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RE: Falling STEEM/SBD Price: A Comment on @timcliff's Article
Why not limit Steem to 250 millions coins just like Bitcoin is limited to 21 million coins??
Why not limit Steem to 250 millions coins just like Bitcoin is limited to 21 million coins??
The founders, @ned and @dan, wanted people to get paid without investing any money. The only way to achieve this is by printing money daily and then distributing it to authors through upvotes.
If there was a clear and well communicated limit (using your proposed number) of 250 million coins, then Steem wouldn't keep losing its value, as traders will engage in the following logic:
So the price of a Steemit share (which we refer to as Steem), when we hit the limit of 250 million, would be equal to SUBJECTIVE VALUE OF STEEMIT / 250 million shares.
After this point in time, the only thing driving the price of Steem up, would be the subjective perception of the price of Steemit.
However, since authors keep selling Steem for fiat currencies, sooner or later all the Steem will leave the system and there will be none left for upvotes and authors will gradually stop getting paid. In fact, all the shares will become property of the cryptocurrency exchanges, such as Poloniex or Bittrex (you can see all the Steem they've bought in their Wallets), who will basically own (a defunct) network.
Would you buy Steem to go an upvote an article and save Steemit? Not really, right?
That's why Steem (shares) keep getting printed. But this is akin to a company, which is worth very little, printing millions of shares, trying to sell them on the market and get some cash in for the authors. Steemit is basically running on hype at the moment, and it's quickly disappearing.
In order to put some value back in the shares, the company must increase its capital. In order to increase its capital, money must flow in the company's accounts. Hence my prediction that soon we will see banners on the site. It would also be good if our company offered unique products and services*, which would also attract more investors, but at this point in time there are none.
* You know why Bitcoin became popular - there were tons of illegal services and products offered in exchange for this semi-anonymous currency, which is one of the big reasons why it's so widely accepted and used today.
An excellent analysis there @dek
I suppose its like a company going bankrupt that keeps printing corporate bonds off to raise capital!
I know @ned has talked ads to get around the problem like you say, so I think it's only a matter of time now!
Aha, there you go! Thanks for the nice comment!
Let's hope ads bring in enough revenue to compensate for the rate of Steem printing.
Let's hope so @dek - we deserve better for all the hard work you and I have done on here :)) Steem on my friend!!
I highly doubt that. Nothing disappears into thin air when it is sold. It just gets a new owner.
Yes, the new owners will be the exchange accounts - Poloniex, Bittrex, etc. Would you buy Steem from them to upvote user comments? No, right? That's why Steem will be forever printed and will lose value, unless value is invested back (through advertising, for example).
In the end, the winners will be the domain name and content holders and the exchanges, holding all the Steem. Unless Steem losses value and then the exchanges will be the losers.