There's a sense of euphoria on Steemit about growing number of users. I don't want to be the Grinch of the party, but I'm not that enthusiastic about the growing user numbers.
@cryptoriddler has written a post about the user numbers exceeding 800K. I've already commented their post and they were kind enough to provide us with more numbers. So, I think the growing number of users issue is worth a post, because I see more and more people writing about it.
Are 800K+ Accounts Good News for Steemit?
In order to answer that question, I want to ask two questions.
- How many of those 800K accounts are retained as daily, weekly active users?
- How many of them turn into investors?
How many of those 800K accounts are retained as daily, weekly active users?
@cryptoriddler provided the following numbers as a response to my question.
from a post by @cryptoriddler
As I have written in my response, the only two meaningful numbers on that table are the daily and weekly. Unfortunately, the rest of the figures shows how low the retention rate is.
Moreover, the numbers on that table contain two figures that we need to ignore.
- People who have just signed up and who will give up on Steemit after 30 days.
- Automated accounts, such as bots.
There's a way to filter people who have just signed up. If we count only people who have signed up at least 30 days ago and were active on Steemit in the last 7 days, that would give us a better picture.
How many of them turn into investors?
Let's assume that all of these accounts are humans and Steemit will be able to retain a significant portion of them.
What is the motivation of these new accounts?
- Do they want to invest their time, effort, and/or money to the platform in order to add value to it and eventually profit from their investments in the long term?
- Or do they flock to Steemit with the expectation of a quick buck?
I'm not going to answer that question. I leave it up to you to answer that question. When you answer that question, also think about the consequences of that motivation on Steemit.
Do more users mean higher Steem price?
More users mean higher share prices for "traditional" Internet companies, because you either sell more subscriptions or more advertisement. Both options are not applicable to Steemit. That means the number of users doesn't have much of an impact on the Steem price.
A higher Steem price is only possible when investors see an investment opportunity. Personally, I don't see that opportunity in Steemit's current form.
When I look at the Steem price in Bitcoin, I see that other investors share my view. I'm not bothered about the Steem price in fiat and I explained that in a previous post.
Steem 1 year price chart in Bitcoin from coinmarketcap.com
Actually, increasing number of users who want a share from the reward pool is bad news for the existing users as their share will diminish since the Steem price doesn't increase.
So, I have a difficult time understanding the euphoria among some users who try to earn money on Steemit.
What would attract investors to Steem?
Let me invert that question.
What wouldn't push investors away from Steem?
At the moment, 6% of the yearly inflation is paid to the authors and curators. When I look at the trending and hot tabs, I don't see content that is worth $50+ Million USD a year. That keeps me back from investing more into Steem.
When I propose replacing the reward system with a tipping system, I get the feedback that, in that case, investors wouldn't tip. In the current system, they don't invest. The effect is the same.
Investors aren't the fools that many Steemians think they are. They know what it means to invest in Steem. If they wouldn't tip on the posts on the trending and hot tabs, they wouldn't buy the Steem token in the current system, because the effect on their portfolio is the same.
Conclusion
If you want to save Steemit, attract investors, and help it reach its potential, you need to get rid of the author and curator rewards.
Moreover, you need to create a system that feeds relevant content to users just like YouTube and other social media apps. And let investors tip on that content, on their own discretion.
Investors aren't idiots. They know that in order to make more profits on their Steem compared to on Bitcoin, they need to have great content on Steemit. They will tip if you give that content to them. They know that would motivate more producers to create more high quality content on Steemit.
Disclosure and Disclaimer
At the moment of writing this post, I owned Steem Power. This post is for information purposes only and not intended to be investment advice.