Steem dollars is designed to be a comfort zone for those who need USD. 10% annual interest is toilet paper money
@godcomplex -- Craig, you're THE MAN!. We need a video on the topic of compound interest built into Steem Dollars. Would you like to help spread the word?. I blogged about it but it's in the whitepaper that there is an adjustable interest rate for holding Steem Dollars. This means when whales power down they never really have to power down into fiat. They would be smart to power down and buy Steem Dollars which can get them compound interest. This means Steem Dollars are going to be more important to speculators than Steem itself.
@craig-grant -- I disagree, steem dollars means nothing to me, and never will. It's designed to be a comfort zone for those who need USD. 10% annual interest is toilet paper money
@godcomplex -- How about you make a video on why you disagree? It's the first time I've heard someone say 10% interest is "toilet paper money".
@craig-grant -- ok, will try to make the video, but think about this. I earn 10% more steem daily just for holding steem power, so my 15,000 steem power earns me 150 new steem daily, and I can withdraw steem weekly and convert it to bitcoin, the price of bitcoin currently rises at least 10% each month.. and you want me to think about 10% annual interest for holding steem dollars worth $1 USD.. that's insane
I wasn't aware of the 10% interest on steem dollars, but it would definitely have consequences in terms of real-life economics if it builds up in terms of people having them parked to get interest.
If steem dollar = dollar, then that would make the steem platform something that would attract a lot of external investment to acquire steem dollars appreciating at 10% per year.
So say a fund comes along and buys 10mn steem dollars in order to make them 11mn steem dollars. That's -1mn dollars for the ecosystem in the end of the year. Is this sustainable? I mean banks get your deposits, give you 2% interest and then loan you with 5% - so they have a business model where they have income. Here there's no income except inflation. So perhaps that would create a lot of pressure in steem price as a lot of steem would be needed to support all the steem dollars interest.
old money like investments funds does things the old way.. cryptocurrency compared to them is like alien technology
Sure, but the scenario isn't that different compared to a bitcoin whale or a rich individual doing the same by buying steem dollars. In the end of the year you still have to pay him 1mn dollars if he buys 10mn dollars.
I don't believe in rich individuals and bitcoin whales, that's just another angle in the religious aspect of cryptocurrency. I know how much bitcoin I have, and that's the amount of bitcoin that matters to me.
If i understand it correctly there's still inflation if you keep STEEM DOLLARS, there is (almost?) no inflation if you hold your money in STEEM POWER. The developers have thought of almost anything you can ever think of already, don't understand them ;)
If you want to know everything you can always read the whitepaper. But for most people reading it will make their heads explode :)
There is no inflation in Steem Dollars. How can there be when you get interest on top of the "stable" Steem Dollar? Steem Power I read has 5% yearly inflation? But I'm not entirely sure I understand it right.
Right, my bad. Haven't slept much the past days since i joined SteemIt :)
I think they mentioned STEEM POWER has 10% less inflation than STEEM. There's also some 9 to 1 ratio, i'm really lost in all the details. Maybe we can figure it out if we read the whitepaper 10 times, but i'm too lazy right now haha.
hmmmm, interesting! changed my views on steem dollar. must rethink my strategies!!
beautiful
Awesome quote! Very interesting exchange. I think I'll follow your approach, Craig.
I wasn't very clear on the interest system for STEEM, SBD and STEEM POWER, but your video made it's clear as day. Thanks.
It's a great system, but I'm just concerned it would be too complex for casual users.
the casual user does not need to comprehend the complexity to benefit from it, all they need to do is get steem power, then they will eventually see the light
I suppose you are right.
And it's not as if you get squat-all on Reddit or Twitter!
It was already a bit complex for me in the first days, and i'm a programmer. But it's mainly because they have no FAQ (yeah i know, it's a beta) and i'm too lazy too read 50 pages of whitepaper haha. I ended up having to read the whitepaper a little here and there though, but i'm still too lazy to read every sentence for 50 pages :)
Awesome and entertaining :D
You really can't say Bitcoin currently rises 10% per month. It has gone up ON AVERAGE over the past few years, but i don't know about 10% per month.
EDIT: i did the calculation: over the past 9 months it's about 10.4% on average growth per month. Over the past 7 years it's somewhere between 10 and 15% growth each month (ON AVERAGE) assuming 7 years ago the prize was $0.01, so you were actually kinda close with your estimate :)
And that is my reasoning for saying maybe it's a good idea to hold Steem Dollars because you have a lower risk with the 10%. Bitcoin on the other hand might as well go up a lot because of the block reward halving but I don't actually know. I just think it's easier to explain Steem Dollars with 10% interest than Steem Power which no one has anything to compare it to.
Steem Power is almost like equity but not. It pays something similar to a dividend but it's not liquid. It can be powered down so you can pay yourself a salary over time. But when people want to shop they'll choose Steem Dollars right? So most people will be trading Steem Dollars.
the video you requested
You made mistake its not 10% daily it more like 1% daily if u take inflation in consideration. By your words 150 a day divided by 15000 is 0,01 multiplied by 100 its 1%. Steem power has 90% interset rate yearly and steem has 100% inflation so in return you should get something like 1% daily (not sure about math here).
1% daily is still not that bad.
1% daily is a hell of a lot better than 10% per year :)
And calling it "not bad" is an understatement. 1% per day is ABSOLUTELY INSANE! That's 3777.34% interest per year. You only need to have $20 to be a millionaire in 3 years man. Sounds way too good to be true and are absolutely Ponzi statistics that aren't sustainable. I've had suspicions that SteemIt is just a Ponzi scheme, but until i read the Whitepaper i'm not entirely certain.
I really liked the video dude.
That is a great video. Thanks for taking the time to discuss it.
yes, for using and spending, steem dollars is the way to go, but for earning profit, it's not
On the short term there's a chance Steem is going up much, much more. Steem is higher risk-reward than Bitcoin (which is already a high risk investment). Just invest an appropriate portion of your portfolio in both based on the investment risk for each.
I think Steem is actually lower risk higher reward than Bitcoin. As long as Steem growth rate looks as good as it does then I would think it's highly likely to keep going up. The risk for Steem is what if no one uses Steemit? But so far not only are people using Steemit but I'm seeing side apps like Steemchat being developed.
Steem looks as good as Ethereum right now, and at the current price it's only $4? Ethereum is $10? It's still early.
Bitcoin is 7 year old and Steem less than 1, Bitcoin has $11 billion in it and Steem less than $400 million, so it's IMPOSSIBLE for Steem to be less risky than Bitcoin (because of things like volatility, security and adoption).
Steem and Ethereum have a difference in supply so you can't compare the prizes.
I can say it because that's my experience right now, not over the years, and as time goes on, 10% per month is very conservative
You can calculate it by comparing the last 12 monthly closes. I'm actually getting curious, i'm gonna do it :)
EDIT: the results are in my top comment.
Right but you can also calculate the compound interest that you can get from Steem Dollars using this calculator. So compare the numbers and get back to us.
https://jscalc.io/calc/mKEqkCwkOOe4IzwV
Right, but Steem isn't 7 years old. First let's see if it survives for a year. The system has many, many flaws that need to be solved.
Thanks again Craig, there's a lot to learn and I appreciate your explanations.
That picture wins the internet for today!
Steem dolar is great invention because it is always same as regular dollar period. You know how much its worth anytime.
If u like trading then you are better in steem so you can dig your way up through fluctuations of steem value and earn more dollars.
If u are not trader and not willing to take risks you just sit in your steem dolars and earn your self 10% interest (yearly if i'm not mistaken).
And if u buy your steem with steemdollars better do something with it don't let it stand there for to long. Either work on market (riding waves) or power up to get 90% interst rate in steempower (but there is catch that you can't get out fast) or trade those steems for more steemdolars or btc.
craig is half way, almost 100k lol
It's not Arnold.
Here's Arnold. :)
(he still does not know what is Steemit) :)