Let me start off by saying that I enjoyed the concept of Steem / Hive when it started back in 2016/2017. Getting paid for blogging... who would have thought that we'd actually see that coming true? As more users joined up, the economic flaws were all but ignored as the price of Steem rode the whole crypto euphoria wave back in 2017 and early 2018. Then, the bubble popped.
The Economic Problem
When a good idea meets a bad economic model, it is the reputation of the model that remains intact. So just what is so wrong with the Steem and Hive economic model? Ultimately, it is the same one that plagues all currencies which have too high an inflation rate with too little demand.
Just like the USD purchasing power has decreased to a hundredth of what it was a century ago, that is the future of Hive. There are many similarities, but the main ones:
- rewards concentrated in the hands of a few
- no incentive to hold rewards in said currency
And so, those who earn more Hive, will sell it down at regular intervals to pursue opportunities elsewhere.
Contrasting with DEC
Let's look at a coin that I think is making a change in the right direction and that's DEC - the coin you earn playing Splinterlands. Like Hive, it too was plagued by unsustainably high rewards and no real reason to keep the coin. That all changed on Sep 1 with the new ranking system that reduced rewards drastically and also gave players an incentive to hold on to their cards and DEC by requiring certain amounts to be held in order to qualify for leagues.
The price of DEC was even below 0.003 and now has shot up to 0.009. That's more than a 3x increase and an example of how the economics of a currency impacts its value.
I hope the powers that be on Hive listen before its too late but I am not too optimistic.