I will not label Steem, the native token of Steemit, a complete shitcoin. This is because Steemit is a unique platform where authors are rewarded for their content with Steem, which is a new and innovative way to earn cryptocurrency and increase cryptocurrency adoption. However, Steemit and Steem have some serious centralization problems that cannot be ignored, and Steemit is totally rekting itself.
For starters, Steemit regularly dumps Steem onto the market to fund their company, and this applies constant downward pressure on the price of Steem. Recently Steemit was forced to layoff 70% of their employees since the price of Steem has collapsed so much that paying all of the employees became unsustainable. Since January 2018 the market cap of Steem crashed from USD 1.8 billion to USD 75 million.
Part of the reason the price of Steem has crashed so much is Steemit is dumping tons of Steem consistently, and they seem to have centralized control over printing more Steem as far as I can tell. This is bad for all Steem investors and traders, and honestly, is enough of a reason to avoid investing in Steem. There are better, more decentralized cryptocurrencies to invest in.
The Velocity Hard Fork in September 2018 was a total mess, and even after it stabilized Steemit was worse than before. Since the fork happened Steem has declined 72%, and continues to fall.
It started a week before the fork, when the fork was accidentally implemented and the whole site crashed. This caused a major loss of economic activity and users. Then the fork finally came, and suddenly no one was able to post for what seemed like at least a week. This was because the fork had a serious bug where everyone had negative mana. Eventually they forked it again and reset people’s mana to zero. But then it was discovered that in order to post as much as you want to, a solid 50-100 Steem needed to be invested. At the time this was about USD 50-100.
The Velocity Hard Fork was advertised to bring ‘massive’ improvements of Steemit’s technology, and to retire the Resource Credits system, which was supposedly inefficient. No improvements to Steemit’s technology were apparent after the fork, and the Resource Credits was a system that should not have been messed with. In general servers are cheap, and there is no way Steemit needed to change the system to pay for the servers. They changed the system to fund their entire company which was, and still is, bleeding money. Unfortunately for them, the new system caused Steemit to lose money even faster since they scared away the users.
The mandatory Steem investment to post created a subscription barrier on Steemit for the first time, and subscription based models for social media forums make no sense at all. There are so many sites that do not require any subscription, and therefore new users would never choose one that has a subscription. It is likely new users stopped signing up for Steemit, many existing users abandoned Steemit, and only diehard Steemit users with very mature accounts that they use for business reasons paid the necessary Steem to keep posting.
The Alexa rank of Steemit declined from about 1,800 before the fork to 4,000 today, and it is continuing to plunge. This is a direct result of the Velocity Hard Fork implementing a subscription barrier. Steemit thought they could make more money with this subscription model, but ultimately the loss of users was so devastating that they had to fire 70% of their employees. Hopefully Steemit realizes this error, and forks again to remove the subscription barrier. Until then Steem is a shitcoin, since it will continue to lose value non-stop.