Despite becoming the third most popular digital currency by market capitalization, market remains skeptical. Nevertheless, steem was able to surpass $400 million this month, still reaching significant attention of traders.
During the month of July, the market capitalization jumped more than 2,000% from previous $17.9M to $411.9M. Its price rose more than 1,800% during this period, increasing from $0.24 to $4.63.
Users are still able to obtain the digital currency by publishing some content on social media platform named Steemit. If they publish popular content, measured through upvotes, they get tokens for the digital currency.
According to Joe Lee, co-founder and CIO of Magnr (in an interview for Coindesk): “The concept itself is interesting, it is a Reddit and Quora mashup with a strong monetary incentive to produce good quality content. Whether steem succeeds as a digital currency will be more a reflection of Steemit’s success as a platform as opposed to the economics of the coin itself. This is a good example of a digital currency whose value will be closely affiliated to its utilitarian value as a social networking and sharing platform.”
Nevertheless, some market observers expressed their worries that steem might be only another Ponzi scheme. Kong Gao, a marketing manager for bitcoin trader Richfund, provided his concerns about steem. “Most of the articles on Steemit are promoting steem, which makes it seem like a variation of a Ponzi [scheme]. Furthermore, it is the same group of people behind Bitshares.” As a result, “I don’t think it is sustainable and I don’t take it seriously. I’ve also spoken with a couple of serious altcoin traders in China” and they have their doubts as well.
Due to such criticism, creators of Steemit have responded through the creation of certain safeguards into the system to provide users with greater incentive to hold on to their steem tokens, like Steem Power.
According to the Steem Power statement: “Long-term holders are almost completely protected from the dilution used to fund growth” as a result of this setup, the white paper continues. Past that, the “Steem power can only be converted back to steem over two years via 104 equal payments.”
While steem’s innovative approach was the major point, which helped the digital currency to gain over its competitors and reach the third highest position, we will have to wait as only the time will prove if such system is sustainable or will fail. Nevertheless, the digital currency seems not be lack popularity over the next years.
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