Thanks for the read Sterlin.

"The first thing I want to mention is that I don't believe the creators ever intended SMD to be used as a general purpose currency."

Many that I have interacted with have argued that this is the goal and one of the prospects for long term growth and sustainability. Dan has intimated as much by talking about SMDs being used on markets to exchange for goods. Here is one example:

https://steemit.com/steem/@dan/steemit-s-evil-plan-for-cryptocurrency-world-domination

"It was strictly just supposed to be 'influence' and 'power' on the platform."

Well vests, i.e., "steem power," are strictly for platform power and cannot be traded or used as currency. SMDs are pegged to the US dollar to promote their use as a stable currency.

"Apparently, demand is created as a result of people seeing value in the currency for various reasons."

Sure, steem generates demand based on investment prospects and the unique utility of the platform (and I'm sure for other smaller reasons). But to continue reward payouts there needs to be a reason for a broader user base to buy in, otherwise the steem inflation will drive the price down. For the average person buying steem now and powering up that translates into basically no voting power. So where will the new investment come from?

I think integrating advertising could provide one major answer to sustainability. I'm sure it's being worked on.

"But even if it fails, this idea will eventually be perfected, as I am sure you agree."

I do!

"In my mind, this suggests that there are a lot of ways, many of which have not been imaged yet, for continuing to add value to Steem as a crypto-token."

It's possible, yes. The platform has potential if the problems can be overcome, and with a strong community that becomes more likely.