Steem is what is called a cryptocurrency. In other words, it is a currency that uses a number of ever-evolving encryption techniques and technologies in order to govern the generation of additional units of the currency as well as transactions involving the same, which is a significant difference from standard currencies, which are reliant on central banks as well as the rest of the governments that issue them. Steem is the latest in an enormous number of cryptocurrencies that have been launched since Bitcoin popularized the concept in the public consciousness, though it is interesting to note that it has made some interesting innovations on its predecessor.
Why Has Steem Seen a Significant Rise in Its Value?
Recently, Steem has seen a more than 1,000 percent increase in its value, thus bringing the total value of the Steem units that have been issued so far to $130 million within the span of two weeks. (1) This is an incredible movement by any standard, but it is particularly incredible because the cryptocurrency has just been launched. Furthermore, it is interesting to note that there are signs that suggest Steem might not have become the fifth most valuable cryptocurrency in the world in such a short time based on just hype and no substance, meaning that it could become even more valuable in the near future.
Here are some of those signs:
First and foremost, Steem is based on a particularly clever way to monetize social media platforms. (2) In short, the most successful posters have been known to make respectable sums of money by posting social media content on a regular basis, but for most social media users, that is not possible, whether because they lack the ability to create such content or because they lack the time and effort needed to do so. There has been speculation about introducing such a feature to social media platforms, but that is all that it was up until the point that the people behind Steem released Steemit, which is a new social media platform that hands out units of Steem to users who post content liked by other users. As a result, the feature serves two purposes. First, it increases the number of people who might be interested in becoming a Steemit user, which is the single most important factor for the success of a social media platform. Second, it increases the number of people who will be using Steem, which is the single most important factor for the success of a cryptocurrency.
Second, the social media platform comes with the option to exchange units of Steem for units for Bitcoin. This is a rather clever move because it provides its users with some assurance that their cryptocurrency will have some value no matter what happens since they can exchange it for the single most popular cryptocurrency out there without having to jump through a tedious and time-consuming sequence of hoops in order to do so. In turn, this raises their confidence in the viability of Steem, thus making it less likely that particular option will have to be exercised. Summed up, Steem is backed by Bitcoin in much the same way that national currencies were once backed by precious metals, except this will work better because national economies have long since become too big for national currencies to be backed by precious metals in this way.
Finally, the fact that Steem has a sizable organization behind it should be considered a point in its favor because while it might not have the same tools as a central bank, it is still much more capable of interfering in case of a crisis than the weak and tenuous organizations behind other cryptocurrencies. This is particularly true because the people behind Steemit seem to be well-prepared for the challenges that await them, as shown by their collection of relevant expertise and experience as well as their financial backing by a superangel investor. As a result, if they play their hand well, it seems possible that they will be able to use their current wave of success to secure funding from institutional investors, which will enable them to make Steemit and thus Steem even bigger successes. (3)
Will Steem Be a Success in the Long Run?
At this point, it is still much too soon to tell whether Steem will be a success or not. On the one hand, the people behind Steem seem like they will be able to handle all of the challenges that await them, but on the other hand, first movers are not necessarily the ones who will be able to reap the most reward from a particular trend. After all, a first mover is also the one who will be first to make critical mistakes that could not have been anticipated without actually seeing action, whereas those follow in their footsteps will have to chance to observe their choices before making better decisions by learning from them.
As a result, while Steemit seems like it holds some promise, it might be other social media platforms that will benefit the most from incentivizing their users to post useful and interesting content, particularly since cryptocurrencies are notoriously risky and unreliable. Should the people behind Steem prove that incentivizing content creation is an earner but become unable to keep Steem under control, it is possible that bigger and better-established competitors such as Facebook and Twitter will step in to capitalize on such opportunities in a way that they cannot.
Still, those who are interested in cryptocurrencies should consider taking a look at Steem as well as the Steemit social media platform. After all, Steemit is a social media platform like any other, meaning that they should be able to earn likes by posting about a wide range of topics both with and without relevance to cryptocurrencies. Better still, the time and effort needed to use a social media platform is minimal, meaning that they will have lost next-to-nothing even if Steem turns out to be a failure, which is not something that can be said about a lot of the other cryptocurrencies out there.