It is true that Steem , EOS and Bitshares are among the best crypto currencies due to the value that the coins have , the communities and team behind them. However will excess supply be their demise?
For those of us that are conversant with the economics of demand and supply, it is argued that if supply surpasses demand then the price falls and vice versa-hence why the precious stone (Gold and diamond), crude oil and even equity industries systematically control supply in order to better control price. Crypto-currencies, on the other hand, are not immune to failure if the team goes against the principles of economics.
Moreover, many investors have lost money concentrating only on market cap of a coin without looking at the big picture: future value, team behind the project, circulating supply and importantly, total supply.
According to coinmarket cap - See for yourself here on coinmarket cap some great coins have not seen their periods due to excessive circulating and total supply even though they are excellent projects with amazing team.
Zach Herbert argued that :
There are two major inputs to market cap: total supply, which is required to properly calculate present market cap, and inflation, which can be used to predict future total supply and therefore future market cap .
Total Supply:
Every site we could find that lists out tokens by price, volume and market cap does so based on circulating supply rather than total supply. Circulating supply indicates how many coins are in circulation, but does not include coins held by the project. By contrast, total supply includes coins in circulation + coins held by the project.
Read full article here .
This argument is valid with this simple example: If Lamborghini produces few cars of its new model ( Lamborghini Veneno -see pic ) , price will be very expensive because many rich people will want to buy (demand surpasses supply). On the other hand , how many people will be proud driving the most common car in his / her country with excessive supply?
Why Steem will succeed : steemit
I will remiss if I say that am not passionate about steem and its ecosystem. Moreover, in reality , steem ecosystem is the best compared to other crypto currencies :
- Superior blockchain: steem processes transactions faster and more efficient than bitcoin and Etherium combined which shows its superiority and thus solid future value.
- Community growth: we all know that social media platform can grow into 1Billoin + members as the case of Facebook. In reality, it pays more to be a member of steemit than any other social media due to the great community , quality contents and reward system-read more here on my former blog . Therefore , in few years’ time steemit will be huge when it enters mainstream (especially if just one big world celebrity signs up on steemit and make positive noise about it ) and thus will reflect in very high steem price ( now is the time to buy more steem and power up).
What do you guys think?
- The points raised here are great, however I will add more
- I agree with the points raised here and thus, will always look at the big picture
- I disagree with demand and supply economics
- Shut up @charles1, you are talking nonsense again.. steem price will never go up
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See my former blog post on Why many people will fail on Steemit and other social media
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