steam investment

in #investment8 years ago

Sorry if this is a noob question.
Let's say I just want to invest in steam for profit.
What are the possible differences in value after 2 years time frame?

  1. Purchase $1000 worth of steam and hold it for 2 years.
  2. Purchase $1000 worth of steam power and hold for 2 years.
  3. Purchase $1000 worth of steam dollar and hold for 2 years.

After 2 years, I want to cash out, but I have no interest in participating in the site during the time.
However, I like the business model of steam and I think it will grow.

Sort:  

The answer: 2.
When you want to cash out, sell your entire account (if accounts are still trade-able at that time).

By the way, we're talking about steEm but not steAm.

What follows are estimates designed to give order of magnitude and should not be counted on as investment advice or accurate projections. Assumptions are yours to make, I do not advocate any particular future value or estimation.

If you assume a future market cap of $1B and a current market cap of $50 million and that 99% of STEEM will be held in the form of Steem Power then we can make the following assumptions. If there was no dilution at all then you would make $19,000 (a 20x growth).

Buying STEEM

Initial Percentage 0.00138% worth $1000 when Supply is about 72M STEEM. After 2 years the supply of STEEM will around 1 billion which means you will have earned about 40% return on investment (1.4x). It is clearly not advantageous to hold STEEM for long periods of time. Long term your losses are 50% per year assuming a fixed market cap.

Buying STEEM Power

Based upon current behavior, 99% of STEEM is held as Steem Power which means you are effectively diluted by 9% per year to fund growth. After 2 years the Steem in your Steem Power will have grown to be worth about $16,000. My math could be wrong here, but the order of magnitude is about right.

Now here is the rub, you wouldn't be able to cash it all out at once unless you sold your account "in bulk". Instead you would have to cash it out over 2 years. Assuming the market cap remained flat $1 billion, you would get $153 per week the first week. By the end of 2 years (4 years from start) you would likely pull out $15,000 (flat market cap with 9% per year dilution).

If you sold your account you would probably find a buyer willing to offer you $8000 for $16,000 worth of Steem Power. This is based upon time-value of money, risk, and bulk trades.

So if you bought $1000, convert it to Steem Power, and then immediately started to withdraw it, then you would dollar-cost-average your selling over 2 years. Assuming growth was average and steady from $50M to $1B then you would likely receive $8000 in 2 years time.

Assumptions Everywhere

There are all kinds of assumptions baked into things and my numbers are all order-of-magintude estimates and could be completely wrong. That said, I can say with confidence that your return for holding 2 years will be much higher with Steem Power than STEEM.

** NOT INVESTMENT ADVICE **

Steem Dollars will earn you a 10% APR unless they start trading for more than $1... then the rate of return will fall toward 0. In other words, holding Steem Dollars is like holding a variable interest bond.

unless you sold your account "in bulk".

Out of curiosity, is there a safe way to buy an account? Won't the seller always know the private key (and have the potential to take funds) or is there a way around this?

By selling an account, you just need to update your account's keys to the buyer's PUBLIC key. After that the seller will have no control. And the system supports something like multi-sig account, which can be used to do escrow.

Great thanks for this information.

Ok lets see:

1.- Purchase $1000 worth of steam and hold it for 2 years

You have to keep in mind that "steem" has a high inflationary rate, so here you will be betting that the growth of the platform will be higher than the actual inflation.

2.- Purchase $1000 worth of steam power and hold for 2 years.

If you put your money on steem power you gain interests, you can also upvote content (which doesnt require much from you) and gain some curation rewards. I think this would be your best option.

3.- Purchase $1000 worth of steam dollar and hold for 2 years.

Steem Dollars will always be worth the same amount of real USD, YOU WILL GET 10% annual reward, so in 2 years you would be looking at 200 bucks. If you want to specualte this would be the worse option.

Good Luck and let us know what you decide on a follow up post!

I had a similar question. Thanks for asking the right questions and for those who can answer with knowledge.

Great discussion point. I was about to start a similair discussion. Not sure if I believe in the current crypto investment climate but I do believe in the blockchain. We do need to look better at the insights of every coin. What team is behind it, is there any management. How strong is the product, is there any product at all? An interesting website I found: https://www.coincheckup.com The site lets you check all there is to know about the team, product, communication transparency, advisors and investment statistics on every crypto. Check: https://www.coincheckup.com/coins/Steem#analysis For the Steem Detailed report.