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I don't understand the claims of "Steem is a Pyramid Scheme"


2 years agoSteemit3 min read

I'm no economist and so this could all be wrong (if so please educate me in the comments, I'm always open to learn) but to me I think deflationary currencies (e.g. Bitcoin) that have a hard limit to the number of coins (21,000,000 in the case of Bitcoin) are the cryptocurrencies better described as "Pyramid Schemes" because for every fiat dollar buying in every single person who already bought in will see an increase in value of the Bitcoins they hold. So for every friend you get to buy $100 of Bitcoin that adds $100 of market cap to Bitcoin and then in turn adds $100/(number of mined coins) value per coin. If you get in early enough and just wait you can't help but get richer off the backs of those that buy in after you. Now of course the fiat/BTC exchange rate fluctuates because of cryptocurrency markets but at a high level that is my understanding of what is going on.

Steem on the other hand has a defined amount of inflation that reduces over time but never goes to zero. This to me is the opposite of a "Pyramid Scheme" because if you just sit on a lump sum of Steem it's going to slowly lose value and the only way to avoid that is to be active on the blockchain (post, comment or upvote). In my mind that inflation basically ensures that some amount of wealth held by whales gets cycled back around to minnows who join later. This seems like a much more equitable proposition and means that Steem will always be an attractive blockchain to invest in whereas chains like Bitcoin only become less and less attractive to new comers.

Not a pyramid scheme

If our ultimate goal with crypto is to replace fiat then I worry about the next generation or the poor. How will things be equitable for the poor who get on the chain late? Steem incentivises you to use or spend your Steem otherwise it will slowly vanish due to inflation, but if you upvote minnows posts or comments then you not only protect your value on the Steem blockchain but you also increase value for others.

I bought in to Bitcoin not long ago and it made me some good returns but the more I learnt about cryptos the more I noticed I was just hording Bitcoin and actually the thought of spending it just filled me with doubt so I avoided doing so. This just led to stress. The best thing I did recently was dump all my Bitcoin and move to Steem and then stake it and delegate it to @MinnowBooster. Now I sleep so much better knowing my staked Steem is being used to spread the wealth and I get paid a bit doing so. If I ever get to the point of giving up my day job I fully expect to un-delegate and start using my staked Steem directly but until that day I'm happy to see my little bit of Steem not only keeping its value but also being used to give value to others.


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