Why Price Pumps Are Deadly To New Users
As much as I love to see the price of STEEM and SBD pumping because it means more value for each post I create, I know this type of thing can be deadly to new Steemians. This may even be the case for anyone who started to blog on the Steem blockchain a while back.
However, I see this as the most significant issue to anyone who enters on a pump of STEEM or SBD because they join expecting high returns. When the bottom falls out what motivation do they have to keep working hard and create the best content they can?
I see that this happened over the past few months as STEEM went from $9 USD to about $1. Engagement is down, interaction in off Steem communities is down, and overall enthusiasm is down. With the lack of cooperation on the blockchain, we all end up with fewer rewards at the end of the day.
I do not mean in US dollar value but total STEEM and SBD. The price of STEEM will always rise after a massive pullback, and this is when we should support our favorite creators the most. By helping all of us stock up on STEEM so when in a year when it is worth ten times it does now we are all better off.
The recent pump gets people's attention on the Steem platform that maybe knew nothing about it. Especially when the price moves up faster than Bitcoin, Litecoin, and Ethereum. But big moves in a single day or several hours is not going to help user retention long term.
Instead of praising the pump we should be cautioning people and teaching them that pullbacks will happen. Showing the price history could be a big help in making sure they stick around during a bear trend in price.
Just one year ago the price of STEEM was sitting at about $0.17 USD which tells me that STEEM is still ten times higher even after this long pull back and crypto winter. This kind of gain is not common in traditional investing, these people are thrilled to get 10% returns on their investment.
So now that STEEM seems like it leveled out and just a day or two ago looked grim to everyone who was here back in December, we need to think what the future may hold for this cryptocurrency in the long term.
Don't create content here for short-term gains but instead produce blogs, music, videos, and memes (ugh) for the long term. Hold your STEEM as Steem Power, so you are less inclined to spend it on today and invest in your future.
I'd be a fool to predict the future of STEEM, so this is just a fun thought experiment and not financial advice.
image from TradingView.com
Let's say STEEM keeps the ten times increase that its saw last year for the coming year. That would put STEEM at about $10.50 USD (if you are reading this after 2019 just adjust the numbers). So if today you have $100 USD worth of Steem Power that same amount would be worth $1050 USD. Totally worth the wait right?!
But that is not a likely situation you continue to create content over the year. As you build, you gain rewards and new followers which leads to increased rewards. So let's say you earn an average of one steem power a day over the next 365 days. That would put your total Steem Power to 465 SP in one years time.
The value you now hold in STEEM would be worth $4882.50 USD! That's a lot better than giving up on the platform and coming back after the price goes through its roller coaster again. But these numbers would not be possible if you stop creating because the cost of STEEM "tanked" and you feel unmotivated.
This is why anyone who loves the platform should educate new users on this part of the game. Yes, it's a game and a mental game that ever someone like me who got into cryptocurrency back in 2015 and saw so many ups and downs.
If this game is hard for a veteran to play than how can we expect a new Steemian who is also new to crypto to play with a level head? There is a metric crap ton of emotion that comes along with money, and in this space, everyone wants to get rich as fast as possible.
Promoting and hyping up the pumps in the price of STEEM only further pushes that mentality. We must praise the long and steady trend over any temporary pump. When we do, that new users can grab on to the correct mindset and continue to create for the platform in significant pullbacks of the price.
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I'm not sure that will help anyone. Newbies have to go through the school of hard-knocks. The free market is a great teacher! Even the largest equities and commodities markets in the world get pumped, so I don't think crypto will be exempt.
That's not to say they can't learn from the free market because they will have to learn how to control their emotions when these events happen. Why not help them out with a heads up?
Because well-intended advice usually can't overcome greed. Sage advice usually falls on deaf ears!
I don't think that means we should let them run as they may. If giving new users a heads up means 10% of the stay through a dip than that is better for the platform if no one warned them to begin with.
But I know what you man, it's the whole "answer not a fool according to his folly, lest thou also be like unto him. Answer a fool according to his folly, lest he be wise in his own conceit."
Tricky indeed.
for as long as STEEM is being traded, it will remain susceptible to pump-and-dump schemes.. i guess since the founders of STEEM intended for it to be that (traded), it will remain.
it will be callous to say, one will stay in this platform for the fun of it, but this is a two-edged sword -- having fun while getting paid to do it. like others who said it, it's a matter of perspective.
Honestly I think the best thing people can do when the price pumps a lot is to sell a little steem. If the Steem doubles in value, taking 10-20% off the table and keeping it in savings is pretty smart. I wish I had done that when it was pumping like crazy a few months ago.
I don't even think about it in terms of buying back in later. It's more about reducing risk for the long-term.
That is great advice and I always seem to forget that lol
If you have a stable work and income, I do not think that you need such a security. (If you only invest what you can afford to loose).
If you have to live off of your crypto you should definitely assure yourself to replenish liquidity when spikes happen.
I have the luxury not to worry about getting money from here, and am putting all my rewards into my SP, because I want to use my account to support other users. I've only been here for a month, and I joined when STEEM was about $4, I think, and then it dropped suddenly. It's nice to see it recover a bit, but I worry more for my friends who rely on the income from this platform than for myself. Thanks for sharing your thoughts on this—as a new user, it's nice to get the perspective on trends in STEEM over the longer term!
Though I am new to steemit and honestly, I have no idea what is going on here. I like to steem and steem dollar, it is why I end up on steemit.
In the other hand, I will continue what is supposed to do.. creating content. I am just pissed off from other social media getting hack.
I'm here for the long term. I haven't had this much satisfaction posting articles in a long time. I'm using bots as an experiment in promotion and reward pool claims, and it's going OK.
I also know that bots are not sustainable on their own. As the programmers continue to tweak the system, they are continually leaning the system towards the producers of content and those who connect with others.
I can't say that I'm thrilled with the notion that there are many people here who will vote willy-nilly for someone they know and ignore perfectly good content elsewhere (I kid you not, I've seen this). But this is a "community" social media site. And with Hiveminds, that is only going to become more obvious.
The theme in the OP is that price volatility is going to shake people off the content trail. If they are thinking about rewards when they create content, they may not be motivated by the joy of content creation and sharing. That volatility will leave us with a greater concentration of people who are truly dedicated to the craft.
And those who are truly dedicated to the craft will find rich rewards in the following years as Steem and SBD appreciate. It's also worth noting that investing is not about the price, it's about the rate of return on investment. What I love about Steemit is that as I type these words, I'm "mining' new coins, assuming someone actually upvotes my post, of course. That kind of makes it a lottery, doesn't it?
Consistent effort over time, will yield prodigious results. Each time I use Steemit, I learn new tricks, new ideas, little shortcuts and I get better. That is how it is with any kind of work. As the name implies, Steemit is work.
I agree with you, it all requires finesse and an awareness of the role gambling plays on Steemit. What do you mean by Hiveminds exactly?
Here is a relevant article:
https://steemit.com/busy/@taskmaster4450/will-hiveminds-communities-kill-paid-bots
the people who just stay because of the earnings would not stay for a long time... it doesn't matter what the price says for them...
I think only the people, who have fun an an added value for their own, will be here forever 😉
I agree. Even though I'm a new user, I also noticed this. It's saddening to see people stop interacting and it's weird that my feed is so empty... but I'm glad I found a nice community that keeps me going, despite the fact that the only people left seem to be the trolls and the spammers...
haha i agree and that is why I am still posting 5-6 days a week. Keep up the good work!
Yeah, I agree. Posting pretty much every day. Spending way too much time here :P
Even though I'm still not really interested in cryptocurrency itself, maybe that's why this drop also affects me much less?
That is very possible, for me it's the fact that I saw this kind of thing happen many times over the past 3 years that I basically expect it now.
I really like the way you put this. I hadn't seen your blog before but this post was resteemed onto my feed and I'm glad it was. The pump is fun for me but scary. I see my value go up and then down without acting. I feel like I should sell my liquid steem during the pump and then buy back a few days later. I've powered up most of my earnings because I'm in for the long haul but feel like I could be smarter financially if I used the pumps to get more steem after the "dump"
I just keep posting - I like the interaction more than the $$. That said...some nice whale boops once in a while is pretty sweet. I still try for at least once a day...and to interact with others as well. I'd rather spend my time here than on other platforms...and if it helps me build SP, then great.
Very well said! It's a numbers game and now is a good time to build your audience.