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RE: Where Does the Money in Steem Come From?
Taking the Blogging is Mining analogy and that Steemit can be used for payments just like Bitcoin, is Bitcoin only speculative as well? What is the incentive to buy Bitcoin and does the math add up? Has it all just been speculation the last 7 years?
The difference is that if you buy Bitcoin you buy into the blockchain tech, your money is "safe" and should appreciate as long as Bitcoin works as it's scarce. That's why it has been appreciating annually since it was created.
Steem on the contrary is a highly inflationary currency, you buy on a Monday and by Friday there's thousands more Steems created, so the price will go down. What value does it have for the buyer? I get that there's value in content, but there's a disconnection there. Buying Steem doesn't give anything back to the investor, it'll always dilute unless it's supported monthly by an external agent like a company or via ads/revenue. Speculators and traders won't cut it.
I see you're talking specifically about Steem not Steem Power. Steem is meant to be held for short term liquidity, not long term and its price is what dictates the market value of the entire ecosystem. You wouldn't expect anyone to hold Steem for a long time. You'd expect buyers to go from Steem to Steem Dollars or Steem Power and the rapid transition into and out of Steem should still reflect the overall value of the ecosystem even if people are in Steem for only brief periods of time.
Why would you buy either one of them? both are inflationary. What don't you understand? Is it so hard? I've never bought Steem, I've only earned it, there's no point at all to buy Steem. SP is even worse because it's still inflationary and you are locked for 2 years into that. It's like you are trying to sell me US dollars "to keep the economy up". Don't tell me you need to invest money to win more because we know where that discussion is headed...
No you don't need to invest more to win. Steem Power largely isn't inflationary (other than the 10% redistribution) because it's sheltered from Steem inflation. All that really matters is your % ownership of any company or ecosystem and in this case that's reflected in Steem Power. Inflation (or dilution) only effects the # of shares and is only one component to price. The other component is the subjective value investors have. In the early growth phase of a growth company, the company as well as its perceived value can grow at 100% rate hence if there is an equivalent dilution/inflation prices should remain stable. I'm not concerned about recent prices and that seems to have brought some people out of the woodwork. I doubt big investors would even question the mechanics of Steem/Steem power. At least I hope not and that would reflect poor due diligence. I thought Steem was way overinflated at this stage anyways. People who think that prices are always strongly correlated with fundamentals should try to explain why Bitcoin went down by 50-80%+ many times over the last 7 years.
Steem Power is no more than Steem and that's the single point of failure and where the actual money comes from. Money comes from fiat and btc and other cryptocurrencies into STEEM, that's what holding the whole platform together and creating the payouts. You already said SP is also inflationary (it's Steem after all too) so it doesn't matter if it keeps a similar price over 2 years, it will inflate either way and that's if you don't power down at all.
Bitcoin always went down because of fundamentals, it's all about fundamentals and sentiment in crypto, technical analysis is for the very short term. Bitcoin dropped when Mt Gox held most of the BTC for sale. Ethereum dropped from 21 dollars to 10 almost in a single day during the DAO hack.
Steem can't seem to find a bottom because traders and speculators are beginning to realize that unless you power up (which doesn't make sense to me but I can give you that some Steem believers will do) it's pointless to buy.
No. It's the Steem Power that has value and being allocated. Money doesn't have to flow from fiat/btc into Steem/Steem Power and people will still want Steem Power. It's just a matter of how much value do people place and that's up to the market. When I talk about fundamentals, I mean user adoption, transaction volume, real world use not sentiment, psychology or technical analysis. It's a standard hype and reality cycle like any other crypto. Look at the charts of every new coin and you'll see similar patterns. The bigger question is are there real world use cases and growth with any ecosystem. That's what I'm looking at. Anyways do what you do and I'll do what I do. Cheers.