Hello Steemers! I am in the venture capital industry and today I'll be discussing why 1 STEEM could be worth $300. You may think that's ridiculous, however just look at the rise of Facebook, Reddit, Bitcoin, and Ethereum. Steem synergizes cryptocurrency with social media. These are two of the fastest growing and most exciting fields.
How big is the market?
Social media is extraordinarily broad. While steemit has potential and has proven to have all the right ingredients for disruption, it's not going to decimate Facebook or Twitter. But what it may disrupt is Reddit.
How big is reddit? Reddit is a privately owned company, so market cap and financial figures are not available. Externally, we can value reddit through two means: revenue multiple and comparison with similarly sized companies in the same vertical.
- We know that reddit has 234 million monthly active users.
- From my experience in the industry, I would peg the annual value of each user at $6.
- That would mean $1.4 billion per year in revenue.
For a company like reddit, generally a valuation is at 5 to 15x revenue. Given that reddit has very strong growth (about 50% YoY) and strong commercialization aspects, a multiple of 11x seems appropriate. This would peg reddit at $15 billion.
If you compare reddit with similar internet properties, you would arrive at a valuation of $15 to $30 billion. Thus, I believe $20 billion is an appropriate conservative estimate.
How much can Steemit take?
Let's presume that Steemit becomes half as large as reddit, in three years. Assuming only a 20% annual growth rate of reddit*, they would be worth $35 billion by then. Half of that is $17.5 billion.
- Even though reddit has been growing at the rate of 50% YoY, they have became quite large and it is prudent to peg a lower expected growth rate.
Steemit is more than just a social network however. It is also a cryptocurrency, with a stable Steem dollar. It's decentralized and backed by the blockchain. If you look at the tip bots (bitcointipbot, changetip) on reddit, you can quickly see the synergy. Bitcoin is currently worth $10 billion, and while I don't think it's plausible that steemit will overtake bitcoin, I think it's quite possible that:
- bitcoin's market cap will grow to $30 billion in the coming years
- steem's cryptocurrency aspect will be worth 30% of bitcoin
That would place steem's value from crypto at $9 billion. Summing that up with the $17.5 billion from social media, that's a possible valuation of $26.5 billion.
1 STEEM = $309.36
Of course, there is monetary inflation of STEEM, so it's appropriate to discount that figure a bit. Unless steem makes it up with even further growth ;)
Does this sound like a pipe dream?
If you talk to any investor, you will see that venture capitalism is about optimism. There are a thousand reasons why an idea won't work. It's the ones that fight despite the headwinds that prevail. Uber is worth $60 billion, even though they have hundreds of lawsuits and fights with regulators worldwide.
So many people, like professor Bitcorn, said that bitcoin won't work. And look at the booming cryptocurrency industry today: it does work. There is no reward without risk, and while there's absolutely no guarantee that steemit will be worth anything in the next few years... there is huge upside if it does.
You are funding an early stage startup
If you look at Facebook's stock performance, you'll see that they've more than tripled their value since IPO. However, this ignores the fact that angel investors and venture capitalists in Facebook has had upside of 1000x+.
Steemit is not a household name yet. It is unproven, and it is highly volatile. You're investing in an early stage startup, with extreme potential.
That's what makes it the most exciting cryptocurrency of 2016. And it's why I'm here.
What i would argue here is that Bitcoin is still yet to go mainstream like normal currency but its acceptability is growing fast, and its current market cap is around $10 Billion.
It took many years for Bitcoin to reach here but in case of Steem i would say it would take less time, as it is social media platform with paying out system to normal users. I think Steemit would also help speed up adaptation of crypto currency, also we see new people joining Steemit who have never invested or were never interested in crypto. Money is going to attract more users to steemit for sure as youtube and other similar medias are not paying enough to its users.
steem at this stage very favorable to investment
steem на данном этапе очень выгодный для инвестирования
I notice many of you are not up voting your own posts. It's a good idea to do so as you receive value from you own up vote.
You get $0.18 every time you upvote your own comment? I get nothing when I upvote my own comment. Won't I get more making fewer votes and using those votes to upvote good content? I'd like to see the formula that determines the payout per vote.
Not sure of the logarithm the calculates the pmt, but it all has to do with you investment (effort, or money). Keeping at it eventually, you are sure to see an increase in voting power. You might want to check this article out:
https://steemit.com/voting/@gavvet/minnow-voting-power-from-the-record-usd30-000-makeup-post-perspective
Thanks, that was insightful.
Let's say only 25% of what you said is accurate.
That still means steem could reach $77.34
I'd still be good with that..
I don't think there is a direct link between Steem price and the amount of users the Steemit site gets. How about if most of the new users convert their Steem dollars into Bitcoin? When calculating the future value of Steem you can't gloss over the inflationary aspect of the coin like you did in this article. There is no good reason why Steem's market cap should be 30% of Bitcoin's market cap when currently Ethereum's market cap is not even 10% of Bitcoin's market cap.
I think the correaltion would be more users = more people want to power up = buying pressure for steem.
Also, more users might equal more headlines in major newspaper which would in turn attract traders and speculators.
The second part of your statement is sound, but the first part is iffy because there is no guarantee that new users would want to power up. There is a high likelihood that many new users just want to make money off of the platform and will just take their Steem dollars out of the system and buy Bitcoin with them. I personally have used every single one of my earned Steem dollars to purchase Bitcoin. I never even think about powering up since I also earn Steem power from posts.
I'm all for the Venture Capitalism comparison, but I think you're numbers are quite a bit padded and just looking for the shock value, hopeless romantic upvote.
I agree the markets that Steemit is aiming to take market share from are enormous and highly competitive. Even, then, your price targets sound crazy.
Take a look at Airbnb's pitch deck or how back in 2011, bitcoiners were doubting that 1 BTC = $1000.
1 STEEM = $300 is a longshot, and it is kind of crazy. But all good opportunities are crazy.
By all means, come back to this post in 3 years and see what the value of steem is ;)
I understand that this grows quickly because people like to earn Steem by participating. But who is buying Steem and why? Only people who pay for Steem give it value.
No completely correct. People who like to work (earn) steam also give it value, as a mater of fact they are the ones that give it its ultimate value.
Sorry, you're right. Only people who pay for Steem give it a price. But I'd still like to know why people pay for Steem.
This article may help:
https://steemit.com/cryptocurrency/@phoenixmaid/are-you-still-wondering-why-steamdollars-have-real-usd-value#@phoenixmaid/re-sigmajin-re-phoenixmaid-are-you-still-wondering-why-steamdollars-have-real-usd-value-20160718t092437124z
people pay for steem, becuase steem represent the value the community provides the world via blogs etc. If people decide that the value of the steemit community is worth more than the current asking price for the asset (steemit), which will be determied by total market cap then they will by in expectation of income, but really the ultimate expectation is the capital gains on the investment.
I'm a bit skeptical about some of your assumptions and valuations but interesting perspective on what the possibilities are. I feel like it's a bit like the 1% fallacy - "if we just get 1% of such and such market we'll all be rich!"
One could only hope! The potential is there for sure. Remember this is just starting out. Great post.
For steemit to reach that market cap new users much invest in steem and steem power. Ot they dont the scale with tip to the other side. There will be money going out and nothing coming in.
Have you check out Bitshares? Same dev team and is to global finance as Steemit is to social media.
Solid post. I was about to start a similair discussion. The high risk the cryoto space brings with it one thing nobody seemingly cares about. Besides coinmarketcap.com there is: https://www.coincheckup.com This site did all the research for you. It's truly amazing.
3 years have passed, yet steem is at $0.2.... and I am buying