I have been in Steemit for about 8 weeks now. After reviewing the Steemit model, I have decided to write a follow up article because I have enough experience over 30 years in finance and business to see many problems with business models. Maybe the article below will open the Steemit founders eyes to change things before the web site go's down in flames. The founders had a good idea, but there are far too may flaws where they need to revise their model and soon.
Most people have heard about Bitcoin and the new trend of cyber currency. The problem is that Bitcoin and the other 500+ currencies are made up out of thin air. There is nothing behind them. Bitcoin is the only coin that I currently know about that has a fixed number of coins. The price of Bitcoin is based on supply and demand for it’s existing 21 million coins. It is true that if you invested $1,000 in Bitcoin in 2010, that your investment reached a very real cash dollar value of $74 million. There are many things that are attracting investors and consumers to the cyber coin market. You can look this topic up in Youtube and how it all works. There are several layers to all of this stuff, but make no mistake about it that the new world currency move is pushing towards digital currency.
The average transaction fee is about 6% to buy and 8% to sell digital currencies. Some companies charge a whopping 15% to 20% fee to buy or sell.
The interesting thing that I am seeing is that there appears to be a “scheme” from the vast majority of 500+ digital coins that are popping up where you cannot buy their currency with cash, but instead you must first purchase Bitcoins with your cash online, then buy the other currencies with your Bitcoins. So the other companies dreaming up their own currencies are actually collecting up the limited supply of Bitcoins which has automatically driven up the price of Bitcoin.
Bitcoin has reached over $3,000 last month, currently trading about $2,339. The other cyber or digital coins appears to have variable rules how many coins they print to get your Bitcoins. All coins are bought and sold in fractions. So you can purchase $100 worth of any digital coin.
Now here is the red flag. There currently are no banking laws or regulations for cyber currency. The IRS cannot even get access to who has how much or where today. It is all in cyber world. Thus, billions, yes, billions of dollars in financial transactions from around the world are occurring with no regulations or oversight to prevent fraud of any kind. There are many legitimate cyber coin models, but there are far many scams in cyberland today. So you must be careful. I too am still doing my own due diligence as to which digital wallets are secure and reliable today. This is where you basically store your encrypted cyber currency.
The New Facebook that is a Disaster: Steemit.com
Web sites like Steemit.com have a voting system that pays people to post articles in a cyber utopia model in their web site. When members like your article they can “upvote” your article where you earn Steem dollars.
Additional financial rewards occur when you buy their currency where the company locks your money up for 90 days at a time. If you want to cash out, they will only allow you to cash out about 9% of your coins per week. Their currency is called STEEM. The red flag I found with Steemit.com is that there is massive cyber bullying and cyber stalking against authors who post any article that speaks negatively or questions the risk of cyber currency. Steamit.com web site looses a lot of its credibility by allowing 99% of all authors to use fake or screen names, so you really have no idea who they really are.
The web site appears to have high cyber currency rewards for articles about hyping Steem currency, Bitcoin, Steemit web site, art, travel and photography. All other topics are merely ignored with little to no financial rewards. I observed how the founders of the site allow massive cyber stalking where if say 40 people upvote to like your articles, they have other people who have 2 -5 people who have the power to down vote all 40 votes and actually have remove your article. So their website hardly offers a fair and democratic methodology under their current web site model. There are no tools like what Facebook offers to block a cyber stalker or report anything about any article or person. So in this cyber utopia there could be a calling to blow up America and there are no means to report the content to the web site founders. When you think about it, Steemit could be used by groups like ISIS who speak in code and post, while actually being paid by the web site. So this cyber currency world is truly the Wild Wild West.
To date, all cyber coin transactions off and on shore bypass the government, the banks and IRS. This has become very appealing to the anarchist and other Utpoia movements. Another flaw with the Steemit web site is the founders print more coins to help pay their bills. Frankly this entire unregulated Utopia cyber model for many cyber coins, especially Steemit.com looks like a Venizuala style crash is just waiting to happen.
I wrote about this very concern when the value of the Steem currency was $2.09 just three weeks ago. Currently $1.09. Unless the Steemit.com founders make many changes to their business model, the chances are high that their currency will continue to crash. Maybe to a mere 10 cents or less.
Outlook
The entire digital currency market appears to be on the edge of crashing into a 1929 nightmare as the millennials keep trying to hype up the values. However, when the dust settles, I do think that Bitcoin, Ethereum, Ripple, Litecoin, and several others may do well in the long term.
I wish to stress that many of these coins were valued at $0.0001 each just several months to one year ago. So coins like Etheruem can crash from $250 back to $20 and still be way ahead where is traded at $8 last year. In March 2017 Ribble traded at $0.006 each, rallied to 30 cents and currently trades about 19 cents each.
Also, when Bitcoin falls, pretty much the value of every digital currency also falls.
This is not going away, but there will be some very negative selling waves and press coming up where it could provide some speculation opportunity in Bitcoin, Ethereum, Ripple, and Litecoin. My advice is if you do purchase any cyber currencies, then the risk would be the higher than putting your money down on a roulette table. So be careful and do your homework. Over the next five years, the changes are extremely high that the world will do business using cyber coins. However, nobody knows which ones will still be around five years from now compared to Goldman Sacs on Wall Street suddenly starting their own cyber currency that crushes competition. The odds look favorable that Bitcoin and these top four will still be around.
A great place to start is to monitor the Coin Market Cap Desk that shows you the current U.S. Dollar price of each currency, historical price charts, how many coins are in circulation and the daily dollar amount of worldwide transactions per coin each day.
For example, on July 11, 2017, Bitcoin had a market cap value of $38.4 Billion, priced at $2339.75, with a circulating supply of 16.44 million coins valued at just under $1.5 Billion for that 24 hour period, updated in real time. Coin prices are moving 24 hours a day and quoted from this web site.