It is too easy to blame steemit or other big players for the decline in steem prices. We are all responsible for it. But the good thing is, we can all work together and trun it around.
The theory of the good and the bad money
When you have several currencies and are offered a choice to use them, which one are you going to use first? You will tend automatically to first use the money that you believe will loose its value. So if you have fiat and gold, you will use your fiat money and keep gold. If you have steem and btc, you will probably use steem first and keep btc.
The quality of the money is directly linked to your trust. The more people trust a currency the more they will keep it.
This theory is very important to understand what happens to steem. A long steady price decline tends to weaken your trust in a currency. You will be afraid that this currency looses additional value. Hence you will want to get rid of it and get a more stable one. Since everybody will behave like you, sooner or later somebody will sell the steem to dollars and therefore participate in the price decline.
A steady price decline has three results:
- Trust in a currency is declining and fear increasing
- Automatically the time you keep the currency is declining
- The circulation speed of the money is increasing
A faster circulation of the currency linked to an inflationary system can create hyperinflation !
If we go on like that, soon steem will not have any value at all. Whitnesses will not be able to cover their costs with what they make in steem and the whole blockchain could colapse.
Steem is not broken, the technology is great, the concept is great. We are confronted with a problem that is psychological and contrary to countries like Venezuela, we are capable of turning it around.
How we can manage the turn around
Fortunately steem is not a big country. It's a community of a limited size that interacts a lot. We have all one thing in common: We need steem and are happy if prices increase. If we work together, we can turn this thing around. First we should stop being scared that steem is going to collapse. It's precisely this fear that could lead to the collapse. No fear – no collapse.
Stop considering Steem as a bad currency. We have a wonderful ecosystem that is amazingly creative. This whole ecosystem needs a stable currency. So it is in all our interests to keep it stable.
How to keep Steem stable
If you want to be able to earn Steem in the future and you want that your Steem Power keeps some value. You need to do the following steps. The more people doing the steps, the faster we can mend the price. You can resteem this post to accelarate this.
1) Stop or reduce the spending of your steem
When you have some steem on your account don't use this steem to buy tokens, splinterland cards or other cryptos. The only valid thing to do is to power up.
2) Buy back steem regularly
If you have a lot of money invested in tokens, splinterland cards or cryptos. Sell them from time to time. Use this steem to power up.
3) Write posts about how much you powered up
The more your friends and followers see how you power up, the more they will gain confidence in steem and they will do the same. Influence the people around you to trust steem. Follow these two authors if you want to see how you can build trust in steem: @exyle, @jongolson. Rember the reason for this price decline is purely psychological!
Never forget steem is the best thing on the internet (I might be biased ;-))
My projects:
@help.venezuela : a program that supports steem users from Venezuela.
HVOTE : A token that is underlined with a real steem account. With the sales of tokens, the Steem Power of the account is increased. The votes are sold on smartsteem and together with curation rewards, the account produces real economical value. Big token holders get upvotes from the account.
Great post (re-steemed).
Unfortunatelly for most Venezuelan users, keeping steem or powering up is not an option. Many of us came here looking for an additional source of income. I have manage to increase my SP with tons of hours dedicated to commenting and posting, but I cannot always do that (electricity, internet, credit on phone, simple enthusiasm sometimes fails us). It has been too slow a process, considering the number of post and how long I've been here and it has been a process with tons of disappointments.
There are many big accounts that could be making a big difference if they upvoted more frequently the tons of plankton accounts that keep struggling to remain here.
They keep upvoting the same accounts that are already solidly established. Many users give up afte months of posting without getting a single SBD in rewards.
Do people have to beg for those big upvotes?
More upvoted to small accounts means that their users will engage more and will recruit more steemians. More upvotes to small accounts means that those accounts will grow and will power up and will be able to delegate SP and buy STEEM.
I felt the same as you when I joined first. It took time and dedication to get upvotes and regular followers for my account. It's much easier to be seen now with the different tribes to sort out the content that interests us.
I read a very interesting article lately about how it takes a couple of years and hundreds of posts to gain a following on any social media site. It is the same anywhere that you have to build a reputation but it can be done. I would recommend not selling if possible as this is all a new eco system and we are looking 3 - 5 years down the line before it get developed and the price gets to a steady place. Everything that you see are the building blocks for what this place will be eventually. It's coming together but will take time. I just want to be in the right position with the biggest SP when we do get there.
Thank you very much for your comment. I've been on steem for almost 1.5 years and it has never been that easy to buy cheap steem and to power up. I see it as an opportunity and I try to power up as much as possible.
Hi @hlezama,
Thanks for your interesting comment. I totally agree with you that we are not all in the same situation. I believe however that we should all be aware that the higher the steem prices, the more we all profit from it. If we all can power up as much as we can afford, I think we all profit in the long term.
Best regards,
Achim
Regards, my brother @achim03
We are all concerned about the fall in cryptocurrency prices in general. Yesterday there was a general fall phenomenon of all cryptos, large and small.
As you put it, this is a problem of trust. I believe that no currency has gained enough trust in its users. Even BTC that everyone sees as the unbeatable giant, It had a high circulating market when its value plummeted in Q2 2017.
PowerUp is the maximum demonstration of trust to steemit. When we increase our stake we are committing our resources in a plan of at least 13 weeks. So if we all powered up we would be showing greater confidence and in theory there should be a recovery.
I have a question for you:
Increasing the stake in the tribes, does it cause the effect of trust towards steemit? That is, is it also beneficial for the recovery of the value of the steem?
Your friend, Juan
Hi @juanmolina,
Thank you very much for this interesting comment.
I had troubles to understand for a long time what the effects on tribes are towards the steem price. I came up with a theory that is maybe not 100% correct:
Even if tribe coins are handled in steem, investing into these tribes is actually taking money away from steem. In the past people would have powered up in steem and now they are powering up the tokens. This means that indirectly money is going out of steem.
Let's take an example:
A new tribe is created and people invest into it. They use steem to do so. In fact they simply transfer steem to the creator of the token. If this creator now has lost trust in steem he can take the steem away and exchange it into dollar or other cryptos.
So as a conclusion I believe that investing in tribe coins weakens steem additionaly.
Best regards,
Achim
Just one question @achim03, @juanmolina
Assuming that "investing into these tribes is actually taking money away from steem" would be true, shouldn't we also consider a bit unexpected scenario:
Shouldn't that mean, that tribes are creating buying pressure? Just wondering.
Yours
Piotr
This is a very interesting question. What I struggle with is to see how these tribes add new value in economical terms. Before the tribes I got an upvote which was worth something in steem.
Now these tribes can give additional value to my posts but at the same time the value of the steem upvote has diminuished. When we consider these tribes, their token has often been created from scratch without any inner value. Then these tokens have been bought with steem. Instead of powering up steem, we now power up in these tokens.
At the end of the day we get a similar post value if we add steem and all the tokens together but there was no "new money" coming in. In a way the tokens have diluted steem.
What happens if people become aware of that? I think that some might realize that most tribes don't offer an added value and they might not want to invest into it anymore. They would probably start to sell them off but would they buy steem instead?
First of all, I apologize for not having a fluent english but i would like to ask a question. It has been requested from the Spanish-speaking community maintain the token of the tribe, it is suggested to make power up or stake, invest in it, but not sell them but, based on what you raise, would it be better to change to steem and invest in this last because it is the currency in which we continue to trust? What would be the suggestion based on your vision? Thank you very much.
Hi,
Thanks a lot for your comment. Your spanish-speaking community is right to ask not to sell and to stake the tribe coin. This is true for tribes but this is also true for steem. Before investing in any tribe, I would definitely make sure that I have steem power first.
Many thanks for your valuable response, grateful. Congratulations on its publication.
Interesting analysis
I'll think about it.
Thanks friend.
Thx for this interesting (and logical) explanation @achim03
This vision has a lot of logic by the relationship as close as possible to the published content.
“When you have some steem on your account don't use this steem to buy tokens, splinterland cards or other cryptos. The only valid thing to do is to power up.”
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Hi @guruvaj,
Thanks a lot for your comment. What you write is very interesting:
Money is also there to be spent but people also save it. The important factor is the speed at which it is spend. The faster you spend a currency, the more you participate in devaluating it. At the moment people tend to use the steem as soon as they have it. Like that they increase the circulation speed and fire the inflation. What we should do is change our behaviour. Let's say instead of using all the steem that we get immediately. We power up 50% of it.
Best regards,
Achim
To add:
One of selling point of steem is:
-in steem, you will earn cryptos in the cheapest and safest way.
Therefore, these people who entered steem for money, needs to compensate for their efforts.
More mature steem users, do powerups, and buy more steem.
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Dear @achim03
This definitely summarizes everything important about how we see the currency and how we should act,
My grandfather said without trust he has no respect and when that respect is lost, trust is lost
We must respect the parameters that are established so that this currency continues to grow but we must also join efforts as it says and agree so that it continues to grow, steem has a great value that part and part is being lost, only those who interact should make an effort in his strength.
Greetings friend.
Hi my friend. Thanks a lot for this great comment!
Hello my dear @achim03, very good theory, very good advice. I believe in what you say and I will try to follow the advice to the letter. Let's raise the price!
Hi my friend!
Thank you for your comment! Yes let's get this price up again :-)
the community can if they want to
Thanks a lot for your comment!
Dear @achim03
I'm seriously not sure if this is the right moment to try to turn price of steem around. There is just to much uncertainty related to HF21. And HF22 is already on the way too.
Uncertainty is the put-off for investors and it may take some time to pass that stage of development.
I've never heard about this theory before. Interesting stuff. Thx for sharing :)
You've mentioned those three results of a steady price decline and it all does look like a vicious circle. It's always a huge challenge to get out of that cirle and break it.
To turn things around we would need to ensure that users are getting their trust back. And it won't happen as long as Steemit Inc will be forced to sell such a huge amount of steem on monthly basis.
As long as this continue, people will doubt about any efforts will bring long term results. STINC selling those steem tokens is like a niddle poking the eye.
Why? Isn't buying those tokens (Cards) similar to buying tokens on steem-engine (like PAL or LEO)? Why shall we recommend to users not to do that? I'm a bit confused and I would love to understand what's on your mind.
Upvoted and resteemed :)
Cheers, Piotr
Hi my friend,
Thanks a lot for the great comment and the resteem!
I gladly try to answer your question:
I struggled to understand for a long time how the tokens and cards influenced the steem economy and I have developped a theory about it:
Before the steem-engine token, you had three choices with your steem. Either you powered up, or you invested in bid bots or you exchanged it into other currencies.
With steem-engine tokens and also with splinterland cards this reality has changed. You now delegate this choice to the person who sold you the tokens.
Let's say you buy a new token that has just been issued. The token is created from scratch without inner value. The steem that you spend goes to the creator of the token. The steem didn't get transformed, it just changed hand. Now it is the token creator who has the choice what to do with the steem. If he doesn't power up, he either exchanges the steem into other cryptocurrencies or buys other tokens.
With cards and tokens, steem is just the means of paiment. It's not bound, in contrary it stays liquid. With loss of trust into the currency, people will want to get rid of it and buy for example splinterland cards that are indexed to USD and keep their value better. So liquid steem just changes hand till somebody sells it for another crypto currency or fiat and lets the price dip.
In conclusion
I believe that steem-engine tokens play a big role in the negative price evolution of steem. Why because if I put myself into the shoes of a person who just created a new token. If I manage to sell thousands of my tokens and get steem for it. What would I do with these steem! I would make sure that they do not loose their value. So I would invest them in something that keeps the value better like btc.
I think with the low prices it's a really good time to buy steem. Not too much at once. I believe that prices will still drop but we will reach a point where only the people keep steem that really believe in it and in the long term this will allow to turn the prices around.
Best regards,
Achim
It should be mentioned that the largest contributing factor to the falling price is steemit (inc) itself. They are funding their company and all of their development and activity by selling off their massive stake. Week in, week out regardless of price. This creates even further downward pressure on the price of steem as they are selling in quantities larger than most people can afford to buy.
This is the distribution model of steem as the blockchain started without distribution but rather mining open to the public... the founders “ninja mined” the vast majority of the stake. Steemit inc selling off their stake weekly to fund their activities is the distribution of the token. At the moment, with not a lot of buyers, the constant sell pressure (not existent on other block chains) has caused steem to go down harder than the rest.
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Hi @allcapsonezero,
Thanks a lot for your great comment. You are totally right that the sales of steem inc contributes greatly to the price finding. What I can say is that steem inc has been doing that forever and the problem is that they have to come up with income to pay their employees. With low prices, they simply have to sell more.
However we can help steem by visiting steemit and clicking the ads on it. This is a new income source for steem inc and if we all do it, it could take some sales pressure away.
This is true also because steem isn't yet a currency that people trade with. The biggest demand for steem comes for the people using it. If as users we power up, we actually take away these steem from circulation and block it for at least three months. The more steem "we take away" like that, the more the supply diminuishes and if the trend can be broken, people would start again to buy steem rather to sell it off.
Best regards,
Achim
Hello!
This post has been manually curated, resteemed
and gifted with some virtually delicious cake
from the @helpiecake curation team!
Much love to you from all of us at @helpie!
Keep up the great work!
Manually curated by @niallon11.
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For more information about our project,
please visit this month’s UPDATE post.
Thanks for uvpote and resteem!
To show the example:
I just sold 6500 DEC and Powered UP 40 Steem
Amen, that is exactly what I did ! Even leasing SP to be more effective ! Take care and let's rock this platform all together :D
It should be mentioned that the largest contributing factor to the falling price is steemit (inc) itself. They are funding their company and all of their development and activity by selling off their massive stake. Week in, week out regardless of price. This creates even further downward pressure on the price of steem as they are selling in quantities larger than most people can afford to buy.
This is the distribution model of steem as the blockchain started without distribution but rather mining open to the public... the founders “ninja mined” the vast majority of the stake. Steemit inc selling off their stake weekly to fund their activities is the distribution of the token. At the moment, with not a lot of buyers, the constant sell pressure (not existent on other block chains) has caused steem to go down harder than the rest.
The only way to get the price to go up is to create more demand for steem than the amount steemit dumps every week. Your suggestions for this will help, but the demand for the blockchain resource credits needs to go up. D’apps (including steemit) need to attract more users to create that demand.
Steem is entrenched and the committed user base isn’t leaving. It is only a matter of time before something attracts more people to the blockchain. Keep using it... keep telling people about it. Keep buying steem and posting your powerups. But know this: the amount of steem dumped every week is the key to the drop in price. Until the user base increases, you have cheap steem available. It won’t be available long.
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