STEEM Is Going To Go Insane!!! There Is A Major Supply Problem
The people who are active on this blockchain and working to accumulate some Steem Power are going to find it is one of the best things that ever happened to them.
Quite simply, the Steem system is set up to handsomely reward those hold Steem Power. Anyone who amasses any amount is going to be very happy down the road.
When will this take place? I have no idea. Markets are their own animals so we will just have to wait on that. However, we can look at other factors which lead me to this conclusion.
We are rapidly moving to the Age of DApps. Steem was fortunate to get listed a few different places. One, State of the DApps, is seeing a strong representation of Steem applications.
I pulled this last night from their website:
According to this, there are 5 Steem apps in the top 10 and 9 in the top 25. This from a blockchain with a token worth under 30 cents and is ranked 50 something on coinmarketcap.
Certainly, at these early stages, this story has little bite to it. Few in the general public are using blockchain applications so the volumes on them is still very low. However, the fact that Steem is ranking so well against the likes of Ethereum and EOS is saying something.
There is also another part to all this. Presently, there are around 40K accounts transacting on a daily basis. This is a number that could 25 fold very easily up to a million. An application having a million users is not a heavily used one, let alone the entire blockchain having that.
A million users on this blockchain will make STEEM go insane.
There is a simple reason for this.
According to Steemd.com, this is the amount of STEEM out there. There are 292M STEEM in total right now which means that would be 292 for each user. That means the average holder would be a Plankton. This, of course, is only the average and not the mean since there are many accounts already above that total. Even with the inflation rate of about 8.5%, there simply is not a ton of STEEM out there.
We have another aspect. There are direct transactions costs on Steem. That does not mean it is free. We get around this by having Steem Power. Presently, it takes 5-10 SP to post and do a couple comments. Anything beyond that requires more (I know it is tallied as RCs but you get my point).
If we presume 10 SP per account so they can be fairly active, that is 10M STEEM required. Right now there is about 87M on the open market.
What if, however, we see 5M user on the Steem blockchain? This jumps the amount of STEEM required to 50M.
Now, 5M users when we have about 40K daily sounds like an astronomical jump. However, when you look at it realistically, it is not much at all.
This is a list of the top 15 social networking site. Notice the smallest on the list has 35M monthly users. Please bear in mind, these are single applications. With Steem, the numbers are a totality.
If one Steem application makes it to 1/10th of Meetup, that is 3.5M users right there. Again, this is for ONE APPLICATION, not the totality of Steem. Try to envision what it could look like if there are a couple hundred DApps on Steem. Could the totality be used by 10M people?
It is not completely out of the question.
Going back to our original numbers, there simply is not 100M STEEM out on the open market. In other words, there are not enough STEEM left to accommodate that many people.
Which means, those holding STEEM need to be enticed to sell. The only way this happens if is the price gets high enough to stimulate some cashing out.
Ultimately, it is a basic supply problem.
The time frame could be a year down the road; or two; or three. Based upon the amount out there, it is unavoidable.
There is one other thing that comes into play here. It deals with the potential downside and how people typically view things.
It is a mistake to look at this like the DotCom bubble. This is nothing like that. Yes, one could equate the pricing of the coins to that bubble and the bursting that took place.
However, we must realize the DotCom dealt with companies. They were what was priced based upon nothing and when the music stopped, they went bust. Blockchain is not a company. The value that is provided is much different than a company. If you will, a company can be equated to the applications we are seeing. Nevertheless, the token is tied to the blockchain which derives it's "value" based upon what is on top of it.
At this point, the blockchain is not going away. There are enough people supporting it that no matter what happens, the blockchain will continue. Numerous posts dealt with different "worst case" scenarios over the past month so no need to rehash them.
Through it all, development continued. Some applications left while others folded up shop. The blockchain, however, just kept growing. There is more development taking place today on Steem than was when it was almost $10 a year ago.
I believe that the major point of exposure will be seriously lowered by mid-year. We are seeing Steemit Inc make progress on converting the data structure and reducing the size of the master nodes. This will increase the decentralization ensuring the continued running of the blockchain.
Steem is basically a highway. It does not matter the type nor brand of the automobiles driving on it. If one or two manufacturers have problems, the road does not care. New players are just as welcome as the old. A bankruptcy of one company does not affect the roadway. Invariably, other companies pick up the slack.
Work the numbers yourself and see what you come up with. Try to figure out a way where, with any type of user base on here, that the amount of STEEM does not encounter a supply problem.
This should make what is already in people's wallets very valuable.
If you found this article informative, please give an upvote and resteem.
And this is where the math fails:
We are currently operating at
10xRC. At this point only STINC knows the actual RC projections.I don’t know if anybody already deconstructed the RC matrix. Does it go up if more active users? Do transactions become cheaper (assuming no 10x in play).
Because unless the 10x is maintained, which then allows just as much spam as before given sufficient accounts, the price of STEEM may very well crash because “premium” blockchain to operate on. If you need 1k STEEM for a post and 30 comments/day... that’s a steep entry.
Migrating to RocksDB will make running full nodes a lot cheaper which will make RC's cheaper, too, which is a good thing because it's not the high cost of transacting on the blockchain that makes STEEM valuable but all the traffic on it. The lower the transaction costs the better. That achievable by running efficient RPC nodes. What we need is masses of people using Steem DApps. Realistically, we can expect valuation in the low tens of billions when we have hundreds of millions of users - or perhaps tens of millions of users if enough people are willing to pay for the advantages of decentralization. We are extremely far from that kind of numbers but making transactions drastically cheaper is the way to get there.
That’s been my impression as well, and my main hope for scalability. For all the good points of Steem scarcity listed in this article, the big problem is at current conditions we’re capped at a relatively small number of normally functional user accounts.
In a recent State of Steem forum on Discord, I was intrigued most by some of the discussion from @blocktrades. Apparently their team was the original subcontracted developers of initial RocksDB implementations (the user account history module I think it was?) He also confirmed that upcoming node efficiency and cost reductions could bring down resource costs, because they would make more resources available for everyone.
He even went on to describe a future where it could feasibly be possible to have simple node install packages for consumer hardware that even a layman could use. I envision it like most proof of stake wallets that stay open & running to secure the network while staking rewards. We could see Steem clients that basically act as nodes and help generate the network resources the end user is consuming.
All a bit pie in the sky, and I’m very much the “layman” I mention above... but I feel there are smart folks working on the technicals, and many outside of Steemit Inc. capable of taking up the tasks if need be. That keeps my interest and optimism alive... perhaps foolishly!
Yes, that’s correct. But let’s make sure not to confuse ‘Resource costs’ (RC) and ‘Resource costs’ (operational infrastructure costs).
The latter being how much it costs to host a node on a server. The specific hardware requirements for such. We’ve known for decades that they were ridiculous for such a small community as Steem currently is.
The former being the”new bandwidth” matrix introduced with HF20. And then hotfixed by applying a
10xcalculation.My point is that unless you can create proven value, nobody is going to pay high “entry fees” to be capable to operate.
RocksDB is challenged in mseveral points already. It’s a long overdue focus but at the same time several have highlighted already that it does away with other benefits inherent to graphene tech. RocksDB should also not change the economics of the RC model. That would be the biggest clusterfrak yet by STINC if.
It’s just forgotten nowadays that we operate at 10x RC.
At the same time, 5 million users [at current cost] is 150m STEEM burnt.
PS: RCs will operate from “delegated pools”, so more likely than not be available to dApps. AFAIK there is no user-to-user RC delegation model yet. Also... right now all that is vaporware.
We would have received the initial SMT testnet December 2017 (as per Ned in SMT Telegram). We will eventually receive “something someday” but while before nobody knew what, now we know even less.
That's exactly the point. A premium blockchain with these high prices for simple transactions would need to show clearly that it deserves the "premium" tag. Why should dApp developers not prefer one of the other blockchains, that are as fast and cheaper to run their dApps on? This is not a selling point, but a big challenge. And in the meantime I think, that Steem is actually much less than Steemit. The Steemit dApp is at the moment the only working blockchain social media, while the Steem blockchain has many competitors, where SMTs are already a reality. Talk to real developers out there - most choose Tron or EOS for a reason - or many reasons (especially the tokenization that already works there).
If Steemit Inc. is actually more more than Steem, that would be disappointing. From my layman's point of view last 12 moths they (Steemit Inc) only burned money, there is little user acquisition, while user experience is even going down - for example I see in created feed posts disappear after a week, there is a hole and then you can see some 3+ months old posts. Looks like a trivial bug, but shows how bad Steemit is.
This is indeed the hidden gotcha in @taskmaster4450 's computations.
I found that getting over 100 SP was the line where i could actually start using steemit. Before than it was just by luck that i got any rewards. And now with RCs in place, it would have just been by even more luck that i got out of the bottom.
Even further, 1MV is where things actually started working for me like the system that was advertised.
Where i typically got curation rewards for voting. That i could post and comment as i wished.
So, the way i see it, things are going to be even harder for the new people. Getting to the 100 SP threshold may be impossible accept by buying. And we see that there isn't enough STEEM out there to buy. (for everyone)
I think this is an interesting point. As I was reading the post I wondered this too. In such a premium ecology, will we see a problem or maybe a new economy of information? Or will people leave because the don't have bandwidth?
Most people are just consumers, but they do want a vote and a voice.
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Your optimism is amazing on Steem :)
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Not only it is important not to sell any STEEM, but there is also a feeling of hapiness everytime I get paid with STEEM at this current prices. What I mean is, we are the lucky ones, the resistant ones that will be rewarded for our persistence to stick around in this tough times.
Great, keep hodling!
Awesome research 👍
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I really like the manner of analysis you are bringing to all steem users. The positivity, and the practicality and logic of your reasoning is remarkable.
Thanks @taskmaster4450 for clearing our minds into alot of things in relation to blockchain.
You and @chbartist have the same strategy in educating we steemians; you tend to simplify concepts in a non-technical approach, while @chbartist tends to use more figurative way of explaining the value of steem, blockchain and the community itself.
Both of you are gems of the community.
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Let’s what happens in 2025
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Very good points and arguments for the STEEM and all the apps already on the blockchain and future apps in the making.
That is also why I am so active with @actifit! Who else is joining to make it happen? At least for your own health and fitness!
Leave your comfort zone and start moving!
I like your optimism.
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Something is wrong with your Steem supply number, coin market cap says there are 307,712,749 STEEM Right now. Turns out inflation is not really 8-9% because people are converting SBD to Steem, thus creating more Steem inflation. Conversion created 12million extra Steem if I'm not mistaken. To fix this problem SBD needs to go, what can guarantee us that SBD will not fall even more in the future, the 1$peg is clearly just a dream.