As a stakeholder in the platform, I do not believe I derive any value from all this content that you claim adds value. It is an illusion, but there is no actual economic or monetary value that derives from it which would support the notion of investors' money being given to bloggers. None.

The only mechanism that supports this being viable is to distribute crytpocurrency widely and have that grow into a self sustaining economy.

Free bets are a game. If people enjoy and participate in the game, it adds value for the participants. It adds value to the economy by distributing tokens widely, seeding a market which can then be tapped by entrepreneurs offering goods and services. (There are other games on steemit that I also like -- I noticed one where you have to guess the combination of a safe.)

It makes just exactly as much, or as little, sense as paying people free money out of thin air for posting their blog, although in reality I think it makes more sense because the market is bigger and the barriers to participation by users is lower.

FWIW, the issue you raise with people not believing in 'free money' already exists. It especially exists when they try to post and earn nothing because they aren't particularly famous, or talented, confirming their view that the whole thing is a scam. Now contrast that with what happens when they pick a side on a steemsports game, and win. They actually earn a payout, into their account, which can be cashed out (and methods for doing this more easily will only improve over time).