Words from the Editor

Steemit the Altcoin: Boom or Bust?

One of the problems with Bitcoin is that it costs $670 to buy one. That might seem like a ridiculous statement, but people are put-off by that price tag. They don't think in bits; they think in bitcoin. So while I am excited that I have one million bits, people only think about the one bitcoin.

I can't tell you how many times I have read, "I missed the boat on Bitcoin." Why? Because it's $670 per bitcoin? It's only $67 for 100,000 bits. It's only $6.70 for 10,000 bits. When you start to think about it that way, it becomes easier to justify buying bitcoin.

Unfortunately, many people still don't see it that way, so they go hunting for success in other altcoins. An altcoin is any coin that is not bitcoin. Ethereum is, technically, an altcoin. Litecoin is an altcoin. And Steemit, the newly launched social media website, has its own altcoins associated with it.

Now ... I'm not entirely opposed to altcoins, but the unfortunate reality is that the majority of them are scams. The founders release a bunch, while holding onto a dispropriate amount, and then pump them up until they can sell, leaving other investors to carry the losses.

Steemit comes with Steem, SteemPower, and SteemDollars. The difference between them is, to be honest, confusing to me. But here's a handy link (on Steemit) to explain it.

Now ... I'm not suggesting that Steemit is a scam because it does appear to have a viable use case for its users. However, it's worth noting that it is an altcoin that is currently being pumped incredibly because people think they are going to get rich on it. When I made my Steemit account, I had 10 Steem in SteemPower. I now have 10.519 by voting. However, the value of it was approximately $10 when I signed up five days ago and now it's $34.

But here's the problem ...

What goes up must come down. If the founders of Steemit see that they're 1,700% richer than they were before they launched, they might decide to run. And then what? The average person will be left holding the bag.

Steemit will tank. The value of the coins will be severely diminished. That doesn't mean that it will always remain there, but early holders will want to get rich. And the amount of money some of these people have, I expect them to start selling en masse. Therefore, it's boom time for Steem now, but I expect the bust to come. History shows that's inevitable.

Thanks for reading this week's issue of Crypto Brief. For those that are interested, I also run FinTech Brief, which is about general fintech news. Also, check out the sponsored ad below. This is a new company that I've launched. And as always, if you have a question, please don't hesitate to hit reply.

Jacob Cohen Donnelly




Law & Regulation