This article will be exploring where the inherent value of steem is derived from.
Traditional social media, blogs and microblogging sites make money by placing advertisements on their site. There are costs associated with running the sites such as hosting fees, employees and domain registration. The revenue of traditional sites is created by clicks, or how many people visit your page.
Now we have to compare steem with these sites. How will steem create value where other sites fail to?
Pros
A) Steemit is censorship free, you're free to post whatever you like even though it may get down-voted into oblivion
B) Steemit is open-source, the community creates the value, instead of a team of developers.
C)No barrier to entry like most blogging sites
D) This platform makes me question how do I define value
Cons
A) No barrier to entry, lots of garbage posts, posts that are not well thought out
B) Possibility for bots to abuse the system and make money without creating value
C) Centralized system, the few largest whales are the kings, if they don't like your content, you don't make money
D) Where is the inherent value. How do we define value as a community.
The biggest point from the pros and cons list and the point that I keep trying to work over in my mind is: Where is the value. What is the inherent value of steemit?
Comparing Steemit to Similar Sites
A traditional site like reddit that is the most similar to steemit makes money off of advertisements and people upgrading their memberships. The money generated goes to paying the people who work on the infrastructure, not those who create content.
On steemit, those who create content get paid and those who work on the infrastructure get paid because they are personally vested and have an interest in bettering the project.
So the value is @dan , @ned and the witnesses and other developers who work tirelessly behind the scenes to make everything work. There is no revenue stream for steemit. The only thing similar to revenue is demand for steem which drives the price up.
The Value of Steem
The value of steemit is determined by 3 things
#1. What the developers contribute, upgrades, hardforks, new features.
#2. What the users contribute, more specifically, the quality of each post.
#3. How many new users current users bring in, and how much the new users spend powering up.
My Opinion
I'm going to be religiously watching the price of steem and trying to find correlations between hardforks, new users per day, updates, and price to see if the contents of this article are true. This whole article is speculation, speculation on what the value is. There may be something I missed, if so, feel free to point it out, I don't pretend to know everything, some of my underlying assumptions might be wrong and I'm open to all comments and criticisms.
Some other ideas to consider.
You've given me some things to think about as well. I added you to my follow list.
The value issue is to me the greatest issue in my opinion.
I saw the steemit photoshoot a few days ago, and I just couldn't stop thinking: How does this add value? What does taking a picture with someone who looks good and have steemit on their shirt do for steemit? I couldn't find anything good that it did, it didn't seem "valuable" to me. But I'd love to hear how it could be valuable if you think it is.
You're talking about the professional shoot?
It's not valuable to me either as far as content. The case has been made that in order to generating excitement and exposure it isn't bad in the short term to have big payouts even on content we don't see a value in. I agree but I also think that there is too much voting based on attractiveness of the photos and whale following.
It would be more beneficial for someone who has a genuine interest in Steem or the community beyond the SBD rewards to be rewarded with a large payout. The community needs distribution, so it needs more whales & dolphins to spread their upvotes around to minnows as well as create content. Users only reciprocating upvotes in their own little circles won't do this.
It's also detrimental to the market if these users immediately cash out large amounts of Steem or SBD and dump it on the market. This user withdrew their first big Steemit SBD reward to an exchange, it's logical to assume they sold it immediately.
One of the biggest growing pains is going to be popular content like this that earns big bucks. Value is subjective. And sorry to be sexist but there are users that are playing up to those that will vote for a pretty face with poor or mediocre content. Also there are always going to be nitches, photography isn't my thing so I can't really appreciate it. Give me a really good sci-fi writer or someone who I can debate and converse with on certain topics and I'm more interested.
So after looking at the user's history I don't think that the post was anywhere near as valuable as it was rewarded from the viewpoint of contributing to the community either.
My other concern is what will happen to these one hit wonders when (I'm optimistic) users start moving toward better quality content? Those that become discouraged my dump their Steem, depending on how much is dumped it could devalue Steem considerably.
Some of this goes back to site vs community viewpoints. Sigh, and I need to learn to condense my thoughts better. Still too many words. :D
Thanks for the conversation.
Ya, I was talking about the professional shoot, I don't think the people who did that shoot are in it for the long haul. They definitely just make some money, then cash out and move on. I hate seeing those sorts of posts.
Also followed you back because I like talking to people who see eye to eye with me.
I agree with both of you. Seems the only "value" being rewarded is promotional material with marketable faces doing marektable things. Thats all well and fine if it is done so to bring in the masses so we all can win eventually. But if it becomes a cycle, then the entire idea behind steemit is another hollow, corporate nothing. Big wig pays ad agency so a mass of nobodys buy big wigs' vested product. Only to find the only value in it, is for the guy who sold you on it. In which case, every minnow, flounder, and tuna becomes nothing but sucker fish.
Hope that makes sense