Where Does The Money In Reward Pool Come From?
This video is basically my attempt to answers @travelling-two's question in this video:
https://steemit.com/dtubesnapq/@travelling-two/bfrstp74
He asks:
"Where does the money for the reward pool come from? It's a question I know I will and have got when talking about Steemit and all the other dapps on the Steem blockchain. I have still yet to find a simple answer for the average person out there. With a simple and effective answer, it should be easier to convince unsure potential users about the platform. What is your best way of putting it? I would like to know!"
My answer does not qualify the criteria of being simple, but.....
The 'money' or currency of this blockchain is not dollars but Steem and they are printed at a rate that is decided by factors that we won’t go into. The basic idea is that it is the total market cap of the coin that counts. The total market cap is divided between all Steem tokens equally.
For the price of Steem to rise, the market should value the Steem products/services at an increasing rate that is higher than the print rate of Steem. We also need to understand that money is basically pegged to the trust of the people using it.
The thing is that there is no simple answer. It is not that the answer itself is not simple. It is the fact that to understand the answer we need to understand the definition of money and how it works in reference to market forces.
▶️ DTube
▶️ IPFS
It is quite simple. The steem blockchain produces inflation at a rate of some 9% per annum. After I believe 2021 this % goes down. Large part is for those who run the system IT. Other part is for rewards.
It is like a government (or other crypto via mining) printing some new money.
To invest inactively the return must be higher than this 9% given the volatility risk you have.
I rest my case...... There is no way of simply explaining this to a guy who is a part time barista/waiter and (I am just trying to portray an average joe here)
He would simply ask- 'do they just print money? That's impossible.' Then we would start over with how economy works and loose him within five minutes.
I believe Steem is created three different ways: (1) there is Steem given to witnesses for running the nodes at each block produced, (2) the rewards pool which is tied to the inflation rate you mention and distributed according to the vest stake and activity of users, and (3) when users convert (burn) SBD for Steem.
If demand or purchases of newly minted Steem is lower than the supply hitting the market, price will decrease as seen in recent weeks.
Posted using Partiko iOS
True...and very clearly put my man. @goldrooster is also on point as well.
In this last year I have tried introducing Steem ecosystem to several people. During this time I have come across a common phenomenon that I call 'selective blindness'. People are simply not able to believe that a decentralized ecosystem can print tokens that have value like the regular money (fiat ... ahem! ahem!). On the other hand they are easily able to ignore the fact that the government does that everyday without any realistic backing (other than the blind trust of people in it).
In the first video by @travelling-two where he asks the original question, I felt that the answer should be such that the newbie can also be convinced that we can generate value in terms of money (independently of centralized systems) if we choose to do so. This is where the problem comes in and it lies not so much in our definition but in the skewed understand of how money works. Please note that I am not trying to say that people are stupid and we are smart... all I am saying is that people do not care enough to look into it except superficially. I am pretty sure that if they take a closer look, they will leave charlatans like me in the dust.
My usual approach is to simply skim over the whole topic and show people how they can get tokens that can be converted to their so called 'real money'. Once they enter the ecosystem, people are usually smart enough to find their own wings and look for answers. In one way, this is also good because this ensures that a good percentage of our users tend to know (with time) how this ecosystem works.
Hi, @hashcash!
You just got a 0.23% upvote from SteemPlus!
To get higher upvotes, earn more SteemPlus Points (SPP). On your Steemit wallet, check your SPP balance and click on "How to earn SPP?" to find out all the ways to earn.
If you're not using SteemPlus yet, please check our last posts in here to see the many ways in which SteemPlus can improve your Steem experience on Steemit and Busy.
Congratulations @hashcash! You have completed the following achievement on the Steem blockchain and have been rewarded with new badge(s) :
Click here to view your Board of Honor
If you no longer want to receive notifications, reply to this comment with the word
STOPI like your user photo! Big fan of goku here!
Posted using Partiko Android
Congratulations @hashcash! You received a personal award!
Click here to view your Board