Investing Idea: Steem

During the height of crypto mania, platforms that combined social media and blockchain technology were a can’t-miss opportunity for investors. The quick rise of Steem – a social media and blogging platform powered by a decentralized cryptocurrency – highlighted the potential of this new paradigm.

In December 2017, Steem.com was receiving about 223,000 visitors per day. Less than a year later, the platform was laying off most of its staff as monthly visitors declined by almost 20 million in just six months.

STEEM, the native cryptocurrency of the social media network, was one of the worst performers of 2018.  Peak-to-trough, the cryptocurrency lost a staggering 99%. At the time of writing, STEEM was trading at a 95% discount to its record high of $8.57 set on January 3, 2018.

Although much of the hype and euphoria is gone, Steem still has an attractive value proposition for investors looking to scrape the barrel on oversold cryptocurrencies. If buying low is a priority for you, STEEM is perhaps as low as you can get.

Steem Value Metrics

  • Current Price: $0.4379
  • All-Time High: $8.57
  • All-Time Low: $0.0691
  • YTD Performance:
  • Market Cap: $135.5 million
  • Market Cap Ranking: 47th
  • ROI Since ICO: -31.9%
  • Primary Markets: Bithumb, Binance, UPbit

Investment Case

At its core, Steem is a social media and content creation platform that rewards users for their contributions. It provides a ‘shared economy’ model for social media that allows users to get paid in STEEM tokens, which can be traded on the open market or used for digital payments.

If censorship-resistant social media is the wave of the future, then Steem has a pretty good chance of surviving crypto winter. The platform was borne out of the idea that free speech should be protected and that no central authority should be able to censor ideas. This is a noble vision given the wave of blacklisting and de-platforming currently underway on Facebook, Twitter and even YouTube.

That being said, some have questioned Steem’s commitment to free speech after it banned user ‘thedarkloard’ for attempting to leak documents ‘exposing’ 9/11 as a conspiracy. This is a potentially slippery slope for a platform that says it is committed to the expression of free ideas.

Despite the controversy, Steemit has succeeded where other blockchain projects have failed: usability. By May 2018, Steemit had more than 1 million users. The platform has been at the center of public discourse on an on-again, off-again basis since 2017.

At the time of writing, STEEM was the 47th largest cryptocurrency by market capitalization, but its activity score was much, more higher. The blockchain activity matrix puts Steem in sixth spot in terms of transactions. On a transactional basis, Steem is more active than bitcoin, Ethereum, bitcoin cash and most other large-cap cryptocurrencies.

The blockchain activity matrix:

Also read: Why Investors Should Pay Attention to Steem.

Analyst’s Take

Steemit is backed by a solid, proven concept and has been developed by one of the blockchain community’s brightest minds (Dan Larimer). Its fall from grace over the past 12 months is not unlike many of its altcoin peers, though the extent of its decline is a bit worrying. Looking beyond the obvious crypto winter, Steemit is heavily influenced by South Korea. This partly explains the extent of its price collapse over the past year.

During the height of the bull market, South Korean exchanges were dominating cryptocurrency trade volumes. This was especially the case for altcoins and tokens. As activity in that market began to cool, so did demand for many small-cap cryptocurrencies.

Korea’s oversized influence on Steem may have contributed to the coin’s sharp decline over the past year. As volumes on Korean exchanges dipped, the buying and selling of STEEM tokens fell sharply. That partly explains the meteoric drop from a high of $8.57 to a low of around 7 cents.

On the basis of technology and adoption, Steem is still fairly well positioned to succeed. That sentiment was recently echoed by Weiss Ratings, which listed Steem as the sixth most likely cryptocurrency to succeed on the basis of technology and innovation. It was outpaced only by XRP, EOS, bitcoin, Ethereum and Cardano.

Valued at less than 44 cents, STEEM tokens are a low-risk, high-reward investment given the size and growth rate of the network. Doling out $500 on STEEM would buy you 1,136 tokens at today’s prices. If STEEM ever manages to return to its all-time high, that $500 investment would become $9,735.

Disclaimer: The author has no investment stake in STEEM. The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi

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