A year in the life of Steem

July 02, 2018
Chris Wheal

In the volatile world of cryptocurrency, Steem has seen a steady rise in trading volumes compared to other currencies. One factor in this stable performance is the flock of users to its social media platform Steemit that rewards users for posting content.

Steem coin

Since its launch, Steem has been one of the most active in the market: Shutterstock

Users are rewarded with Steem when their content is “upvoted”, and when they curate quality content. The popularity of the platform has given Steem an edge over other coins and there are almost one million accounts in the Steemit social network with one and a half million publications being made each month.

Ranked 33th in the market, Steem had an explosive launch in July 2016 and saw its value soar more than 1000% in the first two weeks after it first paid people with its own coin who posted on its website.

Highs and lows

Since its launch, Steem has been one of the most active in the market. Yet like so many cryptocurrencies, Steem’s price followed the bearish market trends in quarter one of this year.

It shed 85% of its value from the all-time high price of $9.25 (on January 3rd) before finally falling to $1.32 on April Fool’s day.

After its launch in July 2016, the coin was trading for $4.34 before hitting lows of $0.14 in the early months of 2017. By December 21st 2017, the price passed the $4 mark and the market cap went beyond $1bn. On January 4th 2018, the price of the coin hit $8.1 with a market cap nearing the $2bn mark.

One reason for this surge was that thousands of people started to use Steemit for the first time, abandoning Facebook and other blogging sites, as the young platform aimed to establish itself as the new “front page of the internet”.

In early 2018, the coin followed the market slump that affected all the major currencies but continues to hold its head above water. At the time of writing, its price was $1.25 with a market capitalisation of $331.3m according to Coinmarket.com.

Factors that have influenced price

The platform was given a confidence boost recently when China’s Ministry of Industry and Information Technology released results from research aimed at ranking crypto asset projects. The Chinese government ranked Steem second, after Ethereum, as the world’s best blockchain network.

Chinese flag with crypto coins

The Chinese government ranked Steem second in its list of best blockchain networks: Shutterstock

The project outperformed other major projects such as the bitcoin, NEO and IOTA, mainly in the technology and innovation categories.

A report accompanying the list outlined the purpose of the monthly reports to: “help master the development of global public blockchains, trace the direction of technology innovation, and help promote the innovation and application of blockchain technology.”

Rivals

Upcoming rivals, such as UUNIO, could impact on the price of Steem. This is a blockchain-based company that is launching a content rewards platform that compensates creators. It claims that its platform has advantages over “exploitative” mainstream rivals, all the while addressing flaws in other crypto-driven sites that offer a similar concept.

According to the company, Steemit’s upvoting system is flawed because the power carried by a single vote is determined by the money held in a user’s account. The company says this has left smaller content creators struggling to earn decent compensation unless their work is recognised by a “whale” – someone with significant Steem Power.

To compound the problem, Steemit only pays out rewards for the first seven days that a post is live, meaning creators of evergreen viral content could potentially miss out on years of earnings.

Yet this voting system is what attracts users to the platform. As one blogger, said: “Steem is to bloggers what lipstick is to women. It’s a vanity asset. When you have it, people look at you. If you have lots of Steem, they read your blogs. The more bloggers we have on Steemit, the more people want to own Steem to get Steem Power.”

The Steemit team is currently focusing their attention on the back end to ensure that it can handle the expected growth in traffic. It is also working on solutions to encourage a more realistic, broader array of content.

The platform has also begun to attract digital content businesses. The recently launched APPICS is one of the first smart media tokens on the Steem blockchain. APPICS is an independent project that provides a new ecosystem and user experience that can be quickly launched by anyone to help monetise online content.

Laptop with monetization button

Steemit announced it will collaborate with the popular monetisation platform, Datawallet: Shutterstock

Partnerships

The concept of monetising online content will continue to keep investors interested in Steem as it potentially solves a problem that has plagued the content economy since the advent of the internet.

In January 2018, Steemit announced it will collaborate with the popular monetisation platform, Datawallet.

Ned Scott, the CEO of Steemit, said: “The social media monetisation model is broken, both in terms of how platform users are rewarded, and how their data is owned and distributed. Steemit is currently working to resolve part one of that equation and Datawallet is tackling the second.”

Price dip benefits

Some members of the Steem community believe that a price dip is a good thing in the long run for the company. This is because when the value of Steem drops, the activity on the blockchain decreases. This makes it easier to get noticed and build a community.

Although the activity is lower, the reward pool is still the same. Each day the same amount of Steem and Steem backed dollar is generated and put into the reward pool.

If the price surges again as analysts predict, it is hard to know whether this will increase levels of content to the site and lead to a potential dilution of the reward pool. It seems that Steemit has a tricky balance act ahead.

Predictions for 2018

Many investors have trust in Steemit because of the influential names associated with the blockchain. But analysts are adopting a waiting and watching approach to Steem with a mixed bag of opinions. Some see the hype as a mere speculation, while others anticipate some positive developments this year.

A recent Global Coin Report said that this radical cryptocurrency is clearly leading the uptrend and has “the potential to make it big this year and going by its price records in the first quarter, it’s not difficult to imagine it as the game changer.”

Dan Novaes, co-founder and CEO of Current, a blockchain-based streaming site, said: “Until now, I’m not sure people realised just how valuable their personal data is. With blockchain, people will finally have the chance to be rewarded for their time, attention, and data. No longer will their valuable data be controlled by a few giant companies.”

Serafin Lion Engel, Datawallet CEO, said, “Steemit has been a pioneering platform in the industry, built on the common mission of decentralising social media and fairly incentivising users for their engagement, making them a natural fit to be a part of Datawallet. It’s a powerful next step to offer their already active and engaged userbases another avenue to earn crypto, by giving Steemit users the ability to participate in the networks they love, and then take that data they’re creating and turn it around for profit on Datawallet.”

Chris Burniske, co-founder of Placeholder Ventures, said that Steem Power could help provide the digital currency with the stability it needs. He said: “Locking people into Steem Power for two years is a good way to secure long-term capital commitment that will help the platform retain a steady base, hopefully giving it the runway it needs to establish sustainable user and developer network effects. This is an interesting neutraliser to the ‘burn fast, burn bright’ that we often see with new cryptocurrency platforms.”

 

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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