Some people try to tell me that Steem is a Ponzi or Pyramid scheme.
I tell everyone that will listen to use Steem as a network and currency. Most people I talk to have never heard of Steem and barely know what Bitcoin is.
Those who have heard of Steem either love it or think it's a scheme.
Let's define these schemes first.
A Ponzi-scheme:
A fraudulent investment operation where the operator generates returns for older investors through revenue paid by new investors, rather than from legitimate business activities or profit of financial trading.
https://en.wikipedia.org/wiki/Ponzi_scheme
A Pyramid-scheme
A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products or services.
https://en.wikipedia.org/wiki/Pyramid_scheme
Steem is not a Ponzi-scheme.
With Steem an investor is anyone that has a Steem account or anyone holding Steem.
Steem becomes more valuable with demand. If more people want Steem the value goes up.
Demand is really the only thing that gives Steem value.
This demand/value is due to the fact that Steem provides an open platform that many people consider a good option for blogging, social networking and financial transactions.
Essentially every Steem holder is a stockholder of the Steem company except for the fact that Steem is a network and not a conventional company.
Steem is not a Pyramid-scheme
While it is true that older Steem holders benefit from new users, Steem holders are in no way required to recruit new users in order to earn on their investment.
An early Steem investor will earn money because his Steem becomes more valuable with every new user regardless of wether or not the investor is the one who did any recruiting.
Just as with stocks, the value rises with demand and early investors gain large returns.
Other thoughts
In my opinion Steem is a solid currency and network that I have long term faith in.
Unlike Bitcoin, where those with the most expensive equipment are paid to run the network Steem uses what is called "witnesses" to run the network.
Witnesses are people running a server that hosts and creates the blockchain. The blockchain is the database of the Steem network.
The witnesses with the most valuable votes are the ones that end up getting paid for their service of running a "witness node". This gives Steem users more control over who runs their network and how the rules of the network will change.
I am a decentralized networking enthusiast running a relatively new Steem witness node.
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