Why STEEM is undervalued with respect to supply:
One of the leading factors of cryptocurrency price is supply. Supply and Demand tend to dictate price. When a currency is limited in supply (like Bitcoin), demand for the currency drives the price up until demand is limited.
STEEM supply may seem average compared to other coins, but there is something different with STEEM. The actual liquid supply is incredibly limited.
- Current Supply of STEEM is 266,473,253
- Current Liquid Supply of STEEM is 76,677,601
Where is most of the supply locked up?
In Steem Power. Actual people have invested and stored STEEM in the form of Steam Power which limits the useable supply. These people realize the value of STEEM and how much earning power it has. What I notice is that many people here on Steemit don’t fully appreciate the earning power that investing in STEEM has.
Once people realize the return on investment potential with STEEM, people will drive demand up for STEEM as it will become a limited resource. For instance, leasing out Voting Power will provide returns on STEEM investment of 10% to 25%. Using Voting Power can bring even higher returns. This is much greater than most other investments. This is a little known secret the world has yet to learn.
Here is a comparison of other similar currencies that are organized by supply. You will notice I have added Liquid STEEM supply to the chart to accurately show where STEEM should be.
In this chart, the same currencies are compared by price. You will see Ethereum and Bitcoin Cash are out of family. You will also notice the liquid supply of STEEM, it is out of family.
In this chart, I have removed the outliers Ethereum and Bitcoin Cash which gives us a more conservable evaluation. You see that the total supply of STEEM appears to fit normally in the price range. Liquid STEEM at today’s price is clearly an outlier. However, by adding the price of $109 to the chart for the Liquid STEEM, it now fits.
Increased Users will Decrease the Supply:
There are several Apps using STEEM platform. Examples are Steemit, Dtube, Zappl, Busy, and others. Imagine if the combined use of all these current and future Apps eventually exceeds the amount of Reddit users which is very realistic. If I compare today’s Monthly Active Users (MAU) with Reddit’s MAU, STEEM App users will need to increase over 100 times. Currently, the amount of STEEM locked away is in Steem Power is 189,798,652. To keep the price of STEEM low while users grow, there would need to be 70 times more STEEM. This would equate to almost 19 Billion STEEM needed. The reality is that 19 Billion STEEM is not available or even close given the rate that STEEM is being created. Demand will soar dramatically as STEEM Aps grow in popularity and more Aps are crated.
In Conclusion:
Price of STEEM is influenced by market pressure. What the currency traders don’t realize is the rarity of STEEM. Sure, we may see more lows in the near future in this bear market, but eventually, the supply will get extremely low while Steemit, Busy, and other App users will increase. This alone could drive the price well beyond the $109 evaluation based upon Liquid supply.
I hope you enjoyed reading my Blog. Please remember to Upvote, Resteem, and Follow. Thank you.
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For a breakdown of how Steemit Rewards system works:
https://steemit.com/steemit/@socky/steemit-rewards-breakdown-a-simplified-explanation-with-illustrations
The several issues with Steemit (as I see it):
If they can find ways to combat these problems then we can lower the barrier of entry for many more users. The registration process alone is enough to deter people, as I know several who have lost their passwords.
These are growing pains. People are not familiar with how to store and keep the account keys safe. The newer generation will adopt the concept better. My mother for instance still uses checks. For her, Steemit is not the right place, but she doesn’t use social media anyway.
The user interface is getting a makeover. @theuxyeti is a UX designer and is working on one right now. He is taking inputs from the community. Feel free to go over to his page and take a look at what he has done. If you leave a comment with him, tell him I sent you. He will appreciate that I sent traffic his way.
Thanks! Yes I’m still working thru my interface. We started coding it last week
There he is 😀
I enjoy the interface but do agree there are improvements to be made. And there are spam / plagiarism bots that I've noticed on here, I think they do a nice job.
@hotsauceislethal for a better UI experience I recommend busy.org, it's 100 times much more friendly and aesthetically pleasing. The second point I agree 100%
Even if this didn’t go up to 100, we will still have fun
Word
@socky
Interesting, I am trying to get a deeper understanding of the internal workings of this platform/blockchain, initially I thought STEEM was a limited crypto, but yeah maybe I was a bit stupid/naive but I thought pretty much all cryptos where limited after the "mining process", as a way to solve the problem of hyper-inflation that "normal-money" is sometimes "suffering" from...
Please correct me if I am wrong!
But STEEM is different and I guess the different Apps based on the STEEM-blockchain all use the system of "user SP"?
And the "SP" system is good since it creates a scarcity of liquid supply?
So less liquid supply higher demand?
I really hope STEEM based apps can take a large part of the marketshare for social-media. This would be awesome because the value of STEEM would probably potentially skyrocket????
(Just slightly paranoid about the possibility of some kind of future STEEM hyperinflation)...
Please someone reassure me this cannot happen?
The creation of new currency is always happening, but the market value of Steem will dominate the currency. Not inflation.
The big things that influence price are:
If inflation worries you, then fiat currency should have you shaking in your boots. But don’t worry, as any economy grows, there needs to be new currency created to keep up with population and economic size. In Steem, I don’t believe that the growth of the currency will keep up with the population growth. People would literally have to quit the various Steemit apps in groves to be a problem. It would be difficult even then to kill Steemit as people quitting would make it more profitable for those who stick it out as their share of the reward pool increases.
Ultimately Steem is social media which is immensely popular. The Steemit platform is a little more difficult to get use to, but so was the internet when it was new. Now we can’t live without it. Steem will become ridiculously popular as many other social media platforms have. It also has so much more potential as the options for different apps are limited only by imagination. Compare that to other social media platforms where they have their theme and they are stuck with that theme.
But imagine if something goes right
and Steem actually rises to $100
I suspect that the near future may not look that great, but the growth of the Apps cannot be stopped. The demand for STEEM can only increase. The rate of increase in the supply is fixed and will become a very finite resource.
This is very useful info, I'm a few hours away from my savings transfer being completed and I've been wondering what the smartest options were. Whether to power up or delicate the SP...
Make sure to check out the link I posted in the article. It is helpful to understand how the rewards are earned. Also, it is important to understand that STEEM and SP are the same currency. SP is only STEEM that is locked away. With SP, you earn interest and the coveted daily voting power. Owning more STEEM in the form of SP earns more money.
SP is more secure than holding STEEM or SBD. REASON: SP takes time to power down (i.e. to free up the STEEM). If an account gets compromised, the first thing that happens is any liquid STEEM or SBD gets transferred. Keep in mind that this is caused when users release their master or active key. It is important to keep those keys offline and only use the active key after verifying the URL. While storing STEEM in SP, hackers cannot get access to the STEEM locked away in SP because the hacker would need to go through the power down process.
Good point, did realize it
Will do thanks @socky.
It is of my opinion that in order for Steem to prevail, it needs to go for the long game.
As long as all the other top cryptos are still battling out for dominance, Steem will be invisible. There is also a point where marketing matters more than technology/utility.
In comparison with other top social media platforms Steem is very new. The major differences is the rate of growth is phenomenal along with the possibilities. For instance, if we wanted to create a Steem version of Facebook, then it could be done. I think a Steem version of Facebook will eventually come. When other social media platforms are fixed by their version of what social media should be, Steem platform is free to grow in all areas.
You have a quite knowledge about steemit market. You seems to be economist. Anyway nice and informative post you have shared , good job and keep going.
Thanks @xaid. I’m not an economist. I’m an engineer. In some ways they are alike especially when it come to graphs and looking for patterns.
Nice to see you an engineer with good skills in presentation.
Oh, thanks for sharing this positive opinion with us and if Steem Price will reach to $109 dollar then that will be an sky touching growth for everyone and you highlighted the true points, i am not an investor and can't afford to invest but whatever hard work i am doing and receiving the rewards, from those rewards I am powering up 60 percent because i believe on this Platform and as you said when more and more users will enter on all Platforms which are running on Steem Blockchain, then the supply will get to the limitation point and then possibly prices will increase. So let's hope for the great future and thanks for the all details with all charts. Wishing you an great day and stay blessed. 🙂
I'm glad you believe in the STEEM platform. I have watched time-and-again social media platforms take off and become immensely popular and profitable. I'm not going to sit back an watch anymore. STEEM is the future.
A very profitable future
Yes, i believe the same and this Platform needs one good push and in my opinion that is SMT's, and official mobile based application. Thank you for your positive words. 🙂
That's very true, this platform deserves more rewards for the streams of creativity oozing out daily.
Interesting explanation, i like to know the factors that might affect the Criptomonedas
Cool good to know I'm in the right place eventually I will grow bigger to a whale
Excellent post - upvoted
Thanks for the statistics friend I like your post .. very important what you write. I will always be aware of your post
Good analisys, permission to resteem
I agree, the valuation of STEEM will rise greatly in the next couple of years. I believe $100 is very realistic and could potentially see much higher if all goes well.
Okay After reading this excellent publication, I can conclude that it is better to invest in Steem, Now that I am new, I have been in Steemit for only three months. It will be that you can make a post to know how the investment is made and what time is the best time.
Thank you
The problem is that no one can predict the future. However, price bottomed out around $0.80 for a very short time months ago before shooting up. I don't think we will ever see $0.80 ever again. But that is just my opinion.