SteemIt Guide - Buy Steem Power
Note, as I write this on 9/18/2018, the price of STEEM was $0.80. If the price jumped to $2.00; I would not recommend buying STEEM POWER.
I started using SteemIt 168 days ago. My goal was to build my account from scratch. The price of STEEM at the time was around $4.00. I thought the market capitalization was absurdly high and did not consider buying STEEM.
I still would not recommend buying STEEM as an investment. STEEM is a currency. I wouldn't consider buying hundred dollar bills as an investment.
STEEM was designed as a smart token that companies can use to reward activity on their web site. STEEM is best understood as a gaming token. The reason people buy gaming tokens is to play a game.
SteemIt.com is a game. You can buy STEEM on the open market. Transfer it into your account and "power up" to create STEEM POWER. When you are done playing with SteemIt.com, you can power down your STEEM POWER to get STEEM which you can sell on the open market. There is a good chance that you will make money in the process.
The central feature of STEEM is the upvote. The value of your upvote is determined by the amount of STEEM POWER in your wallet. The more STEEM POWER you have, the greater the value of your vote.
The system delegates 15 STEEM POWEER to new accounts. Unfortunately the value of an upvote with 15 STEEM is only about $0.0006 . The upvote of a new account is worth less than a tenth of a penny!
The reason new users should consider buying STEEM POWER is that it would increase the value of their upvote.
How Much Steem Should I Buy?
STEEM uses a complex formula to determine the value of a vote. The formula uses the price of STEEM, the size of the Reward Pool and the amount of STEEM POWER in your account.
The Site SteemNow.com has an upvote calculator. I visited the calculator when the price of STEEM was $0.75. The calculator told me that a 100% upvote of an account with 10,000 STEEM POWER would be worth $0.42. An account with 15,000 STEEM POWER is worth $0.64. Divide by a thousand and we find that the value of an upvote of an account with 15 STEEM POWER is worth $0.00064.
SteemIt delegates 15 STEEM POWER to your account, but the value of your upvote is worth less than a tenth of a penny. To add insult to injury, SteemIt.com simply deletes votes that are worth less than two cents as rounding errors.
So, to fully enjoy SteemIt, you should buy enough STEEM POWER so that a 90% upvote is worth more than $0.02; So, you need to go to the upvote calculator and find that sweet spot. That sweet spot was 525 STEEM POWER at $0.75. It would cost $393.00 USD.
Lets say you bought 525 STEEM POWER at $0.75 and the price fell 50% the next day. Well, the value of your vote would fall to $0.01. Oops!
It is a gamble. STEEM is volatile. If it falls you lose. But, if the price doubles, then the value of your vote and the amount you could get for selling your STEEM POWER would double as well. It is a gamble.
Do not gamble with money you can't afford to lose!
Should I Buy STEEM on Credit?
Buying STEEM is a gamble. There is a real chance that the value of the currency will drop to zero.
Just as gambling in Vegas on credit is stupid. Buying STEEM POWER on credit is stupid.
BTW, borrowing against your SteemIt.com wallet is foolish. If you want to buy something; then you should sell your STEEM and buy the product in cash. Better yet, you could find a selling willing to take STEEM and buy your product in crypto-currency. Crypto-currency, after all, is a form of currency. In theory it is the same thing as cash.
How Does One Buy STEEM POWER?
The most common way to buy STEEM POWER is to set up an account on an exchange such as BlockTrades. One then buys STEEM on the open market and transfers the STEEM into their Wallet on SteemIt. This STEEM just sits there. To use the STEEM, you need to "power up."
Selecting the "power up" option will turn your STEEM into STEEM POWER.
The "power down" process will turn STEEM POWER into STEEM. The catch is that it takes 13 weeks to fully power down an account. So when you "power up" you freeze the money in your account for 13 weeks.
What Does One Get for Their STEEM POWER?
Now for the fun part of the game:
People who participate on SteemIt.com get rewards for participating on the site. Upvoting works as follows: Each time you vote, the system decreases the value of your vote by 2%. The system regenerates votes at a rate of 20% per day. So it turns out you can vote from 10 to 15 times a day while keeping the value of your upvote in the high 90%s.
If you upvote 10 to 15 times a day, your upvotes will be worth about $.25 a day. That doesn't sound like a lot of money, but $0.25 x 365 = $91.25. Assuming that the price of STEEM was stable, an account with $360 would give out $91.25 in upvotes. This is why some people buy thousands of dollars in STEEM POWER. Assuming that the price of STEEM was stable, a person who bought $36,000 in STEEM POWER could distribute $9,000 in upvotes.
SteemIt lets you vote on your own posts. Assuming that the price of STEEM is stable, you would find that upvoting on your account will give you a rate of return higher than any money market account or bank. That is assuming that the price of STEEM doesn't drop. Things that pay higher than the money market return on investments usually are too good to be true.
Personally, I would not expect the price of STEEM to be stable. Quite frankly, I suspect the price will bounce up and down with an overall downward trend. A person who bought $36,000 in STEEM at $8.00 would have seen a 90% in their account value and would be hurting. Some people have losts tens of thousands of dollars on this platform. There is nothing to prevent the value from STEEM to zero.
Planning an Exit Strategy
STEEM is trading at about 10% of its high. While I recommend that new users buy $400 in STEEM POWER to play the game, I think every one on the platform should also design an exit strategy.
My goal on STEEM it is to build up enough STEEM POWER so that my votes are worth $0.02. I will power up all the rewards I receive until I reach my goal. Once I hit the $0.02 sweet spot (which is 480SP), I will start withdrawing the STEEM I receive. I probably will power down the account if I end up with over $1,000 in STEEM POWER.
One should have an exit strategy. A person wins the SteemIt.com game by withdrawing more than they put in.
Buying Advertisements for Steem
I am glad you made it to this section about buying ads. I would not borrow to buy STEEM, but I am willing to seel ad space for STEEM.
Did you notice the wonderful ad at the top of this page? That spot is up for grabs. It is a wonderful 738x90 banner in the upper fold of the page. The starting price is 10,000 ads for 1 STEEM DOLLAR. You can design and order your ad here.
Current stats for this page are: Starting 2018-09-19 I have shown the ads 17900 times to 3637 distinct IP Addresses.