Welp, there goes my hope of using Steemit as a way to keep going. When I joined the site, the Steem dollar had a sudden spike in value. It keeps losing its value ever since and it will soon be worth the same as the American dollar. By the way, the Steem dollar was never meant to be more valuable than the American dollar. Its price was inflated for the same reason all cryptocurrencies were inflated about the same time over the past few months.
And that reason is Bitcoin, the most famous of crypto. Since it’s the only currency you can use to buy stuff online, all other crypto are slaves to it. If you could buy stuff with any currency, this wouldn’t be happening. But the problem is you can’t. 99% of services accept only Bitcoin, nothing else, which means if you want to buy something using crypto, you have to convert whatever you are using into Bitcoin. So whatever fluctuations in value Bitcoin has, affects every other crypto. Steem dollar included.
So now you will be asking, what the heck happened with Bitcoin recently that made all cryptos to blow up in values only to collapse just as easily? Obviously it has to do with Bitcoin increasing in value ridiculously fast, and then losing it just as easily. There are many reasons for that, but the one I see causing most of it is Bitconnect. Bitconnect was a place where you would invest your crypto money, and after a year you would be making a profit based on how much money your investment made. They made a big promotion of this method and convinced tens of thousands to start using Bitcoin over the past few years. This is one of the main reasons Bitcoin quickly became widespread.
Now what needs to be made clear is that Bitconnect did not own Bitcoin. It was using it, it made it widespread, but it did not control it. It always comes down to how much Bitcoin you control, and as it turns out a huge percentage of the total Bitcoins existing in the world was owned by Koreans. It was such a ridiculous amount of money that rumors began to spread over the past few weeks implying the South Korean government would ban all cryptocurrencies in the country. This was more than enough to scare many Koreans who owned most of Bitcoin, so they began converting huge amounts of crypto money into fiat money. With so much Bitcoin suddenly disappearing from the market, the value of Bitcoin dropped dramatically. Bitconnect couldn’t mitigate such a huge gap, since the average guy who begins using crypto doesn’t invest more than a few hundred dollars. When dozens of millions leave the market at once, no amount of new owners could save this mess.
This brings us to the next part of this equation. Why was the South Korean government rumored to be planning a ban on cryptocurrencies? The reason is, because crypto in its inception is not meant to be regulated by banks or governments. The purpose of Bitcoin was to allow every individual to be in control of his money and not to be afraid of the banks or the government one day saying “Hey guys, there is a crisis going on, we cannot pay you the money we promised, we will take money from your accounts, we won’t let you get the rest from the bank, and even when you do, their value will be significantly reduced.” This is exactly what had happened in my country a few years back, when hundreds of people were waiting in lines outside banks, just so they could get a few hundred Euros once every week.
This is what Bitcoin was created for; so you will always have access to money without being depended on the banks. It was not supposed to be regulated by the government. The thing is, this doesn’t mean the government can’t do anything about it. If they make a new law stating “crypto is not allowed in this country” then it’s the end of crypto in that country. Which is exactly what happened in South Korea. Dozens of millions of dollars were circulating in a small country and its leaders could not touch it. Banning them would be a way to make sure nobody would be able to one day buy the country, or something. It was mostly a rumor but it was enough. So as you see, as much as people wanted to believe it was a secure way of always have access to money, it’s not really secure if something as simple as a rumor can damage it that much.
And this brings us back to the hypocrisy of Bitconnect. Cryptos were supposed to be non-regulated. By making an investment there, you trust your money to someone else and don’t have access to them for a whole year. This is the opposite of what they are supposed to exist for. Not to mention the whole Ponzi or Pyramid scheme everyone kept saying was going on in there, but nobody seemed to believe. Really, it’s not a scam, you are just being paid for convincing people to bring their money at a place they won’t have access to them for over a year. Totally not a scam. This is why it shut down as soon as Bitcoin had a sudden drop in value. It works for as long as more people and more money are thrown into it, because older members are being paid with the money of the newer members. As soon as that stops, or the money lose a lot of their value, it becomes impossible to pay back the investments and thus the scam is exposed.
And now I would like to talk a bit about Steemit, since it’s not exactly a holy mountain either. First of all, I did not pull a pyramid scam by inviting many of my subscribers to join the platform. I was not paid every time someone was joining thanks to me. Nobody paid any money for gaining his initial Steem power. There is no investment going on, since I didn’t pay any money for making whatever Steem dollars I have thus far. For the same reason I didn’t lose money because the value of Steem dropped significantly. If you don’t pay money, you don’t lose money. It only means you make a lot less than you expected.
At the same time, it’s still being abused with low effort content. Since you get paid based on the total voting power of your upvotes, creating a huge circlejerk where everyone is voting each other (or themselves), means you can basically make a small fortune without providing useful content whatsoever. As much as they try to make it seem you are rewarded based on how useful and well written are the comments you are making, it’s not true. The ones making most of the money there do it through effortless spam and alt accounts. Effort is not rewarded. Asskissing and self-indulgence are rewarded.
Which is also against the concept of crypto, since it’s supposed to be decentralized. How is it decentralized when most of the Steem is owned by a handful of whales who keep making more profit by abusing the system, while thousands of others are asskissing their low effort posts in hopes of making a profit? How is that different from capitalism? The rich control the poor, and are above the law because they are rich. It’s the same shit as fiat money; nothing changed. Non-regulated, decentralized money my butt.
Now, I am not saying it’s the end of the world. Things might improve in the next weeks. Steem might increase in value again. Scammers could be punished as they deserve. But until that happens, crypto does not look trustworthy if stuff like these keep happening. Also, the Doomsday Clock starts anew as far as I’m concerned. If I can’t make enough to sustain my lifestyle, in two months it’s bye-bye… again.
