Because we, as a society, say it is. No really, I'm not being a smart ass. Okay the market is a little more complicated than that and the creation of a cryptocurrency is definitely more complicated than that. But when it comes down to it, steem, and other cryptocurrencys like bitcoin have value because we, as a society, have agreed that it is valauble. And the more people are willing to pay for it, and the less of it there is, the more it is worth.
But can I buy food with it? Directly no. Not now at least. That may change if vendors decided they would accept steem as payment. But for now, steem cannot be used directly. But it can be exchanged for bitcoin which can be exchange for cash. There are websites that buy bitcoin for real currency and if steem really takes off we might see vendors who will deal with it directly for cash in the future.
So steem and bitcoin by themselves are worthless then? Not exactly. They do have value. From what I know, the transparency and permancy of the blockchain gives security to the currency. It is also easy to send and recieve, saving a lot of costs in the long run for companies and people who choose to deal in it. And steem does have a secondary function. If you are a company or a celebrity, steem yields you influence. Having your stuff seen over somebody else's is a big market on the internet. Look how much the advertising companeis bring in. So, in theory, if you were looking for a platform where you wanted your message to be heard and you didn't have time to build up a network, a large financial investment could guarantee that your posts get seen as long as the viewers are there.
So let's all get rich on nothing then? Not that simple. And also very dangerous. This is why cryptocurrency cannot stand on it's one without a fiat currency. Steem didn't just have value because it was mined and now people want it so it's value is rising. Steemit had a $20 million dollar investment of real money that gave the steem value. When the steem was created it was paired with a real world value, so that the steem was already worth the equivilant of something in the real world (in this case USD). Then they gave a percentage out to the people who would in turn us it and want more it, increasing its value.
I like to think of cryptocurrency as a diamond and maybe just because the mining metaphor works so well as does the 'diamonds are forever' saying. Diamonds in themselves are fairly useless. They do have some functions if you cut them properly and they are shiny (so shiny). But like cryptocurrency, you can't eat it, wear it or accomplish anything with it. Yet if someone asked if you wanted a sandwhich or a large diamond, you would take the diamond (unless you were literally about to starve to death). Cryptopcurrency works the same way. Each steem or bitcoin can be seen as a coin that is worth a lot more in value then it is in actual worth. And why is it worth that value, because, like a diamond, someone might be willing to pay you cash money to own it. But keep in mind there a lot of cryptocurrencies out there, and prices fluctuate, so be careful with any of your investments.
