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RE: Why would anyone invest into STEEM if it is so inflationary?
Assuming 100% of steem were locked in steem power, the maximum real inflation rate is 10% per year, less than Bitcoin. Currently 99% is locked in steem power. If less than 90% is held as power, then power will pay a positive inflation adjusted rate of return.
Hi @dantheman I don't get why the inflation rate would be 10% if 100% of steem would be locked in steempower. Is this because the 'interest' per year is 90%?
Thanks for your reply.
This answers the part regarding inflation. However, there is still something I do not get.
Can the market cap be expected to increase? And if so, why? Is there any intrinsic benefit to owning STEEM, except earning more STEEM?
The intrinsic benefit to holding as Steem in the form of Steem Power is that it earns interest like you said. You also gain more influence as a curator. For example if you have a lot of Steem Power, your upvotes and downvotes will carry more weight than a new user who has very little.
Market cap may increase if publishers and content creators with money realize that they can buy influential power on the network. Also, people tend to be greedy and like to speculate on price so sky's the limit on that one. That's the only reason why I'd purchase- if you think this site will get popular and market cap based on speculation goes up. If you're a conservative investor, I would just earn as much Steem by becoming a early adopter and use the site as much as you can.
Bitcoin's total supply is capped.