Why Minnows Don't Buy STEEM
If you owned Facebook stock when their platform was the same size that Steemit is today, would you have cashed out a portion of your investment to make trivial purchases, like to buy some new clothes?
Would you have even considered selling a single percentage of your stock for any reason other than an absolute life emergency?
I'm guessing you wouldn't.
Yet, I've seen many folks profess their absolute faith that Steemit will become the next Facebook... and then watch them sell what little profits they've earned for seemingly insignificant reasons.
The other day, another user commented that many minnows aren't investing directly in the platform yet (buying and powering up STEEM). It got me thinking: Surely, not every minnow is penniless, or without a means to exchange fiat for crypto, right?
Well, there are some good reasons not to invest in Steemit:
It will cost you money and deprive you of other purchases.
It is a very high risk investment.
It is inconvenient to have Steem Power locked up for weeks and months at a time.
Fortunately, the brilliant architects of Steemit paired those risks to some enticing rewards:
The more you invest in the platform, the greater potential you have to earn from its economy.
Right now, there are fascinating debates over the fairness of those rewards. Like, what is the appropriate weight for an upvote? Or, is self-voting fair?
The rules of the game will continually be tweaked. But make no mistake, there will always be a significant advantage for taking the risk of investing in this platform -- there has to be.
For without investments, the token would lose its value, the economy would collapse, and Steemit would be replaced by a rival platform that got the incentives right.
As a relatively new Steemian, I'm starting to grasp that the Steemit community is split into two groups: crypto and non-crypto users:
The crypto folks have past experience with coins that have seen incredible growth. They look at the potential value of STEEM, rather than what it's worth today. This is an investor's mindset.
The non-crypto folks -- at least some of them -- appear to be looking at the dollar value of their content, rather than the amount of tokens they're being paid out.
In their mindset, I suspect, a post that earns $10 today may pay a similar amount next year, much like a wage.
But what I fear they're not aware of is that the amount of STEEM they'll earn in the future -- should Steemit go mainstream -- will be a tiny fraction of what they're earning today.
To summarize this quickly:
There is a fixed amount of tokens allotted for rewards, and as more people join Steemit, there'll be less to go around. But because the network's growth will almost certainly raise the price of STEEM, the dollar amount a person earns, may not change much at all.
This should alert you to a window of opportunity that Steemit currently offers:
You will never earn STEEM as easy as you can today, because your competition has yet to discover the platform.
You will never earn as much STEEM as you can today, because there are still so few users competing for the reward tokens.
Deciding whether or not to invest in STEEM, or when you should cash out, for any reason, trivial or not, should be an entirely personal decision.
We're all coming at this from different situations. Some people have no money to invest; others have no time to create content.
I just hope that the potential value of STEEM tokens -- not just its current ability to accelerate earnings when powered up -- is not lost on certain users.
If you truly believe in this platform, and understand how its economy functions, I hope you will value your tokens more than I did when I took my first crypto profits some six years ago.
I sold all my bitcoins for less than $20 a piece.
I don't even remember what I spent the money on, but I'll never forget the consequences of making that decision.
Yep. Been thinking about liquidiating my 401k. Stupid thing will probably get robbed by the state by the time I'm eligible to take the money out. Just like pensions. Steem seems like a better bet.
Hey @Agrooed. I replied to @gigafart but that comment was for you too. Keep your 401k. I can show you what I'm doing as far as buying stocks inside mine. I'll actually being doing 2 posts later this week on 2 small cap companies I think are going to be huge. But yeah, I love Steem. I'm not even officially a month yet and you can see what I've invested into my account. Will continue to bump that number up. Bottom line. Stay Diversified!
Get out of your 401K as fast a possible! I did that myself long time ago. It's fairly easy to do. Your 401K won't survive the next stock/bond market crash. Invest the funds from your 401K in real assets which you can control directly like crypto such as Steem, land, art, precisious metals, etc.
I upvoted you but disagree with you @deepwaterscrypto (now i sound like @cheetah)! Your 401K is usually a good investment up to the value that your company will match. Crypto is a great hedge to the traditional asset classes because it tends to go up when the others go down. But it's volatile and if it's all you have you will feel quite sick when the numbers start getting big and fluctuate or worse stay low for a couple of years as they did with bitcoin after the initial euphoric rise. The answer is to learn to grow both.
I agree I personally don't think it's wise advice to cash out a 401k for Steem, as bullish as I am about it I just don't think it's a smart thing to do. 401K if you get an employer match is pretty much a no brainer it's free money.
Virtual High Five :hand:
Crashed and burned on my first attempt at using emoji :)
you have admitted your error and now you can move on from it and be a better person lol...
I guess I've been making micro short-term investments in art & literature since I joined Steemit. xD
You can still make solid money in your 401k. Don't give it up. You can now buy and trade individual stocks inside your 401k. It's not just mutual funds anymore. I can tell you more about what I'm doing if your interestes. Plus, even as great as any investment can be, you have stay diversified. Workers for Enron stuck all their money back into that company. We all know how that turned out. I love Steem.l and I agree with your entire post. I just don't love everything to place 100% of my money on it.
Amen. @aggroed I think that you should consider taking a multi-pillared approach to saving. I'm a CPA, not a CFA or CFP (so take any advice from me or others with a grain of salt), but I think it is wise to look at the following pillars when considering your savings:
If you can diversify across those pillars, you will survive any macro-economic shock with minimal downside. It is always possible to look back in hindsight and say "if only I had invested more in XXX, I'd be on a boat right now!", but for every situation like that there are dozens of others that you don't think about where the reality would be if you had invested more in XXX you'd be worse off today. Saving is not a race, and a disciplined approach will leave you in the best possible position
@canuckpride makes a lot of good points! I think being diversified across available asset types is a smart play as you never know what is going to happen in the future. My only caveat is that while I agree that saving isn't a race..... timing and when/where you start definitely play a huge role in how you finish!
lololol Funny Man!
Great Post - You nailed it.
Big picture out look here....you looking beyond the present day numbers and into the potential future.
And I like the observation and analogy - the previous crypto experience people and the non crypto people. Steemit is indeed an on-boarding platform for supporting a lot of newbs into crypto which is a real game changer in my opinion.
Great Post.
Good move! Starve those wall street wolves with alt investments which don't cost fortune in commissions.
Dave Ramsey would be very mad at you. haha
I'm actually thinking about doing that! I just hate that I will have to pay about 50% in taxes and early withdraw penalties.
I don't know that I'm ready to jump in that deep, but you have a good point. The long term gains on Steem or other cryto currencies maybe a very good way to hedge your bet against one countries economy and it's tax treatment of a 401k and the limited number of investment options they provide.
I would have done it in a heartbeat, given the opportunity.
My $50,000 would now be worth $3.5 mill. The Australian government owes me the difference.
Great post man
https://steemit.com/bitcoin/@lykencrypto/sector-life-of-sex-workers-who-work-off-bitcoin
We call it Superannuation here in Australia, and I've been trying to get mine into bitcoin since it was at $50 in early 2013. They won't let us invest it ourselves, but they assure us it's still 'our' money.
Infuriating.
I can't get into the housing market, thanks baby boomers and foreign investors, but good thing I've got $30,000 in super for my retirement when i'm 120
Please don't do that. By all means invest in steem but it should be a small % of an overall well diversified asset allocation based on your need, willingneess, and ability to take on risk.
I transferred mine into a silver 401k for this same reason.
Agroed, i would cash in(and have)my 401k recently, but not for investing. unfortunately i had to pay for what was left after ins. for my rotator cuff surgery....and the 20wks. of rehabillitation. Mine was a self funded 401k though, as the last time my company was sold we had to sell off the 401k and reinvest in the new companies policy...so i just self invested with vanguard...anyhow, my ROI on the 401k was far less than my investments in stocks.. while i wasn't lucky enough to have enough discretionary income to invest back in 08, when stocks were super cheap i still managed to make roughly 58% gains on my financial stocks(of which i have taken the profits off the top because i believe we will have a market correction here in the next three months, and financials are overheated and have less than 7% to the upside shortterm.... I would do like others have mentioned... diversify into stocks, metals(silver is close to attractive for me to start buying again, it seems to have neared a bottom, platinum would be my next choice, as i do not see gold going anywhere anytime soon if the global economy continues to heat up.) if you look into financial stocks look into the smaller regional banks, i see a possibility for some consolidation to take place in the banking sector, and the small banks are still relatively cheap, but are vulnerable to takeover, and even a slight bump in the economy... As for the crypto-currency markets as a whole, Aside from BTC, the market as a whole is still in it's infancy....the risk is very high, but adversely the rewards could be phenominal... Aside from my growing SP here i am not currently invested in crypto yet.. the crypto market has to do a little bit of stabilizing before i'm willing to risk any serious amount into it. with the exchanges going down, troubles trading on one exchange(the one in which has steem paying highest atm..) halting trade of steem, and other things that keep the market unstable keeps the risk/reward ratio just a little too high risk for me atm....but i mean, if you got a little disposable cash lying around that you wouldn't miss if you lost it then by all means buy you a little bit of steem...
cool. Side note. You can use the enter/return key to make paragraph spacing for an easier read.
yes headmaster aggroed! lol... such a grammar nazi you are ... i have become so used to the interwebz being that grammatically lawless land where spelling, structure, and punctuation meant nothing.... time to brush up on my structure and punctuations. Why do i now feel like i'm back in ENG.1 this morning.
I just want to be able to read you comment. Take it as a compliment.
i do.. because if i can improve my writing, i can improve my quality....
did u cash out ur 401k yet? lol i shouldnt have been so angr about it before, i just love tellling people what to do with their money, especialy when i know for afact it will make them rich! and i know u already know thi, but other minnows readiing this should see how people like u are converting 401ks o steem and that will amke steem seem loike more of a serious investment!
especialy with steem prices so low...i know u are waitingf or them to drop to $1 or below before u buy a lot, i think many of us are waiting for tht! as soon as it drops to close to $1 we will see it start rising to $2
dude someone with Megatron's face as theeir avatar should get into a flaame war with you! it would be cool and then seeing some other autpbots come in and decepticons to join the fight!
It really depends on what your financial goals are. Everyone needs liquidity of some sort for short, medium, and long run.
A good way to structure your potential payout is invest a small amount in long-term risky investment which you have no control over, ie. Steem. A medium portion of your portfolio should go into investment that yields medium returns like crowdfunding, etc.
If you have no liquidity issues, you can skip investing in the short term like trading cryptocurrency, etc and simply hold fiat money.
This does not constituent an investment though. Here's my 2 cents worth of my investment approach.
Talk to the guys at perpetual assets. They can show you how to convert that 401k into a self directed IRA that you can then purchase steem or gold, most any asset, that you will be in physical possession of.
Do it. I just got a fat 401K loan and stopped my contributions to the damn thing. I encourage you to do the same. We put my wife's into a checkbook IRA and she can buy whatever she wants. She may even buy an ETH mining contract.
what's a checkbook ira?
A checkbook IRA is basically an IRA that you can put anything in you can write a check for. Watches, bullion, crytpo, a business, a rental property. There are a lot of folks out there who specialize in them. I used Broad Financial myself. If you have a 401K from a job you don't work anymore, you can roll it into that.
Then you can drop like 50K a year in there pre-tax. So if you make 150K on Steem, you could put 50K into the checkbook IRA, buy bullion, and no tax.
For anybody who can take an angel investors view, investing in Steem may be on the agenda. But many of people do not have the mindset of an investors let alone the mindset of an angel investor. The way Steem is setup still has to proof if it is the right setup; This includes the SP pyramid and concentrated power, the reward distribution and the lack of tools for all the minnows to get noticed with their posts and comments. That is why investing in Steem requires a angel investors mindset and that limits the amount of people tremendously.
You mentioned FB. An active FB users is valued at around 225$. Assuming Steemit has by now 25k active users, an active Steem user is (by coin value) valued at around 16k$ (416M market cap today). A Steem user is valued 17x over a FB user. If we would assume similar value to a Steemit user as a FB user, we should have around 1.7M active users.
What do you think the value of Steem could become?
Thanks for your excellent comment!
Without a gatekeeper to collect ad-revenue and sell private data, I'm not sure how the value of users can be easily measured. But if people (including non-members) spend meaningful time on the network, there's obviously a value.
For instance, I see ICOs being "introduced" here all the time. What is that type of direct advertising worth? And now I see an active market for delegated coins.
Also, the coin's value could one day decouple from Steemit if the blockchain is used in other apps and for other purposes beyond this social network. Maybe STEEM will be used widespread as digital cash, fulfilling BTC's original vision. That's already happening on Steemit, but soon it will likely go external.
(Likewise, the Steemit network has a value independent of the coin, even if it's currently very small. As the user base grows and the network acquires features [in addition to being censorship-resistant and ad-free, etc.], this value increases.)
Steemit has proved that they can hard fork corrections on a regular basis and appear to have a supportive and resilient core user base. HF19 radically rebalanced the rewards, and it appears the network has benefited. I am optimistic they can continue to solve problems this way.
Having said all that, buying and staking STEEM is incredibly risky, like everything else in crypto. If the gamble pays off, I get to help change the world, and probably live a much better life.
The potential for Steem and Steemit is huge.
Steemit can become the FB of the crypto world. It requires quite a bit of additional features and a major upgrade of the UI as well as native phone Apps and IMHO also native desktop Apps, the offline functions will help the frequent blogger/poster a lot. When Steemit can also land commercial business; Maybe even take fiat money from them for services and tooling provided to them to make Steemit another social media channel to interact with their fans, Steemit has the cards to sky rocket.
Steem potential is indeed much more then 'just' supporting Steemit/social networks. Payment will be very interesting indeed. In the end I think a few coins will be used throughout the world, and many of them will compete for being one of these. To become that payment coin, a lot is required. With BTC we've seen a very slow and still very limited adoption. Even the number of ATMs are very limited. POS requires support for the crypto coin as well. Steps are made by various parties with debit cards, and BTC ATMs as well as some POS systems supporting cryptos. But for mainstream adoption also the volatility of the coin is important to be reduced. The mass cannot and will not cope with the constant value crashes that we see with BTC and all the Alt coins. But in time, crypto will become part of our daily lives as a payment currency, and Steem can be one of them. BTW, I see another challenge for cryptos as a payment currency, the huge numbers behind the dot/comma. People do not like a price bing 0.000345 Steem or BTC. Steem is not having the value for those small prices but with the limited supply Steem will have, the only way to become a payment currency for Steem is to get values like BTC has, otherwise the coin is to small for such position.
HF19, I think this was a great release! Time will tell how the whole thing settles in, but I think for by far the majority of our community, positive things happened with the increase of rewards one can earn as well as one can give to others.
High Risk: Crypto is still at the start of what it will become in the future. It is before the chasm, ie it still needs to proof its position in our world. The cards looks good for crypto in general. For each individual coin, it'll be a little harder to predict their future.
Im really glad for you post and your support towards we Africans. As me my African friends initiate our quest to touching lives in Africa here, your support is really appreciated and thank you very much. I've posted quiet a little on my blog and I'd love it if tou could check on my blog and see if my post is okay so that our friends who would join wouldn't make any mistakes here. Your comments will be my motivation and inspirations. Thank you
Good article. I had a very similar thought the other day. Please check it out:
https://steemit.com/steemit/@bi5h0p/how-to-get-yourself-unfollowed-on-steemit
There's always going to be users and content we don't agree with. Fortunately we have the tools to prune the network, a click at a time, to shape it to our vision. Enjoyed your post.
I think a lot of people in the crypto world are trading a lot of their coins on a regular level. Powering up your steem and therefore locking it down makes this impossible for 3 months so it is not very inviting for them.
As I am new and very unexperienced still, in steem and crypto and also trading, locking up my steem is quite a good thing for me as it prevents me from doing anything stupid and I am looking to hold for a long time as I enjoy my experience here a lot.
Also I will totally upvote my own comment since I dont see it as unfair. I invested, I locked my investmant so I am in it for the good and bad times now, my vote is my mining and I earned it by taking a risk.
heh, you know I never even thought to upvote my own comments! :)
That is a good point, powering up does give you at least a barrier to prevent yourself from panic selling everything while still allowing you to get some money out if you need it.
I ve read an articel about commenting and there was suggested to do it and explained why (cant find it anymore though)
But especially if you start out most of my rewards I have gotten so far are from my own upvotes. And as great as steemit is, I would be lying if I said I dont want to make some money with it either.
I was just searching for articles, seems there isn't a consensus on whether or not it's within steem etiquette to upvote your own comments, thought people seem to agree that it is okay if you would otherwise not use your full power votes that day and/or wish to push your comments closer to the top to highlight what you feel is important information/good content. I think I will still try to mostly upvote others but might try the upvoting comments thing in certain situations like they described. I am curious what other's think about the self upvoting??
Self voting keeps you from voting on other content, and that keeps you from generating relationships. Those that find their rewards are coming mostly from their self votes might note that their own votes are limited in number, but the votes of the community are limitless.
For folks that have a grip of SP, self voting is self defense. If your vote is worth $100's or $1000's then not self voting seems like wasting opportunity, and that makes poor business sense. However, you're then trapped by your SP, and unable to curate and grow Steemit in the direction you want it to go.
What really chaps my hide atm, is VP decay. I haven't voted in days, and my VP is barely above 50% last I checked. I consume a lot of content on Steemit, and want to upvote everything I like, even a little. This becomes hundreds of votes per day, and my VP will not recharge, meaning my vote becomes motivationally meaningless.
TBQH, that's a lot worse than self votes, even though self votes account for a far greater concentration mechanism for wealth. The network effect of getting many minnow votes is very motivational, even though ppl want the whale votes (of course. Who doesn't like money?).
Disempowering minnows from voting, as has been shown in my example, dramatically reduces curation, which is the lifesblood of Steemit.
Thanks for the response. Hmm, yeah the voting power decay and recharge cycle are an odd wrinkle/dynamic in Steemit. On reddit, I can upvote all day long and a vote is a vote. Here, there are a lot of posts that talk about limiting your per day votes so that your VP is stable and/or is able to recharge. I am not sure what the answer is though. Hmm...
Last week I was still upvoting profligately, as had been my practice from the get-go. However, I read the white paper (which, apart from some relatively simple math, is not too impossible) and learned that if I didn't reign in my voting, my VP would continue to be debased and never recharge.
It seems that voting until your VP is down to 70% or so, and then waiting for recharge is about the best you can do. Your read of the white paper will prolly give you a better answer than I can.
It's not only self upvoting there are old circles they are upvoting each other
It's a form of insidertraiding
I saw an article that someone offered a bot to do the upvoting in the best possible way for the groupe
It is a way of mining and you expected to invest your money first
Otherwise you get nowhere
The question is if the guys on the bottom of the pyramid are ceep coming
OMG this post is brilliant! I'm so sad I barley found it !
I agree! As I become more invested in Steem With my time, I get a little concerned. Part of me is terrified that the platform could fall, The other part of me feels that it will be the next facebook for sure and I need to keep it here.
So my strategy has been to keep as much as I can in the platform but take enough out where I still feel "paid". That way I feel like even if the platform falls, I got some money out of it. As well as made friends and boosted my writing skills.
I know some of these minnows your talking about, Withdrawing everything they have. I feel like they'll regret it later!
I think your strategy is very reasonable. Betting the house on Steemit is not very wise, but nor is missing a potential life-changing opportunity when it's right under your nose.
But it's great that, regardless of Steemit's outcome, you can walk away with better skills and new friends. Time well spent!
you have an original and interesting perspective. I think you may very well be right. It's not easy to see the forest for the tree sometimes, but if you believe, it's worth putting your money where your mouth is..
I agree. especially since steem power gains interest too
Thanks, I didn't even mention that! There are like a half-dozen ways to make money on this platform.
When word gets out, I fear they'll be the mother-of-all-waitlists, regardless if they improve onboarding...
It's a real tough time for liquid Steem right now @gigafart and I'm going to feature this in my Daily Dose today. We've not broken to the downside yet but were damn close! A classy post. 100% upvoted plus resteemed :)
Good job at trying to explain HODL to non crypto users... $20 tho 😭... hopefully that drives home the point even more... still upset about all that ETH I sold at $18!!! some people will never learn
Ouch, tops are extremely hard to pick in cryptos
yea, stupidly thought $1800 was a sweet price to sell 100 ETH for...
This is brilliant, and exactly what has been on my mind lately. If minnows are patient, produce good content, and hold even half of their payouts I don't believe it would take very long to become a dolphin. Great post, upvoted and followed.
I just found out that I am a 🐬
I keep it all locked ....for now
Nice! Curious, do you know what the requirements are for being considered a 🐬?
I asked the same questions today and got this answer
Nice, looks like I just made dolphin status! Didn't think I was there. Now hopefully on to Orca status lol. Thx for the info!
Hello Hellooo Lets Jump together and entertain the crowd! ❤️ It so far. How many vests do you have?
Looks like 10.79, just barely made it :). Sounds good, I just followed you. Haven't made a real post yet but plan to introduce myself soon and then off to the races I'm hoping! I'll look out for your posts 👍