Steem 10:1 reverse split every 3 1/3 years?
Just reading through on investopedia and it says that every 3 1/3 years there is a 10:1 reverse split on Steem coin resetting the process of doubling the currency every year, is this true?
This is off the investopedia website:
Creators plan for reversing inflation?
Could this be @ned and @dantheman's plan for reversing inflation every 3 1/3 years? I had no idea there is a 10:1 reverse split on the Steem currency every 3 1/3 years. I guess it might be a good idea to do a reverse split every so often or else the currency will get to overly inflated and be worthless eventually, and you don't want your currency to be worthless because of hyper inflation.
Maybe the 100% dilution every year really has no significance then since the currency does a 10:1 reverse split every 3 1/3 years.
System is designed to create excitement
If this is true then this entire system is just designed to create lots of excitement for users and earn lots of coins fast then in 3 1/3 years if you have 1,000 coins now you are back down to 100 coins, but the price on the markets will be higher when the reverse split occurs just like it does in the stock market.
So in 3 1/3 years if there are 1,000,000,000 billion coins in existence on the day the reverse split occurs the coin goes back to just 100,000,000 million coins but lets say the coin is trading at $10 the day before the split, it will be trading at $100 a coin instead of $10 a coin after the reverse split.
Could be a good idea
The reason I think this reverse split could be a good idea is because it will keep the price trending upwards for the currency and psychologically will make people think the value is going up not down. At the same time it also gives people a lot of coins to earn in the system but the value should still be worth the same it just artificially raises the price of Steem coin every 3 1/3 years.
Yea here is the quote from the whitepaper :
"In order to compensate for the ever increasing precision, the STEEM network performs a 10:1 “reverse split” every 32,000,000 blocks (about 3 years). At this point in time all balances of STEEM are divided by 10 and all prices are multiplied by 10. Cryptocurrency exchanges will have to suspend trading around this time and update the account balances and price history to reflect the “reverse split” before resuming trading.
All rounding errors will be in favor of the network. Every balance may lose up to 0.009 STEEM due to rounding, but this amount of STEEM should be economically insignificant.
Collectively all holders of SP will lose at most 0.009 STEEM."
I do recommend reading the white paper, it's a pretty easy read.
Nice thank you for the help! Great work! I figured as much but didn't bother to read the white paper I am going to read it now!
I had heard about this but definitely needed this type of explanation. Thanks
Thanks for desribing the reverse-split to avoid inflation and loss of worth.
check this out to understand the system in general:
@https://steemit.com/steem/@arhag/where-does-the-money-come-from-a-look-into-the-economics-of-steem
upvoted this is great information i think 99% of us didnt know.
May i suggest two small edits for accuracy and readability.
1,000,000,000 billion is one billion, billion. or 1,000,000,000,000,000,000
100,000,000 million is one hundred million, million. or 100,000,000,000,000
Correct: 1 Billion or 1,000,000,000 / 100 million or 100,000,000
Cheers
PJ
It is 1 billion. If there are 1 billion coins on the day the split occurs the coin goes back to only 100 million coins in existance sorry if it was confusing.
Thank you for the reccomendation.
doubt that price rises in 10 times.
even after reducing the award Bitcoin has not risen in price by 2 times.
I upvote U