A central idea to blockchain and Bitcoin was for normal users to take back control of their financial position and assets and the more decentralized the industry becomes through project development and of course uptake of users, the closer it comes to reaching its goal. However there are some interesting things to note.
Use case grows
I think that Steem is one of the projects that goes a long way to connecting people to potential as despite the current complication, it is continually improving and simplifying through the applications that attract real users. For example, from the State of the Dapps site, Steem holds 8 of the top 20 applications by rank. This also shows just how few applications get used and how few people are into crypto projects globally
But, there are some other interesting things to think about. We get told of course that unless we hold the keys, it isn't ours which is good advice especially in the real world where banks operate on ractional reserves. This means if everyone chose to take what is legally theirs from the bank, the bank doesn't actually have it.
And all that Steem
@denmarkguy wrote a post the other day about Steemit not being the largest account by Steem holdings with Bittrex coming in as number one with 5 million more Steem. Of course, they don't have Steem Power, they are holding Steem for users who trade it, 49,204,277 STEEM to be precise.
I find this interesting for a number of reasons that I haven't fully thought through yet but think I will spend some time on it. One thing to note is that while Steemit Inc's stake is ninja mined, the blockchain has paid out a great deal of Steem to users over the last almost 3 years and will continue to do so, while mining is no longer possible.
This of course means that while Steemit Inc's stake is massive, it loses relevance over time, as do all of the whales and early accounts too. While not a great start for distribution, it will continue to decentralize the more people mine the pool now and the more Steemit Inc sells, the faster this will happen. It was perhaps wise for them to keep that stake at the start as a way to protect the blockchain in the early days of growth, but that is another discussion perhaps. It also shows how much potential stake is off platform that could be used for access to the pool - the Steem on exchanges or liquid is about 2.5 times that of all the bidbots combined.
Risk on exchange
The other thing I wonder about is what would happen if Bittrex folded and closed its doors as it currently holds 1/6th of the steem stake in its account. Would it choose to return it to users? Again, we have all been told many times not to hold coins on exchanges for this very reason. What would happn if Bittrex lost control of their keys (or chose) to power up that Steem and actively use it on the blockchain? They currently have 29 million Steem and 7 million SBD they could convert. Anyone want a witness vote?
The next line of thought i have is concerning the idea behind blockchain and Bitcoin originally as a way for users to have control over their financial assets. We all have heard that the top ten richest people in the world have as much wealth as the bottom 50% of the entire global population and think that is pretty crazy but, it is not quite true.
A run on Steem?
Jeff Bezos is worth 135 billion dollars, 20 billion larger than the entire crypto industry but, does he control all of that? Where is his money? Let's pretend that he did actually have it all in a bank, because of their fractional reserve rules, what would happen if he pulled t all out at the same time? In 1995 Barings Bank collapsed because of supposedly one trader losing £827 Million which is about £1.5M today. That is less than 2 Billion US dollars to collapse a bank.
Hmm, Bill gates is worth 94 Billion dollars himself, what happens if that top ten decide to call in their dollars? Not quite how it works of course, but you get the idea, those ten could do a run on the banks like the world has never seen before. What happens to your savings if they choose to do so?
And this is what it comes down to at Steem doesn't it? What is in my wallet and secured by my key is mine and no run on the bank can stop me having access to it unless the global internet is taken down also. We would have some other issues to deal with then.
Who has the control?
But, with all these rich people out there with so much control, is that the real problem? Sure Bezos' 135 Billion is a lot but:
See those numbers? That is trillions. So the world's largest managed fund at BlackRock controls 51x the entire crypto market value. One company. I wonder what percentage of the world's wealth is in there if the top 10 richest people have the bottom 50%? I think it is safe to say that there is a bit of room for manipulation and middlemen bleed along the way.
Eventually though, all things break and as we can see from the state of the world economies, it has been crumbling for years but propped up in a number of ways with some creative accounting and outright lies. Now, more and more people are realizing the precarious situation their personal finances are in and how little control they actually have over them as they are at the mercy of the banks.
One thing I am not quite sure about is that while there is 29 million user Steem stored on Bittrex that appears in their Steem account, there is 14 million stored on Binance but their account is near empty. I don't know how that works and I put it down to business practices but, which is safer? Where is the Binance Steem stored? It is possible I'd say for the witnesses to do something about Bittrex if it went rogue but I have no idea about the Steem on the other exchanges.
Economic blockchain protection
In my thinking, while Steem is a great place to be from a social and various community perspective, it also has a lot to offer as not only is the steem on the blockchain safe in wallets, it is also growing in use case and potentially at some point, could do things like buy food or pay bills of various kinds without having to cross into the realm of fiat at all. Perhaps everyone's dream will come true and we all could buy something with upvotes.
There can be no run on Steem because there is not one single controller like a bank but it can still hold value, Steem is the ideals of blockchain in motion in many respects and while not perfect, a massive reason to get onto Steem and hold some value in storage, if not in active use.
@exyle was talking about applications being the main reason to be on steem but I think there are other reasons. For example, he also asked if Steem accounts could be used to log into other sites in his most recent blog which gave me another question.
Future uses of Steem and crypto
At what point do crypto holdings become much more important collateral than fiat? Considering that if I have fiat money in the bank that is prone to manipulation and can be taken away from me in numerous ways through bank failure, inflation, law changes and the like, my crypto holdings are provable and are most certainly mine (if I have the keys). Even though the price is currently dictated and calculated by fiat, it doesn't mean it will always be so.
Could I one day lock away part of my account as collateral on a house and use the upvotes or interest from that portion to pay off the loan from the inflation pool? That sounds like it is going to get very complicated but essentially it is just a series of contracts and well, this is the blockchain.
Just some ideas and questions
Obviously when it comes to these things I am far from qualified to reach any meaningful conclusions or even offer detail along the way but for me, they are things to think about and consider going forward on the Steem blockchain and in crypto. There are so many things coming to a head in the global economies as well as growing technologies that hedging bets on holdings seems like the only way to mitigate loss as something is going to break and that is going to set off a chain reaction of collapses.
While there is:
Total amount of STEEM stored on all exchanges: 60,550,038 STEEM
Total STEEM supply: 292,671,394 STEEM
Liquid STEEM: 86,418,815 STEEM
Thank you @penguinpablo
In time I see that amount severely drying up and Steem becoming very scarce as more and more people realize the potential of Powering it up and actively using it as not only a way to earn, but a way to protect themselves against various forms of economic hardship. In time, it could increasingly be used to cover some of the everyday costs a person might face and still be held in a wallet that is untouchable by anyone other than those with the keys.
This in itself would drive the value of the coin upward as more people and businesses would want access to some of that security and of course, the Steem pool it buys into. That 100 dollar Steem doesn't look to far off in a world that paid 19 billion for Whatsapp as all it would require is 30 billion marketcap for Steem. 30 billion is very little in this world but one thing is very interesting to note.
When fiat is converted to Steem and put away in a wallet, it becomes untouchable by a bank until the owner decides. Bezos and Gates can't touch it and no run by any mob can take it away as there is no fractional reserve on it. I don't know where all of this leads but I think it is worth finding out.
Taraz
[ a Steem original ]
Sorry for the longish read but hopefully it raises some thoughts, questions and maybe some ideas about why Steem is going to be huge - or not. :)