A share is also different from a crypto in that people could want a crypto for many different use case/reasons. And as more use case are being created that same person could want more of the same crypto unit as it is usefull to him in his daily life. A share has only one use case which is speculation. Bankers tell us crypto is only speculation when the purest form of it is actually buying a share. I'm sure I left out many other differences between a share and a crypto unit but my point is that both are not comparable at all.
It's important to make the distinction between steemit and steem. Steemit afaik is a non profit organizatio/company, so in the future the market cap will be the valuation of steem the currency not the valuation of steemit the company.
special mention to @seablue who encouraged me to look into this further.
My recent post about integrating tips on the platform https://steemit.com/steem/@snowflake/let-s-get-tipping-going-on-steemit Let the devs and community know if you like and want this feature.
A share is not useless. If I'm a majority shareholder, I have power over stuff.
Like what? Please elaborate. Im interested
The direction of the company? Lots of people like power for the sake of. It's a common human trait.
Apparently majority shareholders are often the actual founders of a company which make sense since they are the one taking the decision. http://www.investopedia.com/terms/m/majorityshareholder.asp
You might find this ICO to be of interest. Backed by real assets and production, capped at 100,000,000: MOE Farms ICO
Considerable thoughts. But many altcoins are already gone to zero as well as stocks. steem is worthful mostly because of steemit.com.
Upvoted and followed.
Steemit is valuable because of its blockchain features that no other blockchain have. I agree that steemit.com today is important as it's the only interface but in the future we will have many differents UI some of which will be much better than steemit.com
Thanks for the upvote!
Where did you find a figure for reddit market cap?