<p><center><img src="https://i.imgsafe.org/8baef7ef7b.png" /></center></p>
<h2>The Problem with Most Cryptocurrencies</h2>
<p>The big problem with most cryptocurrencies is that they are merely vehicles for speculation.  Indeed in many ways one could descrie them as a &quot;solution looking for a problem&quot;.  </p>
<p>There is little to no real world use for them and I say this as someone who is a strong supporter of cryptocurrencies since 2013.</p>
<p>Even bitcoin itself is used mostly for speculation.  Whilst many people would like to think of bitcoin like digital money it is in many ways more similar to a commodity.</p>
<h2>Why STEEM is different</h2>
<p>STEEM has STEEMIT.  This provides the killer app and the utility.  </p>
<p>Very few people know about cryptocurrency but most people know what blogging is and they most certainly know what social network platforms are.  </p>
<p>It is estimated that Facebook has over 1.1 billion users and by 2018 there will be 2.55 billion social network users (<a href="http://www.statista.com/statistics/278414/number-of-worldwide-social-network-users/" rel="noopener">source</a>).  </p>
<p>The beauty of STEEMIT is that people don't even need to know anything about cryptocurrencies to start using it - it uses the &quot;killer app&quot; to hook them in and start using and creating demand for STEEM before they even know what STEEM is.</p>
<p>If they later go on to learn more about the inner workings then GREAT.  If they don't it doesn't really matter because they are making use of it all anyway.  Very clever.</p>
<h2>But it gets better</h2>
<p>Speculation can in some ways be the enemy of utility.  It leads to volatility which makes it a lot harder for people to calculate prices and how much they have to spend.  It also discourages long term investment.  STEEM deals with this with high inflation - <em>yes that's right high inflation</em>.</p>
<h2>Isn't inflation a bad thing?</h2>
<p>Not always.  In this case the high inflation of STEEM is used to encourage people to convert it (power-up) to STEEM POWER (SP) - this is the long term version of STEEM that also grants people voting influence on the STEEMIT platform.  </p>
<p>SP grows over time and it can't be sold on exchanges. It can only be sold after being converted back into STEEM which is a long process that occurs weekly over a period of 2 years (called powering down).</p>
<p>The majority of the inflation in the system occurs within STEEM putting pressure on people to either sell or convert to SP.  </p>
<p>This helps to reduce hoarding, increases use and also promotes long term investment into STEEMIT.  In the long term this should prevent the price of STEEM rising out of control and reduce the price disadvantage to latecomers.</p>
<p>The design of the whole Steem/Steemit system is ingenious.  </p>
<p>I haven't mentioned Steem Dollars (SD) yet.  Posts on Steemit are rewarded in 50% SD and 50%SP.  SD are used as a mechanism to help anchor or &quot;peg&quot; Steem to value of the US dollar.</p>
<p>If you would like to learn more read the <a href="https://steem.io/SteemWhitePaper.pdf" rel="noopener">STEEM Whitepaper</a>.</p>
<p>Take home message - STEEMIT is the killer app that makes STEEM viable.</p>
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