Talent, Not Algorithmic Difficulty, Drives the Steemit Blockchain

In my prior video explaining the value of the STEEM currency, I discussed the utter simplicity of its catalyst -- people are willing to exchange money for STEEM, hence its market value. While this argument establishes the foundation of value, I understand that it lacks in contextual substance.

To provide more meat on the table, I propose that the Steemit blockchain runs on talent. Anyone that has tried content creation with sincerity understands that it is not an easy game. Even hitting the record button on the video camera causes many folks to freeze up.

What Steemit provides for the community is a quantifiable way to measure content value, and thus, offer a reward channel. Indeed, anyone who is remotely familiar with the blockchain should inherently recognize this protocol.

The Bitcoin Model

Where does the value of bitcoin come from? Aside from the fact that people are willing to pay cash for it, bitcoin supply is limited through the blockchain. For each new bitcoin to be introduced, one has to perform increasingly complex mathematical problems in a process called mining.

When bitcoin was first introduced, it was relatively easy for anyone with a graphics processor to pump out the cryptocurrency. However, as the market demand increased, so too did the mining difficulty. Essentially, price and difficulty shared a direct correlation.

Now, with corporations and powerful countries accepting the bitcoin paradigm, only those with access to the most powerful computers will dare try to mine bitcoin. Unless you have such access, the economics of mining do not make any sense at all.

The Steemit Application

Similarly, for each new STEEM cryptocurrency to be produced, Steemians collectively have to produce media content. In this network, it's not algorithmic exercises that generates cryptos, but rather, creative synergies.

During the initial phase of Steemit, it was rather easy for anyone with any kind of following to produce posts that generated thousands of dollars. Today, it's much more difficult. It still occurs, but the reputation need to generate such income has increased dramatically, much like bitcoin mining difficulty.

In Steemit's mainstream integration phase, only the best and most useful content will rise to the top. This "talent model" prevents STEEM from succumbing to the death spirals of uncontrolled inflation -- that fate is reserved for the U.S. Dollar, LOL!

STEEM, Baby, STEEM!

So don't get trapped into the ponzi scheme argument. STEEM will only increase in value, but it will maintain its value as the reward system becomes exponentially difficult, preventing the "duplication" and dilution problem.