Introduction to Bid Bot Delegation

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Hello Steemians, today I did an article on delegation and I touched briefly on how you earn Steem by delegating to Bid Bots. There is a lot of money made on delegating to Bid Bots, so I think it’s important to share my understanding and get your feedback on this topic. So here is my understanding of how investors make money delegating Steem Power to Bid Bots and if you have Steem Powered up as Steem Power and you are willing to delegate some of it you can earn Steem this way too.

As you can imagine the economy here on the Steemit platform is a mixture of content creators, content consumers and various types of investors. But I am writing about those passive investors who buy Steem, power it up and delegate it to Bid Bots. The Bid Bots then sell their votes to content creators, who are competing with other content creators for the attention of the content consumers and the upvotes of the content consumers.

These content creators seek to make money in various creative ways, but one way is by buying upvotes, boosting the post rewards for their posts, which attracts readers and potentially upvotes and profits and notoriety. As you can see that’s just a part of the Steemit economy and it’s explanation is already complex.

But my main purpose is to make you aware of the profit potential of Bid Bot delegation. When you delegate your Steem Power to these Bots, they sell upvotes every 2.4 hours and you can make as much as 0.3 Steem and 0.03 SBD per day, per 1000 SP invested. Now while a 100% upvote from someone with 1000 SP is around 0.1 Steem you would need to receive three 100% upvotes per day on three posts every day, for 30 days a month to equal the return you get from a passive investment in one of these Bots.

Let’s do the math.
Steem invested 1000
Powered up to 1000 Steem Power
Delegate 1000 Steem Power to a Bot
Return of 0.3 Steem and 0.03 SBD per day.
Let’s assume 0.03 SBD is 0.09 Steem using a 3:1 conversion for simplicity, so now we have:

1000 Steem Power earns 0.39 Steem per day
1000 Steem Power earns 2.8 Steem per week
1000 Steem Power earns 11.2 Steem per month
1000 Steem Power earns 132 Steem per year

ROI means Return On Investment
ROI equals 132/1000 or 13.2% per year
This is a passive investment which doesn’t factor in a guaranteed interest rate for holding Steem of about 5% per year, so now your ROI is 18%.
But wait, it’s just starting to get interesting. We need to factor in appreciation of Steem.

Imagine if you will, that you held Bitcoin during its run from $4000 to over $8000 this year, that’s a 100% gain. But what if you were also increasing your Bitcoin holdings by 1% per month during this same six month time period as profit from your delegation, that’s an addition 6%, that doubled in value for essentially an additional 12% gain or 112% gain in six months for a passive investment.

Now have someone ask you why Bid Bots are a popular vehicle for investors here and you will think of it completely differently. Steem is a risky investment because it’s a cryptocurrency, but the return on the investment is potentially very great.

Now please be aware that I am applying simple interest math calculations, for simplicity , to a situation where compound interest math calculations should be used to determine the true returns, which would be higher. Remember that the math genius Albert Einstein once said that “Compound Interest was one of the eight wonders of the world.”

So regardless of the controversy surrounding Bid Bots, I think you should have this information, so you can make informed decisions. Knowledge is truly power, so let’s share what we know, so we all can grow here together!

Questions?

Additional thoughts or Comments?

Take Care,
Shortsegments