I am not a speculator, I want to make that point very clear. I look for value by finding companies, commodities or currencies that are currently trading for less than I believe them be worth. It's as simple as that. In the Stock Market, that's a tall task to find these days where everything is overvalued. Commodities on the whole are undervalued, but the markets are in disarray, the fundamentals are skewed and the overall size of most of the markets are small enough to be easily manipulated. That leaves crypto currency, but more specifically, Steem.
First let's look at why the Steem is so under valued right now and what could be contributing to that.
Steem is acting as a derivative of Bitcoin.
Bitcoin is the straw that stirs the drink in the crypto world. As goes BTC, so goes every other crypto currency. So in essence, Steem and every other coin are derivatives of BTC at this point. Is this right? No, but there are reasons for it. Each currency should be looked upon for it's own utility and merit, and they are to a certain extent. The reason real price discovery is not being found is because each coin cannot be directly traded in and out of fiat. We are forced to this point to have to use BTC as a medium of exchange. As time goes on I believe this problem will be solved. Eventually certain coins will separate themselves from the pack b/c of their usefullness. I believe Steem will be one of these b/c of the many problems it can solve with Steemit. Eventually we should have the ability to trade Steem directly in and out of fiat. This will make it incredibly more useful and much easier for the average person to buy and sell and use in their everyday life, thus making Steem much more valuable.
Conclusion: Steem is undervalued presently b/c of these factors
The Poloniex fiasco
This has been an ongoing issue for some time now, but Poloniex has once again disabled deposits and withdrawals of Steem and SBDs. They're a huge exchange and used by many. There's currently 26 million plus Steem tied up on that exchange and the only way these users can get it out is to sell their Steem and SBDs for another currency. This is causing a tremendous amount of negative pressure on the price of Steem.
Conclusion: Steem is undervalued presently b/c of this extreme downward pressure
The value of Steemit
Steemit's capabilites are just getting started and we haven't really scratched the surface of all the problems it can solve. We all know we can earn money through blogging, which is incredible in and of it's self, but let's take a look at some other problems Steemit can solve.
Peer to Peer transaction with SBDs. Peer to peer transactions on a local level can explode Steemit within individual communities and make Steemit a household name. Facebook is extremely popular in advertising things for sale and has really replaced Craigslist here in the US as the #1 way to advertise and sell things within your local community. It has also took a bite out of Ebay's business. As people learn how to transact with SBDs and communities form here on Steemit, I can see the advertisement of personal goods for sale beginning and then completing those transactions with SBDs. This adds tremendous value to the everyday utility of Steemit and gives it a practical use for the user who's not interested in blogging, but would still like to use Steemit for it's many other uses.
Conclusion: Steem is undervalued presently b/c of this incredible peer to peer ability yet to be utilized.
Business transactions with SBDs. @exyle has been promoting this function of Steemit and just did his first transaction by hiring a member from the Steemit block chain to make him a logo and paid for it with SBDs. For more information on this, please visit his blog. It's incredibly informative and he's a great ambassador for Steemit. Much like how we can conduct peer to peer transactions with SBDs, businesses can do the exact same thing. We can buy goods and services from businesses on the block chain with our SBDs. This is revolutionary and gives Steemit it's own medium of exchange on the block chain.
Conclusion: Steem is undervalued presently b/c of the ability to conduct business on Steemit due to SBDs
SBDs. SBDs are their very own currency in the Steemit ecosystem. They are a financial medium of exchange, just like the fiat in your pocket but are actually backed by something of value, Steem. This is the way a true fiat currency should be issued, one that is backed by something of value. Just really let that sink in for a minute. The value of having SBDs as a medium of exchange on the block change is revolutionary.
Conclusion: Steem is undervalued presently b/c of SBDs being a medium of exchange on the block chain backed by something of value, Steem.
The use of Steem Power as a savings account. The average savings account today pays a whopping 0.06 APY. The average CD rate for a 1 year CD is 0.27%. By putting your Steem in Steem Power, you earn 2% APY plus the more you save increases your influence on Steemit which in turn increases your curation and posting rewards. If you post/vote every day, that allows you in essence to collect daily dividends on your savings. Again, revolutionary.
Conclusion: Steem is undervalued presently b/c Steem Powe can be used as a financial instrument to save and earn.
I hope you can see why I've identified Steem as an incredibly undervalued financial asset. It's uses will grow with time along with it's true price discovery. Please add any other uses that you can think of in the comments. Together, our ingenuity and creativeness can help Steemit become a household name and revolutionize how crypto is perceived around the world.
I would like to add this will be my last post for awhile as my time must be allocated to several other projects. I will still try to comment and interact as much as possible in the meantime until these projects are on their feet. As always, go make today great and Steem on!
(Disclaimer: This is by no means to be used as financial advice. I am an amateur investor and these views are my opinions only.)
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Definitely acts like a derivative of Bitcoin, I liked that point!
I like the Warren Buffett style value investing approach you take to Steem. Just hard to to calculate future cash flows of Steem if it ever happens at all...
Great informative article!!
Thank you!! :)
I've been offline for a couple of days to recharge my STEEM power. I am a regular follower of yours and this post makes so much sense! We are investing in and part of an undervalued financial asset. My favorite part is that we get to contribute to the Steemit community by providing valuable content such as this.
Great comment and thank you! When you look at the sheer utility of Steemit the value just jumps out at you when comparing it to coins of similar market share and pricing. I remember evaluating Netflix and thinking to myself, "It just solves problems. If it can attract users, the skies the limit." This is the same way a feel about Steemit, "It just solves problems." To me it all boils down to leadership and how well Ned can set the sail moving forward. I agree about the community, hands down the most intelligent, giving community I've ever seen, and that says a lot.
Even with all those potential markets, you'd have to look at the success of each.
As a social blogging platform, are more readers and writers attaching and staying?
As a potential ebay-replacement, would development time that direction be worthwhile? Does it need decentralization?
As a bank and financial instrument, how good of a role would it play? Would people really save money in Steem Power, given its volatility in the crypto market place? Even with 2% APY, I can't trust that the value will be higher or lower when I need the currency.
And lastly, all of this requires liquidity. To spend Steem or SBD still requires a pretty rigorous process that limits mass acceptance for now. This problem is pretty crucial to success in the various marketplaces.
And to caveat, I'm actually long and bullish on Steem, but I know there is room for improvement .
Thanks for the great writeup.
You bring up a plethora of relative points. If/when Steem is able to be exchanged directly for fiat will be the determining factor in allowing Steem to reach it's full potential of every day usefulness. If/when this would occur you would eventually see Steem debit cards like the Bitpay card for BTC. This factor I feel is the most important factor along with Steem continuing to build it's user base. Great comment.
Good informative article, gives hope in this time of plummeting earnings to persevere.. tnx for posting it.
Thank you and you're most welcome! :)
I do agree Steem is undervalued. Steem itself will turn into a double digit coin. When SBD is used on a regular basis to buy goods and services, I imagine it will maintain the $1 peg because individuals don't want a currency to fluctuate when using it as everyday currency. I hope that is what happens anyway.
This is the conspiracy theorist in me... has polo given a reason for SBD and Steem not being transferrable? You have to wonder if this is purposefully done because they know people will want to gain access to their funds and will, therefore, trade into a different currency at a discount.
Is it possible Polo wants Steem and SBD at a discount because they think it will rise too and therefore are accumulating Steem at a discounted rate?
I know where you're coming from. Something hasn't been right there for awhile concerning Steem and specifically SBDs. SBDs have been trading like their own currency for quite some time. While I thought it very peculiar, I, like many others, did take advantage of this while the price was much higher than their implied value of $1 US dollar. The more I looked into this the more uncomfortable I felt about the action going on pertaining to the SBD. I won't speculate further, as I'm imagine you know where I'm going with this, but I definitely know what you're talking about.
Can someone explain to me why the Steemit audience tends to be a bit more paranoid and apt to believe conspiracy theories?
Is it just the crypto-anarchist side of things? The digital libertarians that don't trust anything?
I wouldn't say it's specific to the Libertarian community.
For example this is from a 2016 You.gov poll:
Absolutely True by affiliation: Dems:12% Reps: 10% Other: 5%
Absolutely True by affiliation Dems: 47% Reps: 2% Other: 9%
Absolutely True by affiliation Dems: 4% Reps: 11% Other: 5%
Additionally, many of these "conspiracy theories' turn out to be completely true but conspiracy theorists are looked at as tin foil hat wearing crazies until the lamestream media jumps on the wagon.
Examples:
I would say looking into conspiracy theories is more the product of being a free thinker. When I see something that doesn't look right I keep my mind open to the possibilities. If we didn't investigate then we are just being irresponsible to humanity.
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STOPGood posting, @orionschariot! Let's Steem to the moon!!