Your guide to trading Steem (STEEM)

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Why is Steem important to traders?

The blockchain niche has been developing at a rapid pace, resulting in tough competition. However, Steem (STEEM) stands taller than many other cryptocurrencies due to its unique properties and application.

Introduced in 2016, Steem is an innovative social media and content-focused blockchain. Its goal is to provide a platform for decentralised application (DApps) hosting as well as decentralised data storage. In its own words, the platform is a “blockchain database that supports community building and social interaction with cryptocurrency rewards.”

The solutions adopted by Steem have addressed crucial issues like the cost of transactions and volatility. By using an advanced Delegated Proof-of-Stake (DPoS) as consensus protocol, fee-free transactions and a fast block time of three seconds became possible.

The Steem blockchain has a large number of DApps running on it. Steemit, a popular decentralised blogging platform, was the first app to make use of the Steem protocol, offering people the chance to earn cryptocurrency rewards by creating and curating content. Since then, the number of DApps has grown significantly. In 2018, 44 per cent of all accounts on the Steem blockchain have been active DApp users.

STEEM is a native cryptocurrency of the Steem blockchain. Other two units are Steem Power and Steem Dollars, with both deriving their value from the value of STEEM coin.

Steem aims to change the way social media works. By allowing users to earn the Steem cryptocurrency for their active engagement, the project encourages people to contribute to the creation of quality content.

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You can trade STEEM CFDs on Capital.com 24/7.

How to invest in STEEM CFDs

An individual has three options when acquiring the Steem cryptocurrency. Firstly, they can earn the coin by participating in the Steemit community, networking, creating content, sharing and commenting. The more valuable contributions a person makes, the more STEEM they earn.

Another way is to buy STEEM on an exchange like Bittrex, Binance or Poloniex. This is considered a long-term investment, as the individual is waiting for the price to rise significantly, so they can later sell their STEEM coins for a profit.

In both options, they own the Steem cryptocurrency themselves.

Alternatively, a person can trade a contract for difference (CFD) on a given cryptocurrency, and speculate on the price difference. A CFD is a type of contract, typically between a broker and an investor, where one party agrees to pay the other the difference in the value of a security, between the opening and closing of the trade.

Investing in STEEM CFDs gives you the opportunity to trade STEEM in both directions. Regardless of having a positive or negative view of the STEEM market forecasts and predictions, you can try to profit from both upward or downward future price movement.

You can either hold a long position, speculating that the STEEM price will rise, or a short position, speculating that the price will fall. This is considered a short-term investment as CFDs are used within shorter timeframes.

For instance, to trade STEEM CFDs, you can speculate on the STEEM/BTC pairing.

Trade Steem to Bitcoin - STEEM/BTC CFD

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There are important differences between buying a cryptocurrency and trading a CFD in a crypto market. When buying a cryptocurrency, it is stored in a wallet, but when trading CFDs, the product is stored in your account, which is regulated by a financial authority. You are more liquid when you purchase CFDs as you are not tied to the asset; you have merely purchased the underlying contract.

Looking for a reliable CFD trading provider to invest in STEEM? If so, just spend 3 minutes of your time to sign up and start your journey of STEEM trading with Capital.com. Try our award-winning trading platform or download our mobile app, which will become your smart CFD trading assistant.

What is STEEM?

STEEM is a fully decentralised, next-generation cryptocurrency based on the social media and content-focused Steem blockchain. It is used to power the Steemit social media platform by incentivising individuals to engage in content creation. The project’s co-founder, Daniel Larimer, stated that the platform operates in a completely decentralised manner, without censorship, data abuse, data vulnerability or downtime.

STEEM can be staked into Steem Dollar, a stablecoin that is meant to be worth $1, or Steem Power, a token that symbolises how much influence you have on the Steemit platform. Both can be traded against each other on an internal decentralised exchange.

Unlike most blockchains that are too expensive and slow to be used for apps, Steem is free, fast and scalable. Here are some of the main advantages that have helped the project to stay well ahead of its rivals in the industry.

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What is cryptocurrency?

A cryptocurrency is a digital asset conceived for use as a medium of exchange, which uses cryptography to secure transactions, control the supply of additional units, and corroborate transfers. In short, cryptocurrency is a decentralised electronic currency.

Cryptocurrency is stored in a “wallet”, which can take various forms. Some digital coins can be stored in an online wallet, or alternatively in an offline electronic wallet, while others can even be stored physically in hardware.

Why trade STEEM CFDs with Capital.com?

Advanced AI technology at its core: a Facebook-like News Feed provides users with personalised and unique content depending on their preferences. If a trader makes decisions based on biases, the innovative News Feed offers a range of materials to put him back on the right track. The neural network analyses in-app behaviour and recommends videos, articles and news to help polish your investment strategy. This will help you to refine your approach when trading Steem cryptocurrency.

Trading on margin: providing trading on margin (up to 1:2 for cryptocurrencies) with the help of CFDs, Capital.com gives you access to the cryptocurrency market even with a limited amount of funds in your account.

Trading the difference: when trading a STEEM CFD, you do not buy the underlying asset itself, meaning you are not tied to it. You only speculate on the rise or fall of the STEEM coin price. CFD trading is nothing different from traditional trading in terms of strategies. A CFD investor can go short or long, set stop and limit losses and apply trading scenarios that align with his or her objectives.

All-round trading analysis: the browser-based platform allows traders to shape their own market analysis and forecasts with sleek technical indicators. Capital.com provides live market updates and various chart formats, available on desktop, iOS, and Android.

Focus on safety: Captal.com puts a special emphasis on safety. Licensed by the FCA and CySEC, it complies with all regulations and ensures that its clients’ data security comes first. The company allows users to withdraw money 24/7 and keeps traders’ funds across segregated bank accounts.

History of Steem

The Steem blockchain was created by Ned Scott and Daniel Larimer, a cryptocurrency enthusiast and blockchain developer. Larimer had previously launched a famous BitShares cryptocurrency exchange platform and is currently working on the development of EOS.

The project was taken online at the end of March 2016. Only a few weeks later, Steemit was released on the Steem blockchain protocol, quickly finding its loyal user base.

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In regard to STEEM price history, just like any other cryptocurrency it has experienced lots of volatility. The coin saw its first burst in value in July 2016, following the official launch of Steemit. The media started to take notice of this emerging project that aimed to change the content creation landscape.

The key factor behind the price surge was the reward payout made to the early content creators contributing to the test version of Steemit prior to its launch. Almost immediately, STEEM became available for trade on two major exchanges: Bittrex and OpenLeger. Consequently, the coin’s value skyrocketed in a matter of a few days.

STEEM went from $0.24 on July 6 to as high as $4.63 on July 20, representing a rise of over 1,800 per cent. As a result, its market cap soared over $384m, third only to Bitcoin and Ethereum.

Following the boost in its value in July, STEEM experienced some significant depreciation afterwards from selling pressure by early investors and creators alike. Much of this downtrend was influenced by the earlier adopted high inflation rate and the sceptical commentary from some crypto experts. The coin continued to lose in value steadily throughout the rest of 2016, dropping as low as $0.12 by November.

This price trend translated into the following year, with the coin hitting its all-time low of $0.0691 on March 10, 2017. Things then finally started to get better, and STEEM traded within a range of $1 – $3 until closing the year at $3.01.

On January 3, 2018, the coin hit its record high of $8.57, peaking at a market cap of over $2bn. However, like most other cryptocurrencies, STEEM price crashed later, witnessing both falling user activity and an 84 per cent price decline. The coin ended 2018 at $0.26.

In 2019, after reaching the $0.532 mark in March, STEEM coin entered another downtrend, with its price dropping to $0.13 by September. Till the end of the year, the coin traded in the range of $0.12-$0.15.

FAQ

Before buying STEEM, you will need a place to store it. This is what a wallet is for, and it consists of two elements: a private key and a public address. A wallet requires a private key, specific to the individual, that enables access to the STEEM address stored in the wallet, which is also the public key. The wallet is what enables STEEM, or any cryptocurrency, to be a secure medium of exchange. Essentially, people can send STEEM to certain wallets using the public key, which only the individual can access with their private key. Some individuals choose to keep their coins in their wallet provided by their cryptocurrency exchange, due to the fact that a lot of exchanges have mobile apps that allow people to easily buy, sell and spend cryptocurrencies.

Cryptocurrency exchanges or online wallets are far from immune to the dangers of cybertheft. The infamous case of the Mt Gox bitcoin exchange highlights this. Historically, Mt Gox was the largest global exchange for bitcoin, until it declared bankruptcy in 2014 after its security had been compromised. Mt Gox had 850,000 bitcoins, valued at $450 million in February 2014, before their exchange was emptied by hackers. It is believed that the private keys of Mt Gox’s digital wallet were stolen from as early as 2011. These risks are avoided when trading STEEM CFDs because you do not need a wallet.

A ‘bubble’, in market terminology, is where the price of an asset far exceeds its intrinsic value. For instance, the dot-com bubble that occurred between 1995 and 2001, is a prime example, where information technology industry firms saw their stocks rise, merely because of the market sentiment around that particular industry, irrespective of their profits or chances of succeeding. This market then crashed in March 2000.

The problem here is that it is hard to determine the value of the cryptocurrency to begin with. Although a lot of investors are holding cryptocurrencies as if they were equities, they are not. Yet, they do not particularly act like currencies either, which makes comparisons to currency valuations difficult.  However, with any new technology, caution is advised. It could well be the case that the valuations of Bitcoin or STEEM are not overvalued, and that the bubble, if there is one, is represented by the various new cryptocurrencies that are being driven by market sentiment. Arguably, this is comparable to the dot-com instance, where stocks like Amazon were not overvalued, but others (like Pets.com, which went from IPO to liquidation in 268 days) clearly were. So, it seems that only time will tell whether the market is overheating, but in either case, there are options to trade using CFDs to take both long and short positions.

From late 2017 to early 2018, there was a surge in the price of Bitcoin (reaching $20,000 per Bitcoin), followed shortly behind by other cryptocurrencies. The market then crashed between January and February 2018, and Bitcoin fell free, dropping 65 per cent in value. Consequently, most other cryptocurrencies crashed as well. So, there clearly was a bubble in the crypto market. The question that this implies is whether there is another one on the verge. The value in most cryptocurrencies is derived from their potential; how they could be used to advance society in the future. Without institutional acceptance, however, the potential value, will remain merely potential, but whether this implies that cryptocurrencies are overvalued is another question.

The 2018 crypto crash was the biggest sell-off of most cryptocurrencies in the history of the market. From 6 January to 6 February bitcoin fell about 65 per cent. Consequently, nearly all other cryptocurrencies crashed. The cryptocurrency market capitalisation lost at least $342 billion in the first quarter of 2018. Bitcoin peaked at the $20,000 mark December 2017, with most other cryptocurrency peaking shortly after. There were several shocks that ultimately contributed to the cryptocrash: bitcoin price depreciated by about 12 per cent after the Attorney General for South Korea announced a move to ban crypto exchanges from issuing new trading accounts. Later that month Coincheck (a Japanese bitcoin wallet and exchange service) was hacked and approximately 500 million NEM tokens (worth $530 million) were stolen, making this the largest crypto hack to have occurred.

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