Why Steemit is Keeping the Price of Steem Down

I've recently published an article, arguing that the value of Steem is not directly related to Steemit. The founders of our new social network, @dan and @ned, could've chosen any fiat or crypto currency for their project.

Some of you pointed out that there are charts, which show a direct relation between the number of users, posts and the price of Steem. This data is undeniably true, and will remain valid until more and more businesses adopt Steem as a currency of exchange - for example, I'm now offering my professional translation and editing services in exchange for SD, and there is already an eBay-like site, which accepts Steem, as well (do list any services that you know of, in the comments!).

As more and more services start using Steem, investor confidence will increase and so will the currency's price. At the moment, 1 Steem is worth approximately USD $0.50. People are publishing content and receiving (from what I've stumbled upon more frequently) anywhere from SD $0.01 to SD $250 (0.02 to 461 Steem or USD $0.01 to USD $225, at the current peg of USD $1 for SD $0.9).

Let's imagine the following. Steem goes up in price, and 1 Steem is worth USD $10, instead of the current $0.50. That's a 20 time increase in its value. So now, the same articles on Steemit would be worth SD $0.02 to SD $5000 (0.04 to 9220 Steem or USD $0.04 to USD $4500, again, at current peg of USD $1 for SD $0.9).

How many of you believe that an origami or mocaccino article is worth USD $4500 dollars? Don't forget, that's USD $4500 per day, as we see at least one of these articles daily. I'm not certain there are Pulitzer prize winners, working at these rates. Our content is not at all that unique, as compared to what's available on the net.

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"Unique" is actually the key word here. The price of Steem will never go up, unless we offer something unique in this currency alone. For example:

Weapons-grade plutonium
Cheap stolen merchandise
Information of interest to the industrial or government sectors
Illegal services, etc.

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As far as I'm aware, there's one major advantage of Steem over other cryptocurrencies - no tax for micropayments. Which may turn out to be a good way to launder illegally obtained funds, and hence increase the currency's price.

In the mean time, Steem will stay where it is, with the occasional hiccup, when a big investor tries to sway the market in a direction, which is favorable for him. For example buying huge amounts of Steem to drive its price up, thus convincing others to buy as well, and then selling at its highest price, effectively taking the money of everyone, who have fallen for his bait. Tricks like these further reduce confidence and the price of Steem.

Let's imagine something else. A new unique product or service is offered only through Steem. Someone suggested talking to J. K. Rowling and her publishers, to have her next Harry Potter book offered in exchange of Steem only. Chronologically:

Steem price goes up, as millions of fans buy magical Steem.
We get paid more for our articles, while this lasts.
Steem price goes down to original values, as J. K. Rowling and publishers exchange Steem for a fiat currency (that's not magical at all, really).

So here's the second problem of Steem (and any cryptocurrency, really) - it's not widely accepted, and therefore we can enjoy high prices only for a short period of time. It's not by chance that Bitcoin's price went up - in addition to being used for illegal activities, there are now thousands of physical locations, accepting this currency. You get paid in Bitcoin, you pay for food with Bitcoin - no need to exchange, hence a more stable currency.

Let's imagine one more final thing. Steem becomes extremely popular and is used around the world. At a price of $4500 per article, how much time would it take for Steemit to become the biggest network, with the largest amount of publishers, seeking huge easy incomes? And if Steem authors make an easy buck, why would the milkman sell his dairy products for SD $1, when everyone is now making SD $5000? Yes, inflation will certainly kick in.

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To sum up everything so far - Steem will never become a valuable currency, unless we offer something unique. At the moment, its price is driven by the Steemit hype. Which is quickly fading, according to the market. And if we, by some chance, find something unique to offer in the long term, then some of us will become rather rich, before inflation kicks in.

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I offer Professional Translation and Editing Services in exchange for Steem.