While steem recently became the third-largest digital currency as measured by market capitalization, surpassing $400 million this month, some market experts are skeptical of steem and have expressed doubts about its economics.
The digital currency’s market capitalization surged in July, rising more than 2,000% from $17.9M to $411.9M between 04:14 UTC on 6th July and the same time on 20th July, CoinMarketCap figures reveal. The digital currency’s price climbed more than 1,800% during this period, increasing from $0.24 to $4.63.
For those new to the digital currency, users can obtain steem by posting content on social media platform named Steemit. When users publish popular content, as measured by upvotes, they receive steem tokens. By developing such a platform, Steemit’s creators have stated that they want to allow users to receive a reward for the content they create.
"The concept itself is interesting, it is a Reddit and Quora mashup with a strong monetary incentive to produce good quality content," Joe Lee, co-founder and CIO of digital currency trading platform Magnr, told CoinDesk. "Whether steem succeeds as a digital currency will be more a reflection of Steemit’s success as a platform as opposed to the economics of the coin itself. This is a good example of a digital currency whose value will be closely affiliated to its utilitarian value as a social networking and sharing platform."