All markets are ruled by supply and demand

and steemit is no different from any other market.

Cryptocurrency market values are determined by the utility of the currency. The more use and value you get, the more demand there is. Example: bitcoin provides a lot of value by allowing users to buy illicit goods their government doesn't allow them to buy with their own money, so the value is great. This is just one example of what bitcoin can do and where it adds value. It can also act as a safe haven for tax evaders and those willing to hold value in something other than their nation's currency. This was demonstrated when Cyprus collapsed and the price of bitcoin skyrocketed from 10 to 260. So we have established that there is a large use case for bitcoin. Now where does steem fall?

The more sellers and miners for a cryptocurrency, the more supply there is because more people are willing to sell at the given market price.

When there is more supply than demand, price falls, and when there is more demand than supply, price rises.

Steem has more utility than bitcoin, because steem already is a clone of bitcoin with more coins in circulation. You can store value you in it, and your money appreciates, you get interest on your steem if you're willing to lock it up a while in steem power. So that is a reason there will be a higher demand for steem than bitcoin. But let's come back down to earth for a minute, because the current steem market cap does not exceed that of bitcoin's. Where do we bridge the gap? Where is the demand?

Well let's first take a look at reddit. Reddit's traffic stats show that there were 16 million unique views in a month which means 15 million people looked at different pages on reddit. And from may 22nd to july 12th reddit averaged about 17,000 people signing up per day! That is a lot of people new to the network. https://www.reddit.com/r/AskReddit/about/traffic

Steemit has a total amount of around 25,000 users and is a superior product than reddit meaning Steemit is a better platform than reddit because content creators are paid whereas those on reddit are not. Reddit, according to http://www.worthofweb.com/website-value/reddit.com/ is 4 billion dollars. Steem's market cap is 270,000,000

4,000,000,000(marketcap of reddit)/270,000,000(marketcap of steem) = multiply the marketcap of steem by 16 and its worth the same as reddit(which it should be worth at least twice as much more, but if you consider reddit and steem equals(which they aren't), the actual value of steem should be around $50 because 16*$3.2 = $50. Now if we value steem at twice the amount that reddit is worth, the market price becomes $100 which is ABSOLUTELY NUTS.

Now newbs to steemit like me should realize that the more steem we own the more power we have on this site and the more money we make for posting posts like these, the more demand increases for steem. This decreases supply and creates demand which is a recipe for huge market growth . And the more people on this site, the more people will refer others to this site which further increases demand, which reduces the supply of steem, and drives traffic, paying the content creators for their time.

Now where is the supply? Who is selling? The answer is: speculators which accounts for at this point a very small portion of all buyers. The owners of steem power/dollars don't have an incentive to cash out because they know their fortune today will be worth 5% more tomorrow. Why settle for pennies on the dollar when you can let your profits run into infinity? Why sell an asset that will appreciate?

And that's why steem is a good investment, because once you realize that there is no incentive to cash out and that there is a huge untapped, undervalued market, you'll buy some steem, and hold it, and tell your friends, power up, create more money through content creation, and so the cycle continues.

John Galt, Out