Steemers...let's face it. It is all bollocks.  There is no world where a 2-sentence reply is worth $10K... It is time to be honest, regardless of how badly this blog may fair in the face of the Cult of Personality that currently plagues Steem (something I will cover in a follow-on blog). The people on here using their "success" from other platforms to catch the groundswell early...well, they are here for a reason. Greed is ruling supreme, and many people see #Steem (the platform) as a way to GRQ. After all, it seems like a free money free for all...if I may freely use the word free, here.

![Greed Rules Supreme](http://www.rawstory.com/wp-content/uploads/2014/09/Greedy-Hands-Grabbing-Heap-Of-Money-Shutterstock-800x430.jpg)

### Steem-the-Investment
So, Steem-the-investment, just what is it? Well, most well know that the "value" system is comprised of 3 instances of cryptocurrencies, so I will not get into the details of that. What I will focus on here is Steem's market valuation and its sustainability from a professional investor's perspective.

![Steem Market Cap](http://i.imgur.com/PIAV3GC.png)

From the above you can see that Steem's current market cap is ~$174M USD, but only an average of $450K trades per day. To put that into perspective, this is equivalent to a biotech penny stock in terms of units transacted. Why this is important is because the market has yet to attempt to absorb any meaningful power downs outside of the initial euphoria. Once whales attempt to unload on a volume-less asset like Steem, the price per unit tends to get crushed under the selling weight.

However, this means nothing when we are trying to ascertain the true "value" of Steem-the-investment and all its currencies to better understand the proposition represented by that $174M market cap.

To do this, we first need to know exactly how many _ownership units_ of Steem exist. According to @dantheman, "Estimated supply after 1 year is 500M STEEM, it will grow to 5B over 3 years and then get split back to 500M." 500M STEEM (something we will call the first-year diluted count) at the current rate of $1.58/STEEM, puts the April 2017 value of STEEM at roughly $790M, and the 3-year valuation at $7.9B, or approximately 1/2 the size of Twitter's market cap ($TWTR), while Twitter has more than 240M users (vs. Steemit's 55K!), generates actual revenue and profits from ads.

In addition to this, Steem is a dilutive system, with the potential total dilutive power coming to bear in the form of a 451B vesting pool that is constantly being unlocked, as can be seen from steemd.com's stats.

![Total Outstanding Units of STEEM-Related Assets](http://i.imgur.com/O90RP3M.png)

Giving this a little context, Facebook ($FB), with one of the largest market caps in the S&P 500, has a total outstanding (diluted average) share count of 2.9B.

So, given that there are only 55K users, with some posts (even responses) garnering well north of $10K, just where does the money, and therefore the ultimate value, come from? The answer is simple, two sources:

1. Those who are drinking "the future value of the platform" Kool-Aid; these people are buying STEEM at post-bubble values and converting it to STEEM Power in an attempt to juice returns.
2. The crypto schleps currently speculating on the value of STEEM/SP/SD in the future

And that's it! Without these people buying STEEM on the various exchanges, Steem-the-investment would be worth $0. 

Those familiar with the Steem system know that individuals with the most STEEM Power cause the most ruckus on the platform, as their upvotes often result in massive $1K+ payouts. Without these _*originals*_ gracing current platform participants, payouts would result in the low single digits--which would hardly incite the kind of irrational exuberance we are seeing today in Steem's market cap. So, in its current form, we have a platform that is largely an oligopoly, with a small number of early members possessing full dictatorship over what material gets rewarded in any meaningful way.

In fact, this is where the real dichotomy comes into play. If STEEM "rewards" were based solely on real money invested into the platform, does anyone here honestly believe we would see some random Millennial introducing themselves for an outsized "reward" of $30K+ in real money terms?


Let's approach this with some levity: the information is worthless by itself--a mere 30 minutes effort on the part of the contributor. After all, the content is the product, right? And in the end, that is what is getting rewarded.

#### So what is the "product"?

Social Networks are not new concepts.  And many a casualty has come about as a result of flawed content monetisation efforts.

![Myspace is for Losers](http://cdn0.dailydot.com/cache/02/92/0292da46d3b4119be9b37d5e64832b6e.jpg)

But there are real winners in the space. Netflix, iTunes, WSJ.com, etc. are probably some of the most prominent examples of successful content monetisation platforms, and from the perspective of Steem proponents, represent the most similar models.  On these platforms, _the product *is* the content_. Remuneration comes in the form of direct payment from subscription holders. I believe this model best represents Steem, as it is the content that gets rewarded via the upvote system, so therefore, we must be convinced that the real source of value (ie. the product) of Steem is the content. However, the current payout system distorts the actual value proposition represented by the contributions of Steemers. For this, again, we can blame the aforementioned "whales" and the ludicrous impact of their "whaledom."

#### What about the potential ad value?

Currently, Steem does not provide any mechanism for agencies to purchase ad space on the #steemit platform, neither does a means exist for ad agencies to reward influencers directly for their well, influence (towards their brands). Theoretically, ad agencies could just remunerate participants directly, but this is not a steem feature, and thusly should be ignored in the value calculus.

So, if we are left with the content, we are forced to attribute $174M of "value" to a relatively small pile of blog posts and replies contained within the Steem "platform"--and if we are being brutally honest, a large percentage of these are about the Steem platform, itself... 

### Steem-the-Platform

So this leaves us with the 174M million dollar question: is STEEM overvalued? In terms of dollar value, there is not a single CFA or VC in the world that would tell you 55K users' worth of "content" is anywhere near $173M. By contrast, Facebook's current per-user value is $98, which would make Steem's users 32X more "valuable" than Facebook's. This is bubble talk...nonsense.

So, what value _*does*_ Steem-the-platform present? As for the concept of a social network that directly and monetarily rewards participants for their contributions, Steem is at the forefront. My issues with this particular _implemention_ have more to do with the fact that a ruling elite control the reward system. Frankly, there should have never been a pre-mine/distribution at the size and scale that STEEM was initially distributed. It proves the motives behind the _design_ of Steem's reward system were largely monetary in nature for the designers of that system, and has the potentially unintended consequence of this same, small inside community controlling the majority of what is "popular" on the platform. So much for democracy...

All that being said, the concepts are groundbreaking, and Steem may win by virtue of its early entrance into the market.  However, given the diluting nature of the reward system and the current tulip-mania value of STEEM, I cannot see how STEEM can maintain it's current price over the long-run.