Where does Steem value come from #BitcoinPizza entry

The question

To precisely define where Steem value comes from, it's necessary to observe a couple of things:

  1. Steem value is exactly correlated to the amount of influence on the Steemit website.
  2. The Steemit website is growing very quickly

The Steem tokens can have some value as a monetary instrument in much the same way that Bitcoin does, but Steem is actually very poor at that. This is due to the very high inflation rate (100%/year or 0.19%/day) and it was purposely designed to not be very good at holding value. So while the properties it has in common with Bitcoin give it some value, it certainly does not give it all of its value.

The network

The actual value of the token is directly correlated to the Steemit website itself. As we can see from Facebook, a social network's value grows quadratically to the number of users. The value of Steemit, then is proportional to the square of the number of users. The value of Steem, since it is an influence token on the network, actually derives its value directly from the number of users joining.

The answer

The simplest explanation for the value of Steem is simply this:

Steem's value comes from the users of the social network.

Simply speaking, it's as if every user on the Steemit network has stock in the Steemit network. What would it have been like if Facebook gave out dynamic shares to Facebook based on how much they influenced the network? That's exactly what Steem is doing.

The implications

This has profound implications, if this is correct, that means that Steem Power value will grow at the square of the number of its users. Steem tokens will continue to inflate by design, but there will be more and more incentive for users to convert to Steem Power.

#BitcoinPizza #money

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