I am quite enthusiastic about STEEM. Of course there is always some risk with a new product like this but I think it has a bright future in front of it. Here are my reasons.

The economics seem well thought out.

-- Overall, in a “macroeconomic” sense, based on the white-paper, there seems to be good design in the STEEM economy. There is an internal market (STEEM<-->SMD), long term stable investment (SP), as well as a more-liquid currency that generates interest (SMD). There is also an approval-based group of witnesses that can alter parts of the monetary policy which can help with adaptation to changing situations. SP (long term investment) gives rise to most of the power on the network, which would make sense.
The interactive website (steemit.com) was just open sourced.
-- The current website (steemit.com I mean), is quite simple in its features, and immature in general. With the open-sourcing of the code, I expect a much richer experience, which will enrich STEEM’s value.
There is a large amount of investment sitting as Steam Power
-- SP is long-term investment. It has poor liquidity. This means people who vest the STEEM into SP are taking a risk. There needs to be some confidence in the STEEM network, otherwise users would not be doing this. A person not invested in STEEM, looking inwards, would take this to be a sign of “stability.” It gives value to STEEM as a currency.
Variable time and amount of reinforcements
-- An important part of gambling, is the variable reinforcement schedule. You might get a huge amount of money “randomly” mixed with almost no earning most of the time. If you cannot predict when you will get the next boost, you will have a hard time figuring out whether you should give up or not. In other words, you have a resistance to “exhaustion.” Currently, depending on “whale activity,” you may or may not get significant awards from your content, creating such an environment. This increases the chances that people do not leave.
Not able to censor
-- This is very important, and to me, self-evident. I will not go further. See below about a concern though.

Though I think most likely the system will do well, there are some risks that are present.

Cloning

-- There is a risk that a STEEM-clone that claims to be superior would be created. The effects would be similar to a fork but not identical. See below.
The market atmosphere currently.
-- I say this because there are many forms of “cryptocurrency” on the market now. None are really proven (if I may include Bitcoin). Almost all of the new currency has value based on common themes—blockchain, use of asymmetric encryption, et cetera, that all contribute to giving value to the coin as a currency. Since I believe most of the value comes from common features, there is significant competition, and therefore uncertainty, an enemy of currency.
Security vulnerabilities/Insufficient audit
-- This could be minimal or it could be catastrophic. It would be so, especially if done in covert for an extended period of time, and then it surfaces with great magnitude. Losing STEEM, corruption of the blockchain history (in covert) would cause instability and loss of the trust needed to give STEEM value as a currency.
Inflexible parameters
-- There are many numbers that are used throughout the STEEM code. For example, as of now, 25%, 21 (witnesses), block time, et cetera. It would be wrong to suggest that we know these values to be optimal. In the case that change needs to occur, to make a more perfect system, the system must be willing to change. I think this will not be a problem because the witnesses are formally chosen by approval rating primarily. Natural to the blockchain protection is computing power and mass numbers—if a large number of people want a different kind of STEEM, they can fork at will, though this does have inherent risk and tends to be undesirable overall.
-- An example is the current inequality in equity distribution. A few have a disproportional amount of equity. This influences the community greatly. If there comes a time though where this causes the growth of STEEM to stagnate, it should lead to sales/powering-down-and-out of the super-rich and redistribution of wealth. This is assuming there is an inherent "trickle up" economics to the system, which is not a given, considering the dynamic parameters controlled by approval-based witnesses described in the prior paragraph.

Legal concerns

-- My primary concern is one of the strengths: censorship. Workers/witnesses perform an essential function – POW, blockchain extension. They have the blockchain on their hardware. The concern I have is if in some form, a person encoded or a group of people encoded an illegal content into the content of STEEM and distributed it that way. An example would be child porn. This content would then be on the witnesses' computers. Sites could censor this but the blockchain has no means of doing that and is not “meant” to do that. Though censorship would not be possible, there may be legal repercussions to the whole system due to some small group of criminals.
-- I tend not to have other legal concerns
Risk of a practical fork
-- This would create great instability, and naturally causes value-loss because “currency” depends on stability and trust.