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RE: Steem Power Interest Is Not Compound Interest!
SP itself does not create a compound interes, but dont you get more curating rewards if you have more SP? That alone creates a compounding effect doesnt it?
Basically anything that earns more money as time goes on and then that increased amount is what makes the money, compounds.
I believe SP has other compounding properties, but all that is needed for a counterexample to disprove an assertion is one instance, which I believe I have done.
tl:dr SP compounds over time
Incorrect.
I mean in the literal sense of you get SP due to simply having SP. the SP is stored as vests which (ignoring any external inputs) stays the same, but the conversion rate from vests to SP keeps going up due to the 9:1 effect. So the fact that SP is actually the current conversion rate of vests using an ever increasing factor could be interpreted as vests dont compound, ie. are static. However, the issue here is that it is discussing SP and not the internal vests and the SP caculated from an ever increasing conversion rate sure looks like compounding, acts like compounding, because it is compounding.
Add to this the effect of SP*log(SP) being your allocation for curating and by any sense of the word SP is compounding, even if the underlying vests would remain static if you never did anything at all.
So, the OP should really correct the misinformation at the risk of getting downvoted should it not be corrected
The internal accounting of VESTS is irrelevant, because it is STEEM that we base the external exchange and market capitalization on. I explained this in my comment.
The point about VESTS is also irrelevant because the value of VESTS are effectively taken from STEEM holders and given to STEEM POWER holders. That is the compounded interest payment.
It is absolutely compounding. The value VESTS represent are taken from one party and given to another. An interest payment is taken from someone and given to another.
WTF ??? Is wrong with people who upvoted this blog!
I downvoted it because not only did he spread lies about me, he also downvoted my blog post.
You are welcome to provide cogent rebuttal. I haven't seen one from you yet.
I'm sorry dude, but you either do not have any idea what VESTs are and what Steem Power is... or you are blatantly lying to people trying to mislead them...
I'm am trying to be as nice as I can here, but what you're doing is just wrong.
Im kind of confused here about the "taken from one party and given to another" thing. Thats not what makes interest compound. Bacchist could have stated it better, but tbh im not sure we're working on the same definition of compounding either
I know when I read "You are welcome to provide cogent rebuttal. I haven't seen one from you yet." I know I need a TLDR
But the conversion rate is increasing linearly, no? That is to say, if i have X amount in steem power, and I don't add any more, the increase in the conversion rate will yield a fixed increase in SP every month, not a linear one. Am i missing something.
Yes, the conversion rate increases quasi-linearly as a function of time, very unlike compounding which is a geometric series that grows super-linearly. The principal, denominated in VESTS, is static. It doesn't move at all unless you are earning additional VESTS by curating or blogging, but that has nothing to do with interests.
recursive... see my other reply... the conversion rate doubles every year.... thats is compounding and thats not a linear increase... ie, the 1m vests is worth 200 now, 400 after one year, 800 after 2 years, etc... thats 100% APR compounded yearly
That is not linear. Anonymint is off on how much were going to make (i think because hes trying to calculate it compounding monthly)
Sounds logical
I'll make this super simple for the standard person that wasn't amazing at math.
Creating the numbers and gains out of air.
You start with 10 sp, at 10% interest a month you have 11 sp.
You start with 11 sp, at 10% interest a month you have 12.1 sp.
You start with 12.1 sp, at 10% interest a month you have 13.31 sp.
Now over time steem may go up in value or may crash and burn and become the value of rdd, diem etc.
That being said today's price does not represent a price seen 104 weeks from now. So while 10 steem may be worth .05 btc currently, your 50 steem in 2 years might be worth .05 or .000005 btc.
https://steemit.com/steemit/@rogue91/steem-power-and-proper-calculations-of-gains
Thank you! That was really helpful.