How viable is Steem as a currency as the Steem network must constantly create tokens to reward bloggers and enable votes (causing lots of inflation)? Answering in Quora.

^{This question was asked in Quora and I have answered this question in Quora, shared in Twitter and additionally I am also submitting the same answer to this question as a backup in Steem blockchain.}

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Every cryptocurrency has a use-case and utility. STEEM as a coin has also its own use-case. In a social blogging platform, it is needed to incentivize the content creators and curators in a way to make the ecosystem sustainable. The block producers must also be rewarded as they maintain and secure the blockchain network. So Steem has chosen an inflationary model to reward the users for their respective roles.

But it must be noted that the inflation that is structured in Steem is very precisely defined with a definite roadmap in which the inflation decreases at the rate of 0.01% for every 250,000 blocks, means 0.01% decrease in inflation every 8.68 days till the inflation reaches a value of 0.95% where it will become constant. The present inflation is 8.33% as per Steemd. If you compare the inflation of a cryptocurrency with any fiat model, then you can find that the paper currency always has inherent inflation and that is also arbitrary & dictated by central authorities. Despite that many hyperinflation currencies have survived and their demand did not degrade to that extent.

During the recession back in 2008, almost all central banks of the developed countries decided to inflate the supply to bail out the banks, financial institutions. The USD supply from 2008 to 2014 grew more than 4.5 fold(means 450%), but its relative value against the goods and services depreciated by just 10%. So inflation here did not justify a degrade in the demand of the currency.

The example Bitcoin can also be taken as a reference. During the initial years, inflation was almost 100%(first two years). Later the inflation gradually reduced.

If a cryptocurrency has inflation, then that can be balanced with better token utility, better token sinks. Even if the inflation in Steem is 8.33% now, if there will be mass adoption, then this inflation will look very negligible. If STEEM as a coin becomes a payment method in branded e-commerce websites, then the demand will so much so that this inflation will look very marginal. STEEM can be a good payment method because it does not charge any transaction fees. There are many other potential use-case of STEEM which can make it viable.

Just imagine, STEEM is a social media, if it will have 1 million active users, then what will be the demand of STEEM coin. So what we all need as a community is that we need to push for the mass adoption of this coin. As it is a decentralized social media, the onus is on all. If everyone is benefitted from this community, then everyone should work for the greater interest of the community.

Inflation is just one element, if there will be a good number of long term investors, then it can easily offset the inflationary pressure on STEEM and the demand can rise above that pressure and pushes to a value where the inflation will be negligible. Steem has one of the best blockchains of the idustry, it has a working product already in this space from the last three years, we have a community, the constant development is being done. We have all positive characteristics, the only thing we need to step up is marketing, letting people know about Steem as product, then the adoption rate will improve, which will help in creating more demand for STEEM.

Thank you.

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^{* Answered in Quora}

^{* Shared in Twitter}

^{* Immutably backed up the answer in Steem Blockchain}