STEEM Is Cryptocurrency 2.0: Here Is Why It Is A Huge Winner Long-Term
What the heck is Cryptocurrency 2.0?
Well I just made it up; at least I think I did since I have yet to hear anyone else use it. Nevertheless, for categorization, it works.
What do I mean by Cryptocurrency 2.0?
When we look at most of the tokens on the market, most of them were acquired by early adopters. In fact, we are still in this phase for the most part. Whether it was anarchists, geeks, technologists, futurists, or the anti-establishment people, these groups formed the core of the crypto buyers since Bitcoin came out. Many of them jumped on BTC, LTC, and ETH when they were to be had for a song compared to now. These same people were the early purchasers of many of the other alt-coins we see on coinmarketcap.com.
We are now seeing the second wave of buyers: finance people. Wall Street is here and, in my view, one of the main reasons the marketcap went from $250B on Thanksgiving to over $625B less than a month later. We are going to see more of this behavior over the next year.
What all these groups have in common is they entered the cryptocurrency realm with money. They bought their way in. Even those who mine tokens had a capital investment (which kept escalating as competition grew).
This is what I call Cryptocurrency 1.0. All the tokens out there that require purchasing. Naturally, many of these coins will evolve and can move into the 2.0 category but I want to keep the distinction clear.
So what makes STEEM Cryptocurrency 2.0 and why is it important?
STEEM, along with a few other like Manna, which I wrote about yesterday, do not require money from people. Their acquisition is tied to why it exists. STEEM is a reward for posting, commenting, and upvoting. While it is available on the open market for purchase, people can sign up on Steemit.com and start receiving the cryptocurrency.
This point is crucial as we travel down the path in the next couple years. In my estimation, after we get through the financial people and their Wall Street money, we will be at the point where the general population is the next to enter. This is where it gets tricky simply because I do not believe the majority of this group will ever buy a single token. They are not speculators, early adopters, or tech people. Hell, most of them do not even contribute to their 401K. Whether it is because they cannot afford to or simply do not take the time to concern themselves, the bottom line is they are not going to be buyers of cryptocurrency.
At this point, we are presented with quite a problem. We know that we are seeing the move to a tokenized world. Therefore, if these people will not purchase tokens, what is going to happen? The answer is STEEM, Manna, and a few others. People will get tokens simply for participating in what the token was designed for. Tokenization is going to happen to all facets of the Internet.
For this reason, the coins that I believe will be successful, outside a few of the big ones which could be transactional and store of value, will be the ones where the average person is given the token in accordance to what is was designed for. This is Cryptocurrency 2.0 and STEEM is already operating on this premise.
To me, STEEM is ahead of the game. While other tokens are trying to figure out where they fit or how to scale up, STEEM is chugging along in keeping with its design. Over the next 6 months, we will see at least another 500K people sign onto this blockchain. These people are not early adopters. They are second or third generation Steemians referred here by someone who is making some money.
The situation only magnifies when we get towards the second half of 2018. My forecast is that we are going to see some substantial growth rates by that point. Almost all of those people coming on at that time will have no interest in cryptocurrencies. Naturally, they will learn the basics since STEEM is the currency of the platform. Nevertheless, that will be the extent of their learning. From this viewpoint, I guess the fact that Steemit.com prices things in dollars on the site is a benefit.
For those wondering what the "winners" will be over the next few years, I would suggest looking at those tokens which have a utility to them which the average person can get involved with. In other words, is the token utilized as a reward for some behavior? Is the basic essence of the token tied to some activity. On Steemit, STEEM is a reward for one's participation as a content creator/curator. With Manna, the token was designed to be distributed as a basic income. Bitradio is similar to IHeart and rewards people for listening to their stations.
Whatever aspect of the Internet or online activity you look at, at some point there will be a token to reward people for it. Search will have tokens; web browsers are on the way (BAT); storage (SIA; STORJ); porn (Vice); photo sharing (appics); the list will expand over the next year.
These are all part of what I consider to be Cryptocurrency 2.0. While some of these projects might not make it, I feel STEEM is not in this category. It is far too advanced for what it was designed to do. Already we are seeing an average of over 1M transactions a day on this blockchain. That is a lot of activity and presenting a widening gap from the other tokens. There are 35K active daily users, most of whom are very dedicated to this platform. Since the reward pool is established and cannot be changed, there is little incentive to leave. This core ensures that this blockchain will keep growing.
Tokens are to the blockchain as Email was to the Internet. It is the first application that many are to experience with this new technology. However, make no mistake, just like email was not the only application for the Internet, tokens are just the first stage of blockchain. Back in 1994, when people were still messing with dial-up and learning about basic email, the idea of Facebook or YouTube was beyond comprehension. Even if you could envision it and tried to explain it to the people them, they would have blown a gasket. It was too much. The same is true now. Most of us cannot even think about what life with be like with DAOs or any of the other applications which will be on the blockchain in the next 10 years.
STEEM is already ahead of the game with the direction of cryptocurrencies and the impact of blockchain on the social media realm. This will provide a wonderful ride upward over the next couple years. The fact that the token is positioned like this gives STEEM an early advantage. Of course, the success long-term is going to require the continued development as the world transitions from Cryptocurrency 2.0 to whatever 3.0 is going to be.
And keep in mind, none of this has anything to do with price action.
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Yeah Steem has its game-theory/platofrm abuse problems, but from a technical standpoint, it's waaaay ahead of most blockchain projects. Transaction fees? Feh, we don't need those. Long confirmation times? Nah, it's almost instant. Copying and pasting long strings of random numbers and letters? Nope, just send to a username. Tons of transactions clogging up the network? Nope, we good - and handling more than almost anyone (maybe anyone?).
Speculation? Nope, it's a fully realized use case with real users.
I'm riding on Steem big time.
Absolutely @dhouse.
You nailed it with this comment.
Steemit and some of the other apps have their issues, both from a technical standpoint and a human one. However, the steem blockchain is fabulous.
Look at LTC, BTC, and ETH....they have scaling issues...bogged down chains...rising transaction fees....etc.
Now, I am confident with all the developers on those chains, they will get past all the issues in time. However, what is the utility of those tokens. Sure they could be money...but people would still need to buy in. If the tokenized world does take off like I believe, I am sure they will find a way to get it into the hands of people....
Yet Steem already figured that one out too.
This was an incredibly insightful post and puts a perspective on the next wave of cryptos that I had never considered.
Suddenly I can see it. All kinds of activities, including work and leisure will be rewarded with coins or tokens.
If you build houses, you might get "Brick" tokens as part of your reward. Go shopping and you might earn Green Shield Stamps, which are valuable to exchange for other goods in the same store. Go to a casino, and they may give you some free tokens to play with while you get hooked.
The possibilities are endless.
As you pointed out, steem is well ahead of the game.
I wrote a blog this morning referring to steem's value as a "vanity" asset. Steem is to bloggers what lipstick is to ladies. It gets you looked at. You get attention. People follow you for it.
I also agree we can not imagine how things will evolve.
When I got my first email address in the early 1990's, people laughed at me. The only person I could send an email to was myself. There was no point in finding anyone else. They didn't know what I was talking about.
I ended up finding an advertising site which would send you a daily email with advertisements. It was the only way to know my email address was working. Today I'd have hundreds of ways to test it. Back then it was the only way.
Resteemed.
Thank you for your comment @swissclive.
The tokenized world will see us having 20-40 income streams. What to motivate people to exercise, there will be a token. Eat healthier? Token Spend time with the elderly? A token.
Here a token, there a token, everywhere a token....perhaps my next post needs to be able the tokenized world and what that will look like.
With tech, people seem to think what they see before them is what is going to happen. Few understand the exponential aspects of technology and its growth. It is a compounding world. There are so many factors which go into this explosion that people are caught off guard.
Even with tokens, it is so early in the game. There are, what, maybe 20M or 30M worldwide with tokens. Just presuming it is 50M, this planet has 7B people on it. The idea of a DAO really blows people's mind. How do you have a company that has no management, requires no workers, and handles all decisions on its own? For those who think AI is the Terminator, I guess it is outrageous. However, for those who understand decision trees and how AI is now being created to follow that, it makes a lot of sense. Most decisions are nothing more than glorified it-then statements.
LOL at the emailing yourself. Feels that way with tokens.
No worries though, I am sure you get enough email now to make up for it in the early days.
If cryptos follow the path of email, i guess we'll all have so many tokens - that we didnt even asking for - showing up in our wallets, and everyone will hate crypto but reluctantly admit that there's nothing better ;-P
So crazy to hear the bits and pieces of possibility! I think that sense of possibility is one of the key things that got me more deeply interested and connected to the platform/cryptocurrencies in general. It's really, really exciting.
I always learn something new from taskmaster.
It’s amazing how far everything has come since our crappy 28k modem
Dial up back in 1996.
I’m wondering how many people will use tokens like these as their main source of income within the next decade!
Wouldn't those tokens just end up being another "bonus on your bonus-card"?
Very good article! I've been trying to tell people that we are still in very early days with crypto. I agree with your assessment that probably only a fraction of 1% of the world has even started on the path towards getting involved. The crazy thing to think about is when (and I really think it's a when and not an if) 20-30% of the world starts to participate, the overall marketplace will be so gigantic it's hard to fathom. The valuations on some of the "early" tokens/coins is going to be mind-blowing.
One of the things I've been thinking about and wondering is how this marketplace is going to evolve. I see where you're coming from with the "tokenized" world and it makes sense. I can't quite envision how that's going to play out yet....but, that's basically what you're saying in this piece: we can't even imagine it yet because it's so foreign to what we're accustomed to. Since you seem to be ahead of the curve in thinking about the future, my question to you would be.....
How do you see these blockchains and the "companies" behind them evolving in the future? In the stock markets, you have companies that want to expand their technologies, distribution channels, etc....and they do that by buying out other companies or "mergers and acquisitions". Is that going to be possible in blockchain? Can, say Bitcoin, for example, "buy out" Litecoin somehow? Or Dash? Or something else? Could Facebook at some point see the writing on the wall and decide they want to buy SteemIt? I'm not saying they would or that SteemIt would sell....or that it's even possible..... I guess that's what I'm asking. How do you see this marketplace evolving? I don't have a clue at this point. Any insight?
Nice vision with the next step of the cryptocurrency and the way the blockchain grows, get more mature and start to be widely adopted. Indeed also I think that one token only is not enough for a platform and what STEEMIT did it just covered all the based in order for the participants to get what the wanted to from it (or at least what they needed to). This might be a recipe for success and while it might need some refinements along the way, the structural base is the one that is important.
What is not clear to me is one thing: Yes nobody buys Steem in the market. So, are we left without payment? Does Steem have value only if there are people buying it? What would happen if Steem had no use for a person who is not part of Steemit? Would we only sell Steem to those who want to buy Steem to increase their Steem Power?
I wouldnt say nobody is buying up STEEM...there are over 60M tokens out there that are not in SP....and recent price actions says there is a lot of activity.
STEEM has a built in use in that it was designed to be reward for content creators. As long as people are creating content there will be a demand.
But you do bring up a good point, part of STEEM's evolution will need to be a place to spend it or, at a minimum, a conversion from STEEM to fiat.
I am sure we will see more of that coming in 2018.
Exactly, I'm not talking about at this time. But for example, if I want to buy something with my reward in Steemit, I change my Steem in an Exchange, and then that to Fiat. But what happens if nobody wants Steem in the Exchange? I mean that the Steem is sustainable for now because there is a lot of speculation in the Exchange, but when that does not happen. What will motivate someone to create content in Steemit if they can not later change their Steem to fiat money? In case that happened, would Steemit have to introduce advertising in the publications?
Actually the amount of money available on the exchange keeps decreasing....even though the amount of STEEM is increasing. That means the rate of STEEM bought up and put into SP is outpacing the amount of STEEM powered down.
As long as there are people on here blogging, STEEM will never go without buyers on the exchange because there is utility in the token. If the price drops far enough, myself and hundreds of others would be buying (perhaps thousands).
Plus we are getting new bloggers each day...a certain percentage of the newer people signing up over the next year are going to use some fiat to power up and increase their account.
STEEM has built in buyers, the one using the platform.
@taskmaster4450 . There are so few people with this kind of logic. Everyone should follow you and learn from you so they can talk common-sense. I will repeat a few important comments you just made:
As long as there are people on here blogging, STEEM will never go without buyers
there is utility in the token
If the price drops far enough, myself and hundreds of others would be buying
we are getting new bloggers each day
a certain percentage of the newer people signing up over the next year are going to use some fiat to power up
Thank you for the kind words. I believe that STEEM has so many things going for it that people are astonished. It appears that most really do not know what they are sitting upon...the power of the blockchain and some of the creative moves that were implemented when this was set up.
STEEM has a built in ecosystem for success....at this point, for those on here, it is already a raging success.....even if nothing changed, we would continue on just like we are. Organic growth is coming so that "keep it as is" is not possible.
STEEM will only move higher as the blockchain expands.
Definitely some newbies will use fiat to power up their account. That's what I have done. It's useful to have a lot of it. Steempower is to bloggers what lipstick is to ladies. It gets people to look at you or in the case of steem power, to read your blogs.
Simply put, it is another vanity asset.
Lipstick, perfume, a Rolex, a Lamborghini, or steem are desired because they
Interesting analogy and one that is accurate.
There is no doubt that SP (and the associated VP that goes along with it) gets one noticed.
It is also the engine that drives this ecosystem so there is a practical use along with the vanity. I keep powering up to add to my standing on this platform. That is what the system was designed to do...give more power to the people who contribute more. Of course, on a platform like this, said power is spread across the entire user base so it isnt as if one is in control.
That said, I know many who would pull out their fiat on a large pullback and power up more. This is the cycle of success which is almost guaranteed.
Yes, but that would not be a kind of ponzi scheme? since people need to buy, so that others can earn money to spend, the content creators depend on the existence of new writers who want to buy Steem.
Not if the content creators are the ones buying the tokens if nobody else is.
I can assure you, if STEEM dropped back to $1, I would be buying tons of it....as wold many other people on here.
The reward pool is set and will not deviate from the payout (in STEEM) established in the blockchain. Therefore, even if we didnt add one more user, this blockchain would keep going with the same 35K-40K posting, upvoting, and commenting.
And what would happen as each of us kept doing that...we earn more money.
You're right, but I do not think you understand what I'm trying to say. With the Steem you can not buy anything in the real world, you can not buy clothes, food or medicine, nor pay gasoline. That is, you need to change your Steem for fiat, and that fiat will be given to you by new users, or people who are already on the platform and want to buy. In both cases, the Steem would not be fulfilling a function that can not be replaced by fiat money, and the only ones that value it are those who want to write in Steemit for pleasure. Or am I wrong? that's my question, I see the Steem as a method to reward content creators. But unlike YouTube, for example, which pays in fiat money, and that creators can use it to buy products, the Steem must first be exchanged for fiat money
@vieira I am replying to your comment:
Receiving value does not have to be fiat. Your house, a gold bar, Apple shares, and a Van Gogh painting cannot buy a cup of coffee either.
All that matters is that someone thinks it is valuable and is willing to exchange it with you for something they think is less valuable. It does not have to be fiat. However if you lived in Zimbabwe, Venezueala on Nigeria, you would find plenty of people willing to swap their fiat for literally anything else, steem included.
People choose to measure their wealth in fiat, but when the fiat approaches worthless that is no longer a good way of keeping score.
The only mathematically correct way of keeping score is to find an asset which has a finite supply, like bitcoin, and measure your wealth in that.
(We are all so much poorer now than a year ago.)
Yes that is true..right now you have to exchange steem for fiat. But that is true for almost all cryptos including Bitcoin. Most places will not accept bitcoin for food, gas, or medicine.
So the question becomes, is the entire cryptocurrenciy sphere a ponzi scheme requiring newer people to enter to buy the crypto so people can buy stuff in fiat?
And by the way, be mindful that you cant use most fiat in most areas.
I cannot go to my local supermarket with a hand full of British Pounds and buy food. I have to convert it to USD at an exchange. Even those who swipe a credit card, their accounts are in pounds but the US company paid in dollars...so exchange has to take place.
We are very early in this game...that is why I draw the parallel to email in 1993 or 1994...people, at that time, had no idea what was on its way. The same is true now...this is just round 1.
@vieira it's important to know that crypto currency is slowly being accepted as payment in some store and I even know of a woman that pays her nanny with steem. So I think the more people get to know about steem and crypto currencies in general,the more it will be used as method of payment for both goods and services.
@taskmaster4450 . It looks like you have done some research into the holders of steem, what's in SP and what's floating in Steem. Did you publish it already? it will be a very interesting study for me to read. Also looking at the flows in and out of SP and what the conclusions could be.
One question.
While I agree a Steemit-like system could be the Cryptocurrency 2.0 system you're positing, how does it work with Steemit, where most Steem has already been mined? And the whale situation is exactly the "early adopter" case you're presenting.
How does that jive with the rest of your hopeful message? I mean, it's true, in theory, but in practice, that ship has already sailed for Steemit and Steem.
Steemit is just an app...one of many that are already on the platform. There is also busy, chainbb, DTube, Zappl, Steepshot, and there will be a host of others from the SMT program. There are roughly 40K daily active users, so I am not sure how you believe that ship sailed.
As for STEEM itself, there are still 60M on the open market. Plus, as more sign up, the power of the Whales diminishes since their holdings, as a percentage, are reduced. The fact that 75% of the reward pool goes to authors means all new users are taking a piece of that pool. Combined, they are cutting into the Whales percentage.
If memory serves me, the 1% holders dropped from 88% to 81% last year.
A great summation of what is happening with tokenization, and the crypto world. You hit on one point that is really a big deal; when Wall Street money starts flooding in, you know it's something big!
I believe Steem is poised to be huge. It was sitting at $6.14 just minutes ago, but soon people will be wishing that they would have gotten it at that price.
One of the great things about Steem is, it has Steemit supporting it, and with Steemit growing by the day, it only makes sense that Steem will do nothing but head skyward.
Steem to the moon. Lambos mansions and Yachts for all! :-)
Thanks for a great article.
You will not believe, today I saw Steem for $ 6. Do you know what I thought first? Did @ taskmaster4450 infect everyone with his faith? In the current price for Steem-a drop of your merit! Good luck to you.
Thank you @cranium but I doubt that my writings are the reason for STEEM at $6.
I can say, based upon a few comments, I did get a few people to stick around who were considering leaving based upon recent antics on here.
In such cases, we are told: "a drop of stone sharpens." The meaning is the following - permanent, even insignificant, actions can make great achievements.
You make some good points here. When speaking to people I know about crypto I always suggest that the ones who don't have much money or are very cautious with it get on Steemit and earn some for free. This platform has the potential to introduce the masses to crypto because the reality is that not everyone has spare money to invest or feels confident doing so.
That is why I love the basic income project...it gives the token away for free...they simply sign up and get it in their wallet once distribution starts.
This is exactly the way I see the crypto space evolving. December's huge move in market cap almost had to be institutional investors, and that is somewhat supported by the selloff over the holidays, especially on the Friday's before the long Christmas and New Years weekends.
Adoption by the mainstream will certainly be the next step, and is an exciting time for utility and transactional tokens. Imagine if STEEM or SBD becomes a transactional coin in addition to the utility function - that could be the birth of cryptocurrency 3.0
The excitement comes as mainstream adoption accelerates, and honestly this could be several years and up to a decade in the making.
STEEM could well become a currency in the traditional sense since it has a fast blockchain and zero transaction costs (at least directly to the one conducting it).
We shall see how that all evolves. I believe there will be hundreds of currencies used as money down the road...in fact, I can foresee multiple currencies in the same transaction.
I foresee STEEM becoming a currency in the traditional sense as it has everything needed by a transactional currency. Add to that a user base of several million and having a STEEM debit card might not be too far fetched. When atomic swaps become a reality any currency should be able to be used easily.
I agree with all that you wrote here.
A lot is possible depending upon the direction some people take it.
The great thing about the blockchain is that anyone with the know how can develop any of the things you discussed. It does not require permission or an agreement from a company.
If a programmer can create some of that stuff, like a debit card idea, then it is open season on that.