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RE: Steem Economic Changes Update
The solution isn't to restrict selling, but to increase the demand for buying.
If you are locked in a cage you cannot wait to get out. Remove the lock and all of a sudden you feel comfortable.
Now look at it from the perspective of someone looking to get in the cage. They are more likely to enter if they are not afraid of getting trapped.
Also don't think of individual whales, but massive numbers of smaller minnows and dolphins.
The way to increase demand for buying is simple: reduce price.
Changing the Power Down rules is an ex post facto action which economically harms those who have already Powered Up in reliance on the two-year period because it impairs the obligation of contract. As explained in the whitepaper, there are reasons for the two year period of reduced liquidity (a characterstic of the good bought) in exchange for greater influence on the platform.
Ironically, decreasing the Power Down time requirement also decreases the trust and confidence people have in Steem and the decision of whether to Power Up because the three month period can or likely will just be removed altogether as soon as it is beneficial to those who have the ability to do so.
So, why not wait until that happens? Thus, there will likely just be more potential investors sitting on the sidelines until Steem proves worthy of investment by being attractively priced and trustworthy in terms of the good they are buying.
I agree, a price reduction would increase demand without decreasing confidence. When you reduce the confidence as this move does then no one is going to Power Up. I think the platform from a technical standpoint has a future, but when I see the founders Powering Down and changing the rules to make their Power Down even more efficient, it begins to effect my confidence. So now I'm Powering Down when I never intended to do it.
In addition I do not know what Steem Power represents anymore. Apparently it's a contract which can always be changed on a whim, so there is no economic certainty about what my Steem Power will be worth in the future or what it currently is worth. So by Powering Down ASAP I reduce my own uncertainty.
This must be your first rodeo with Dan, otherwise you would have expected this to happen after a few months. ;)
I've interacted with Dan under a different alias from Bitshares. I understand how he operates and he is a very talented hard working developer. That said, we know certain decisions with Bitshares were controversial (the merger?).
I accept that Steem at this point in time is an experiment. It is the first of it's kind and we can only learn through trial and error. I just hope Dan and Ned are not wrong in these decisions because it's not just money at stake but also perception.
First. glad to see you back. Second. you said rodeo :P
@fuzzyvest
and this is where I make a Mom joke AFK. :b
You are contradicting yourself there, you say you want a price reduction but then say that you are upset that the founders are selling.
You know what affects investors's confidence is basically a few accounts controlling the vast majority of the VESTs in this platform. The more the power is spread, the more the platform will be decentralized and resistant to abuse, that's what investors want and the founders selling just accellerates the process to get there.
The fact that you are powering down now indicates to me that you lack economics understandings of this platform. Many whales have stopped powering down after this announcement which was predictable ( I actually called it in my previous posts)
You are acting out of emotional feelings not rational thinking.
I'm not upset the founders are selling. I'm upset about changing the function and nature of Steem Power to the point where no one can tell us what it represents or why it matters. This changes the whitepaper explanation and makes all previous explanations worthless. Steem Power used to be influence, and people who would buy it used to represent people who had so much faith in Steem that they either are willing to risk losing their money, or their time, with the belief that Steem Power will develop enough utility in terms of a power up that the utility on the Steem Platform itself will be worth more than the utility of the money they put into it.
For example if I buy WoW gold and power up an account, it's because I know what I can buy with it in the game and what I can do with it in the game. I don't buy WoW gold merely to hold it and sell it later for $ but I buy it as a power up for the game to power up my character. Steem Power no longer represents what it used to represent and I can't know what it is now. I can know at some point in time it's worth some amount in dollars but like with WoW, the players of WoW who truly enjoy the game don't care what WoW gold or items their character has is worth in $ because they enjoy the game.
Risk management. It's less risk to get certain value than to gamble. Why should I gamble if I didn't want to speculate with my Steem Power? But now that people can Power Down at a faster rate, and I'm not going to get the interest I thought I could get, it's now a gamble and too much risk to stay in Steem Power. This is not emotional, this is risk reduction.
I admit, when Steem was fun, or when the focus is on making Steem Power of utility in Steem, then yes I could become irrational and that is the whole point of a game. People don't play games to be rational but they play it to have fun. When it's all about speculation and appealing to speculators, now it's all about being rational and it's no fun. We can't do very much with Steem Power, except power it down. It's not our fault if the developers didn't give it enough utility.
There was an agreed upon formula for the spread of power. Now the formula is changing even before there is much utility for that power. So why do I want power in a game which isn't currently fun and the developers aren't focused on making fun? If the focus was on making it fun for people who have more SP then I would think different but right now the focus seems to be on bringing fun to speculators powering down, so what do you expect?
The people who power down get to trade crypto currencies and have fun doing that. The people who hold SP get to do what? Curate? But that matters why? That is fun why?
Well I don't know, why did you power up up until now?
I don't know, you tell me. Why are you here? why have you powered up? what did you expect?
What do you propose to make it more fun? Steem power are locked in a contract and that gives you voting rights. This design is very restrictive to any kind of game someone wants to create.
Steem the currency would actually be best suited to created Wow gold/linden dollar type currency as SP can't be transfered.
SP wasn't mean to be liquid, or a currency, in the original whitepaper. I powered up in the hope of long term success and in the hope that others would power up after I did. When confidence decreases or when I don't know why anyone should power up then I start powering down.
Friends lists, groups, subscriptions, gamification, and less of a focus on how much money each person has.
"In addition I do not know what Steem Power represents anymore. Apparently it's a contract which can always be changed on a whim, so there is no economic certainty about what my Steem Power will be worth in the future or what it currently is worth. So by Powering Down ASAP I reduce my own uncertainty."
Something tells me you have powered up a bit. I agree. This is going to make alot of people question how stable steem is to build on...
I agree with nearly everything I have read you say @dana-edwards. I honestly dont see why steem would spike from someone buying and powering up on this news. Me thinks it be a bit of a rare coincidence...and that guy/gal will likely be quite angry then they see this change to steempower.
Let people build on steem and stop worrying about the other stuff. Steem and steempower work! Or see my other post if you must do something like this, only include the scale where everyone can choose what level of steempower they want to have.
It's a tax on Steem Power holders because the interest is being reduced. I understand the need to reward bloggers and curators but it's really hard not to perceive of it as a tax and a tax on the wrong people in my opinion.
In any case will it raise demand? I have my doubts that any quick fix or economic band aid will raise demand. I think raising demand takes months of iterative improvement in UX/UI and features.
This is not true, when people see a price go from $4 back to $0.1 they ask themselves what is wrong with the platform. And it is easily verifiable by looking at the daily volume of steem which kept going down regardless.
The way to increase demand and confidence is an increased price of steem which means an increase of the capacity of the platform to handle more users.
Steem power is not what gives you influence in the system. What gives you influence is the % of the total steem supply that you have, so steem is your influence and steem power is steem.
Powering your steem is just a necessary process to participate and curate, but it doesn't give you any financial benefit and never did.
Why should you care if people power up or not? Do you care if people are selling their bitcoin?
Many here have this idea that you need to lock people for 2 years to keep them involved in the platform long term, this is a misconception. If you want people to stick around,participate and invest long term all you have to do is make their investment slowly grow overtime and create a viable model. ( The current hyperinflated model is not sustainable as it creates a constant downward pressure on the steem price which means a pressure on the rewards of this platform)
100% agree with this. However, I am inclined to say that providing various "steempower levels" might for powering up and down might be a very helpful way to let people choose their own risk profile for having their funds locked away. Little changes during beta (especially when only adding options) are ok. Huge economic changes (as @tracemayer says above)---please no. It will definitely cause more uncertainty and only frustrate people who have already bought and powered up steem under a perceived contract.
So why not instead allow Bob to choose between 3 plans for "powering up"?
Give plan number 3 the extra benefit of letting them power down at a % as opposed to the binary choice Plans 1 and 2 get.
In this way, you let the market decide which steempower realm it wants to be in. I guarantee there are many people out there who would hold some steempower with Plan 1 if they need to be able to have access to the money at some point in time in the future. Or Plan 2 could be interesting to some who are a bit more interested in making this more of a way of life.
Then as a user I can choose (as opposed to having this stuck on me without a choice).
The price declining with STEEM is the fair way to let this settle itself. If whales sell to the point that steem is driven to $.001 you will just see more whales who power up. But let me ask you... but if they are secretly building amazing things with their powering down, might they drive the demand up without decreasing price? ;)
Some whales are doing precisely that with the help of friends.
P.S. Please dan do not do this. It has nothing to do with your idea not being good as much as it has with the idea coming after I have seen some pretty big buying and powering up spikes from people coming in. Changing the contract causes too many problems. Just add options. Don't take them away.