The impact of the Fed raising interest rates on the stock market (and crypto too)

When money was cheap due to quantitative easing it was easy for a new idea to receive investment. Startups had an easier time than usual attracting investors. This also played out in crypto where ICOs were able to raise millions and billions. This played out mostly in tech stocks where tech startups often from Silicon Valley were getting billions of dollars off an idea without any monetization.

If we look at business history we can see that after the dot com bubble or even during the 2008 crisis it was the businesses which focused on economic growth which survived and thrived. When Google and Facebook launched they didn't figure out a profit strategy until later. Google went from being a search engine company to becoming the leading advertising company. Facebook also became an advertising company and the concept of "selling eyeballs" and monetizing user data became a thing.

Now that the economy is changing and risky assets are less attractive the market is shifting toward putting investment in projects which have proven track records of profitability and real value. The problem with Steem and most projects in crypto is they do not have or did not have any plan for how to actually attract revenue. People simply assumed in crypto that institutions or retail investors will just buy Bitcoin and that the money will trickle down into their projects. This may have worked in 2016 and 2017 but it's not working anymore.

When something isn't working anymore it is time to evolve and reinvent. The means of doing this which I suggest is to take the methods of data science and research to pinpoint the most successful monetiztion strategies. In addition this new market condition makes economists a very valuable resource for crypto projects. Someone will have to figure out how to monetize and produce the revenue generation strategy.

Steem is a complex ecosystem with a lot of economic agents involved. Each economic agent can be thought of as a potential self sustainable business entity. The blogger is running a business just as a Bitcoin miner must do. When bloggers on Steem cannot be economically sustainable it impacts the growth of the Steem ecosystem in other areas. In addition there are the witnesses, the developers, all kinds of other economic agents which must profit and grow to continue to grow the ecosystem.

SMTs are a nice idea for growing the ecosystem but then we have to ask ourselves how many of these SMTs actually have a bussiness plan behind them? Even some really great ideas for SMTs have no strategy to monetize, to generate revenue. Even if people could buy Steem via Coinbase there isn't enough SMTs out right now that we could feel as if millions of people might go on Coinbase and buy Steem to interact with some SMT business.

If projects figure out a way to create demand for Steem (particularly SMTs) then profit in this context would be the amount of Steem burned or it could be the amount of Steem locked up or it could be that the ecosystem can be measured to be growing by looking at the Steem price. In other words Steem has not had much profit and all kinds of great apps with high utility have not changed this.

We have Dtube, we have Actifit, we have perhaps other really high utility apps coming via SMTs. None of these apps when looking for investors or when looking to get people to buy into the project are promoting it in a way where they can prove they can generate a profit. None of these profits are offering data or hard numbers or profit statements. Why should we think any of them will be sustainable?

Steemit Inc is focusing on efficiency. We know in business efficiency improvements translates into profit. But we also know that reducing cost is not the only strategy. Revenue must be increased as costs are decreased. Amazon is a business which is great at this. In my opinion revenue and profit maximization tools must be developed for the Steem ecosystem as a priority.

Profit maximization tools are tools which can help the different economic agents in the ecosystem make profits in new ways. For example bloggers should be allowed to sell ad space and get a percentage. We should also consider implementing referral mechanisms so people who can advertise can actually draw in people who can view the content (and the ads). If I could reward people via referrals when they bring in business via my blog this would help my business and my blog to grow.