I'm very concerned that one of my best friends just deposited all his savings of 5 000 USD to buy STEEM and STEEM POWER.
I've reviewed this platform and the economics behind it, and i believe he has made a great mistake.
Let me explain my point of view.
STEEM currency is going higher, ok i get it, but it's only because of the buying pressure and the "steam" that this platform is dragging around the world. People are very bullish on STEEM right now, it's what we call a bubble. We never know how high a bubble can go and when it will burst, but they all do.
The dotcom bubble, the housing market bubble and even micro bubbles like Nintendo and his Pokemon Go that are bursting right now.
How the economic system works at Steemit
STEEM is used to buy STEEM POWER, this STEEM POWER let you make more STEEM by holding tight your STEEM POWER and by posting on the website. Why do you think they are paying you to keep your STEEM POWER inside the system ? Because if too many people cash out at the same time, the economy would collapse.
Also, and this is the most important point to be made here, if you have to remember anything remember this, STEEM is created out of thin air everyday to pay for posts, this mean hyper inflation and hyper devaluation of the STEEM currency and the STEEM POWER. Your STEEM (both of it) is worth less everyday, but because of an illusion and buying pressure because of the bubble, the price of STEEM is going up.
STEEM prices may go up for a while till they will collapse and return to normal, that day, my dear friend will have lost his 5 000 USD unless he cash out before the collapse.
He deposited all of his savings
This great friend of mine is not a rich dude, he works hard for his money, he has a kid and a wife to take care of, he strongly believes that Steemit and STEEM are going to the moon.
I tried to explain to him the principles of the economic system behind Steemit, but he's totally blind and unresponsive. Yesterday his deposits into STEEM were limited to 1200 USD and today he announces me that he deposited 5 000 USD in total to buy more STEEM POWER.
My advice to my friend and to all of you who are doing the same thing
Cash out as soon as you can the amount that you deposited in STEEM and STEEM POWER, at least to break even in case the bubble burst sooner rather than later.
As he didn't believe me at all, i told him i was going to make a post here, and he told me that he would reconsider his action only if enough people think i'm right.