You don't really need to invest into Steem to use the platform, though. You can read, post and comment with just the free STEEM you get for signing up. Moreover, the main source of potential profit is posting/commenting rewards, and those rewards do not scale with the amount of Power you own, but with the amount owned by your upvoters. As a consequence, there is no profit to be made from investing into STEEM yourself (except for curation rewards, but those are really negligible).
That's why investing into STEEM is not like investing into a startup. The value of a startup increases because of the promise of future rewards, even if it is in the far future. However, with STEEM, there will never ever be any reward for owning STEEM, so the price should not increase.
Therefore, I believe the only reason the value of STEEM is increasing is an unfounded speculative bubble that will collapse sooner or later. Of course, large Power holders will say otherwise, because they need to keep the value of STEEM up for as long as possible to cash out, because powering down can only be done at a 1%/week rate.
I agree with your first paragraph, but in your second paragraph, you assume that investors invest into Steem by holding STEEM tokens, which they most certainly should not do. Investors for me are those that hold STEEM POWER. The only reasons to hold STEEM for longer time is to provide market liquidity (for which you get paid even).
There is certainly some speculative bubble surrounding STEEM, and if you were around Bitcoin for the last .. well since it's genesis block, you should know that there are ups, downs, pumps, corrections and dumps. None of them give a precise impression of what the value will be longer-term. When the first Bitcoin bubble popped, it did so at $0.007. Guess what, Bitcoin is highly inflationary and still, the price when up as high as $1200, with no real user base, with no real functionality, with no chance for mass adoption .. at all.
I don't mind if the price of STEEM collapses. I not only read the whitepaper, but can read between the lines. Cheers.
BTW, Steem launched on April 1st, with no one actually using it what it was made for for weeks. Today, STEEM has 33,648 accounts registered of which probably >70% are individuals with just a single account. The registration process was halted for some days because of the heavy load. People were begging to get an account on Steem(it).
I'd say, if there was a crypto ecosystem that can go viral, that has plenty of incentives aligned, that allows anyone to participate for free, that has all the advantages of features of recent development in blockchain technology, ... well then I'd think, that's a winner.
In the second paragraph, I should have written Steem instead of STEEM, that was a confusion from my part. But even if you hold your investment as Steem Power, you will still never profit passively from it, and that's by design. Dan mentioned he wanted to discourage rent-seeking behavior. That's understandable, but there's no reason for anybody to invest - capital gains aside. But without any fundamental reason to invest, there can be no sustained capital gains.
Bitcoin is a different beast, because it can be used as a currency and as a store of value. To use it as such, you need to own Bitcoin yourself (i.e.: invest). As mentioned in my previous comment, you don't need to invest in Steem to use Steem. Moreover, Steem is poor at both of Bitcoin's applications, because you have to choose between a liquid asset (STEEM) that is subjected to a very high inflation, or a totally illiquid asset (Steem Power) with a moderate inflation rate.
Steem is currently growing fast because people are attracted by hopes of profit. I can see two sources of profit:
If people realize - or even just start thinking - there is no reason to buy STEEM/Steem Power any more (e.g.: the growth of Steem stalls), everything will collapse and content producers will leave
EDIT: Since we've reached max comment depth, I'll reply to the child comment here. The problem of SteemPower is not dilution, it's illiquidity. If you decide to sell your stake tomorrow, half of your investment will still be locked away a year from now. The Steem Dollar is a joke. If you offer a guaranteed 10% interest rate, the peg with the real USD will never work. By construction, it would mean that a SteemDollar is worth more than a Dollar.
I see your point. Steem Power's only source of profit is captical gains, if you don't want to be active.
However, people that want passive income can still 'invest' in SteemDollar which even pay some interest over time. The SteemDollar is as good as bitcoin except for its speculative nature which is an advantage if you want to use it as an actual currency. For store of value, you may actually want to buy something that is less speculative in nature as bitcoin, but that's a decision for everyone to make on their own and derails the discussion.
Even if everything "collapsed", the network would still go on and pay content creators more than they would have received on any other platform. The only case when the system fails is when the price hits 0 which is as probable as bitcoin being worthless.
Oh .. by the way, the dilution of Bitcoin is still higher than the dilution of SteemPower.
i do agree with you, that steemit is a winner or your might call a slam donk!
I disagree about the "no real user base for bitcoin part". A huge part of the rise in price for BTC has been demand in china, russia, and other countries with both repressive governments and a growing entrepreneurial class. In most of these countries, a successful business person's money being stolen directly out of a state run bank by government functionaries is the norm, not the exception.
I can't speak about China, but I have no idea where this idea that an "oppressive government" steals money from people's bank accounts in Russia comes from. While Russia has some serious "rule of law" and "fair application of law" issues, it is not a kleptocracy. There is a burgeoning middle class in Russia and a significant human capital investment in the Tech Industry. These people tend to meet 2 of the typical crypto currency enthusiast's characteristics: Libertarian Views and Forward Looking Decentralized/Blockchain Systems. Additionally, Russian retail investors are looking for a way to get returns on their investments in the same way as Americans and they see cryptocurrency as a potential vehicle especially when Westerners jump in and drive prices up for them.
Thanks for posting. I agree in general with your sentiments. How did you find out the total number of users? I've been looking all over for it.
The numbers are not displays publicly, but the blockchain knows them:
curl --data '{"jsonrpc":"2.0","method":"call", "params":[0, "get_account_count", [""]],"id":0}' https://this.piston.rocksI largely agree with your reply but I would add that when Bitcoin was $1200 there was a non trivial user base and there was quite a lot of functionality. There were several markets some of them dark also buying gift cards was no problem. There were numerous exchanges. Even Coinbase was operating, linking wallets to bank accounts. As far as mass adoption is concerned, I'd liken it to an island state like Barbados. Sure it will never get mass adoption but for those that use it over time it becomes more valuable. Steem has a real chance of becoming its own island state as well as not everyone blogs or produces content but there are many that do.
Thanks for your response about using curl and piston to find the total number of steemit users. It works for me!
I could not reply directly since the reply button was missing. This may be a bug where if part of a post is in a code box then the reply option disappears.