I'm still learning about STEEM

SBD, STEEM, STEEM POWER and Vesting are hardly intuitive to the new Steem Blockchain user. For someone who has extensive cryptocurrency experience, it's taken me longer than usual to grasp how the whole Steem concept fits together - and quite honestly - I don't understand it all yet. Even after reading the June 2018 Steem whitepaper I still have many unanswered questions.

As a crypto savvy individual with a brain the size of a planet, if I am struggling to master how the Steem economy works, then I know that the majority of others are too. Or they just don't care. Or they don't even realise what it is they don't know. Start digging through the depths of Steem and you find horrible little details about topics like "changes to supply rate" or "debt-to-ownership ratios" which I don't really care to learn about at this stage.

What prompted this post was that I wanted to see how other people used their Steem currencies, to learn how to use my own better. So Bit Brain went to go investigate how the "pros" do it:

From https://steemitimages.com/

What is your STEEM doing for you?

What do the pros do?

"A professional is a member of a profession or any person who earns their living from a specified professional activity." ~ https://en.wikipedia.org/wiki/Professional

With this in mind I looked at a few Steem accounts of prominent Steemians; those people who earn a living from Steem. I looked at "famous" bloggers, YouTubers and also those infamous serial rapists of the reward pool. What I found was interesting: as I mentioned above, they clearly also don't know what to do with their Steem currencies! Steem is wonderfully transparent when it comes to earnings and holdings, we can all rifle through one another's wallets as if they are our own. It's easy to see what people do with their Steem currencies. Most of the pros are holding a completely random mix of SBD, SP and STEEM, some in savings, some not.

This is slightly disturbing when you consider that these are cryptocurrency professionals - people who earn a living through crypto - that we are talking about! Here I was, ignorant old Bit Brain trying to learn more about Steem from the pros, but as it turns out, I may already know more than what they do! It was a little disappointing to me because I was unable to get the answers I was seeking ("How should I best use my Steem?"), but at the same time it left me in territory that I'm already very familiar and comfortable with: DYOR territory!

It also completely validated this post of mine from last week: https://steemit.com/cryptocurrency/@bitbrain/crypto-experts - in which I wrote that almost all crypto "experts" are not proper experts at all!

I have done a little research on Steem already and I am continuing to do a little more. I want to share with you the results of my "Do Your Own Research" so far.

How to use your Steem currencies

As a brand new Steemian I asked around about the post payout options: is it better to get the 50/50 payout or the "power up 100%"? The answer was 50/50 - not the payout, that would have been too easy! No, by a 50/50 answer I mean that 50% said get a 50/50 payout and the other 50% said get a 100% power up! 😆So before I even earned any Steem I had questions about which currency I should earn!

Let's take a look at the facts - that may help you, and me, and even the pros, to decide how to handle their Steem currencies better:

I think that the most important starting point is to look at STEEM vs SBD. Since SP (STEEM POWER) (which also equates directly to "vests") is worth the same as STEEM - they can be treated as one and the same (which they in fact are - SP merely being a form of temporarily "locked" STEEM - at least that's how I see it.) It would be wrong to just say that the one with the higher price is the better one. If this sounds obvious to you (and I hope that it does) then I'm sorry. I feel it necessary to mention because I've encountered so many new crypto investors who are insanely proud of the "cheap" coins they have bought "which will no doubt also one day climb in value to where BTC is now". Coins like Ripple or Tron or Cardano which they picked up for less than a dollar... Not everybody understands the concept of "supply"!

STEEM and SBD have relatively good liquidity and can therefore be traded for one another with very little loss as the spread is small. The most important factor becomes price performance over time: i.e. - if I hold $100 worth of STEEM for 1 year, would I have made more money holding $100 worth of SBD instead? Let's take a look:

SBD is designed to be a stablecoin. Not as stable as a coin like Tether - it's not directly pegged in value to something else, but stable nonetheless. 1 SBD should = approximately 1 USD. STEEM has no such restrictions. Immediately we can see that SBD is potentially limited in a bull market, but may become useful in a bear market as it will maintain value. STEEM is free to climb or drop in price. As SBD is not as stable as it should be, let's take a look at how the two currencies have compared historically:

Made by Bit Brain with TradingView

STEEM is blue and SBD is red. They do go back a few months further, but as currencies are normally very unstable shortly after launch, I prefer to look at them from the start of 2017, which I believe gives a more realistic picture of their relative performance.

Drawing in some trend arrows makes it more clear:

Made by Bit Brain with TradingView

Clearly STEEM is rising and SBD is dropping (relative to BTC). Without drawing out the obvious conclusion: this means that it is better to hold STEEM than SBD.

I could end this post right here, but there are a few more considerations (I did warn you, Steem currencies are not simple!).

Considerations

• SBD is close to its ideal 1 USD value. If the market were to drop again then it would possibly be betyter to hold SBD.

• The crypto market is naturally bullish (despite 2018's dismal first half) - this makes a stablecoin a bad long-term investment.

• SBD has fluctuated wildly in price before. (It almost reached 14 USD last year!) If it happens to be rising faster than STEEM, then hold SBD until that trend changes.

• Historically STEEM has risen faster than SBD

• By Vesting STEEM as SP you can earn in a manner similar to "staking rewards" earned on some other cryptos.

• Vesting reduces liquidity which can lower the price of STEEM (higher liquidity normally translates into higher price - the more something is traded, the higher its price becomes - sort of).

• Vesting makes it impossible to capitalise on rapid temporary price jumps.

• Maximum supply of STEEM and SBD is a mystery, at least to me. I know that coinmarketcap has a max supply listed for STEEM, but I can't find where or how they get that figure. The whitepaper speaks about an inflationary model and hints at unlimited supply (think along the lines of Ethereum for supply). I honestly don't know

Conclusion

I strongly suggest that you convert your SBD to STEEM except for if and when the bottom is dropping out of the crypto market. Whether you then vest that STEEM as SP or not is up to you and your investment style/plan. But what I suggest even more strongly is that you trade your STEEM for other cryptos! The crypto community needs people to use it, it needs that liquidity! Go buy yourself some attrictive looking low market cap coins (like I mentioned yesterday) and you could make a fortune if they take off!

That's my suggestion. Remember to be careful about who you get information from, especially if they are a crypto professional who can't even handle their own STEEM in an optimal manner! Remember to DYOR.

Closing comment

This is Dan Larimer's Wallet. I'm not going to comment, I'm just going to let you see what a true crypto expert ("I would regard people such as Vitalik Buterin, Dan Larimer and Da Hongfei as real crypto experts." - Bit Brain - https://steemit.com/cryptocurrency/@bitbrain/crypto-experts) does with his Steem currencies!

From https://steemit.com/@dantheman/transfers

Yours in crypto,
Bit Brain

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Published on

by Bit Brain

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