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RE: Ned's Making $700k+ Every Week: Is the Steem Power Interest Rate Too High?
@lukestokes @eeks
“The most powerful force in the universe is compound interest”
– Albert Einstein
My only concern for this is the value creation is out of balance, it's almost like Steemit is the central bank that prints steempower that's able to get vested into STEEM/SBD out of nowhere.
One thing which should be clarified here is that it's not really interest but ownership share dilution. It feels like interest, but in reality the ownership share is being diluted because the vested steem is above 90%. And though it does feel sort of central-banker-ish, the question I keep asking myself is how a pizza which was purchased for 10,000 bitcoin is now worth over $6.5M. Explaining that explains what might be going on here. There's also the future value which is priced in to consider. People know what cryptocurrencies can do and this one has utility via the social media angle. That's pretty incredible.
I've also been concerned about the value creation balance, but, in theory, the market is supposed to counter balance that. Maybe $1+ STEEM is overpriced right now. If, however, at some point in the future, STEEM outpaces bitcoin, than getting in at $3-$4 seems really cheap. As they say, time will tell.
Not only that, but the 10K bitcoin, at the time, was actually a far greater perentage of the total amount of btc in circulation.
Bitcoin is worth so much now because of a huge increase in demand. Based on your name and use of english, I assume you are an american, so this increase in demand might not be as obvious to you. When you want to keep your money safe, you put it in the bank.
There are many, many people in countires like russia, and especially china, for whom the only comparable move is to buy bitcoin with that money. Money in the bank in these countries is subject to being stolen at pretty much any time by any number of government functionaries.
I'm a part owner in a law firm whos main focus is helping overseas clients do business in the US. Part of what we do is manage their merchant and bank accounts and send them their revenue in BTC. Up until the end of last year, i was the one actually going out and buying the BTC to do this (to the tune of like $10-40K a day). Its actually hard to find that much BTC everyday at spot, so i floated the notion of simply wiring them the money. The almost universal response was "no, nothing but bitcoin will do. I'd rather pay extra and get BTC" Its that kind of bidding that drover the price of BTC.
If you want to look at it from an exchange point of view. If youre a businessman in one of these countries, and youre buying, you don't put in a bid under the ask and hope it get filled. You pay the ask. And a lot of people doing that drives up the price.
Yes! It's like Andreas Antonopoulos talks about all the time, the other 6 billion people who are unbanked. It's very encouraging to hear about this from someone who is actually seeing it happen. Thanks for sharing!