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RE: 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)?
I feel that a lot of the talk around lowering inflation (beyond the set rate now) is a knee-jerk reaction to the bear market trying to engineer price increases, even if it is not in the best interest of the long-term view.
While tweaks are needed here and there, Steem has a strong running and air game and the applications are shaping up to be some pretty hardcore RBs. What is needed is a line that holds under pressure.
If you want to call four years of observing how Steem works and doesn't work to be a knee-jerk reaction than that's your prerogative, but I disagree.
Proof of Brain is an intriguing idea but one which has just not panned out. Most of the failure modes were predicted in posts made within the first six months to a year (and no, not by me primarily, if at all).
What has happened over time is that available evidence has entirely falsified the idea of Proof of Brain as a growth driver (which is what it was intended to do, and which it clearly has not done since there has never been significant growth apart from, temporarily, during major price spikes) and has mostly validated most of the theories about its failures (vote selling, vote trading and self voting, all in various obvious and less obvious forms, for the most part).
I agree that PoB hasn't panned out as expected, but I do think that there is still a fair bit of game in it that has value if there was adoption. I am not sure what lowering the supply would do for adoption of the social aspects of the platform and what the knock on effects would be. I am guessing then that the RCs will need to be adjusted to suit also - lower transaction/action costs?
What reducing inflation does is buy time to come up with better models for achieving social growth or see other types of applications (such as games e.g. Splinterlands) thrive to the point where they lift up the entire economy (and IMO they are more likely to do so if not burdened with the extra cost of paying for poorly-working social reward scheme they do not even use).
RCs adjust their own costz via an internal (hidden) market within the blockchain code. The more RCs being used, the higher the RC prices, and vice versa. So in general, no adjustment is needed there, it should all be automatic (with the caveat that RCs are something new and unique to Steem, are currently a "1.0"-type solution, and could benefit from further refinement in any case).
What I wonder is what happens if say going to a 2% inflation rate. An account like freedom's with 10M will have the same value as over 1.5 years of the entire pool - isn't that a risk? It makes all other accounts on the platform with significant stake that much more powerful with essentially no way for their power to degrade significantly.
Thanks for the RC insight.
As things stand now, @freedom's account is increasing faster than inflation (I did a quick one-day estimate at about 11.4%; this is rough and may be low if some delegations don't pay every day). It is also possible there are off-chain payments or payments to another account which make the rate even higher.
Distributing more stake with votes makes large accounts more powerful, not less.
But under lower inflation, it will still climb relative to everyone else, but without the ability for everyone else to do anything about it. The distribution would remain quite static and similar to now unless they sell - which is likely if price climbs enough also. The problem is that if there is such a thing as good actors to come, they do not have much chance of ever gaining influence against those who have largely proven themselves indifferent to the community for 4 years.
edit: I will add - publicly indifferent at least.
It would stop increasing (about 0% per year after inflation rather than 3.5% or higher currently, all else being equal; over numerous years even this is a BIG difference). Okay maybe that's still not ideal, but it is better.
We could use a solution to the rich-getting-richer problem that is sort of baked into proof of stake, but unfortunately we don't have one. Sticking with the existing system is not only not a solution, it is making matters worse.
Meanwhile we stop needing massive inflow of new capital (which mostly isn't there) just to maintain the price and value of Steem from draining further down the toilet. Like I said earlier, it buys time to find solutions.
Fair enough. I will have to think more about it and factor in some of the things you have mentioned. I have suspected for a long time that the tap will close and I have posited a long time ago that it would be through a fork that changes the inflation rate. This isn't unexpected, but I am still undecided on whether it is the best way to go. Since I have relatively high stake, it would benefit me, but since this is a social environment, the entire population needs consideration. If SMTs pan out, they will create their own inflation pools anyway, so this might be the best way to secure the Steem infra.
We all need to warm up to the idea to like the blockchain we have, not the blockchain we ideally want. We play the cards we are dealt with and try to make it better from within.
Exactly.
To a hammer, everything looks like a nail.
And to a nail, everything looks like a hammer. 😨