Thursday, 18 August 2016

A look at Steemit - Analysis Into The Future

Steemit has potential so I decided to see for myself where this incentivized, blockchain-based social media platform might end up. In order to see where Steemit is going to end up, we have to look at the past. 


Mark Twain's quote “History doesn't repeat itself, but it does rhyme.” holds true, only because we humans make the same mistakes over and over again based on two strong emotions, fear and greed.

The idea of forecasting the end result of Steemit should be quite simple but as you know, no one holds the crystal ball, your decision is based on calculated risk.

All we have to do is look at the history of something similar and then compare. I could go in-depth with this but there really isn't any need, scratching the surface is sufficient.

I'm going to pick 3 social media platforms and 1 search engine:

  1. Google - In 1998 Google recieved $100,000 dollars in seed funding  from Andy Bechtolsheim and then received $25 million Sequoia Capital and Kleiner Perkins Caufield & Byers the following year. In 2004 Google went public with a IPO valued at $1.6 billion.
  2. Facebook - In January , 2004 Zuckerberg registered domain. By June of that year, Facebook received it's first private investment from Peter Theil, the founder of PayPal, for $500,000 in exchange for 10.2% of the company.Facebook then aquired FriendFeed in 2009. In February 2012, Facebook had 845 million active users and its website had over 2.7 billion daily likes and comments and was able to file for an IPO valued at $104 billion.
  3. Twitter - In March 2006 Twitter was created by Jack Dorsey, Evan Williams, Biz Stone, and Noah Glass and launched in July 2006. In 2012 more than 100 million users posting 340 million tweets a day. On September 12, 2012 Twitter filed for an IPO stating 200,000,000+ monthly active users" access Twitter and "500,000,000+ tweets per day". On November 7, 2013 First day of trading - Twitter had a valuation of $31 billion.
  4. Reddit -In 2005 Reddit was founded by Steve Huffman and Alexis Ohanian and in 2015 valued at $500 million with 203 million unique visitors a month. In June of 2016, Reddit clocked in at 234 million users. I didn't investigate much but Reddit is struggling to find ways to get advertisers to engage with the users. Projected revenue is $20 million for 2016 but that's more the fault of management than anything, in my opinion.

So how does this compare to Steemit?

Steemit  - In March, 2016 by Daniel Larimer, Ned Scott founded Steemit. In July 2016, there were more than 40,000 accounts, today there's not quite 64,000 accounts. Steemits market cap peaked July 20, 2016  at about $405 million. Today it's about $225 million (it bounces around allot).

The similarities:

  • They all started small.
  • They were all started by young entrepreneurs.
  • They all started with seed money and then flourished.
  • They all took between 6 to 8 years to get to the point of 100's of billions of dollars in market cap (except Reddit).
  • They all took 6 to 8 years to get to the point of 100's of millions of users.

Let's compare with Facebook only because they're the big whale in the ocean as far as social media is concerned.

Facebook - Today they have a market cap of $360 billion dollars with 1.7 billion users.

Steemit - Today they have a market cap of $225 million dollars with 64000 users.

Facebook is worth $211 a user (market cap / users)
Steemit is worth $3515 a user (market cap / users)

Ya I know that's allot per user...... Before you rip me apart. There're differences between Steemit and anything else out there.

  1. The biggest difference and most important -  It's not censored because it is a decentralized network operated by miners around the world. So you post whatever the market place is interested in. If no one is interested in what you have to write, you make no money. You just post for the fun of it.
  2. Steemit is less liquid - If you own Facebook stock you could just sell everything you had without making a dent. Unless of course you were the CEO and owned a good chunk of the company. If you wanted to withdraw 100% of your Steem  dollars you can. If you want to withdraw 100% of your Steem Power, you couldn't, it would take 2 years.
  3. You don't pay for it, it costs you nothing  - You just sign up and the way you go, in return you can make some money. Could change.
  4. You don't have to write an article to gain Steem, just follow one of your favorite writers and reply, you might get an upvote, you then gain steem.

So where's Steemit going to be in 6 - 8 years?

Based on the metrics above. The low end could be 225 million users and on the high end maybe 2 billion users, Extreme 3 billion. Let's go with a round number of a billion. That would be a market cap of about 3.5 trillion. That's not taking into account the inflation rat of Steem.

Of course this is basic analysis and no one knows the future. There is a downside...... sometimes the trailblazers don't get the ultimate windfall, it's the 2nd, 3rd and 4th generation start-ups. One thing is for sure, the block chain is here now, here to stay and only going to get more powerful. 

I myself personally think Steemit is pretty cool and I also think that now is the time to flourish with it. This feels like the wild west again on the internet just like the 1990's...... the people that jump on board first can be paid handsomely....once the majority jump on board, it just won't be the same. 

All data and information provided is for informational purposes only. Trend Wizard makes no representations as to accuracy, completeness, currentness, suitability, or validity of any information in this post and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis.

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