My Thoughts on the Value of Steem.steemCreated with Sketch.

in #steem7 years ago

The Currency That Makes This Blockchain Social Network Function is Steem.

Over the last few weeks we have had some major changes on the Steem blockchain. The amount of interest was chopped down to 9.5% and the power down time frame was decreased to 13 weeks.

@Exyle and I had a frank discussion about this while we were at SteemFest. The idea that the inflation of Steem was dropping so much clouded my mind to what would happen when the power down was also decreased. @Exyle reminded me that there were many folks would want to power down as soon as they were able. Now a few weeks after the hard fork on Dec. 6th we are seeing exactly the scenario we discussed on the boat ride on the canals of Amsterdam.

Why Does The Current Price of Steem Keep Me Up at Night?

In this game of Crypto Currencies there are always opportunities. I largely missed out on the first Steem rocket to the moon. I was busy building my business and holding onto some positions in Crypto Currencies that are going nowhere.

This time around I can see the possibilities of the Steem blockchain. Steemit.com was just the beginning. We see the team at @Busy.org working away as well as the eSteem app by @good-karma. Then on top of all of this the amount of Steem brought to market due to power downs will subside in March-April. This means we could have cheap Steem for a few more months and then the countdown to liftoff begins.

What Can You Do?

I would recommend that you begin writing the best possible content that you can write on the Steemit.com platform. If you have the time write multiple times per day. If you want to catch fish you have to put your nets in the water. Put in the time, effort and reap the benefits.

Personally I will invest some of my Bitcoin profits into Steem. I will buy a little every week until the power downs slow down. Am I worried about the price of Steem dropping even more? Nope! Am I worried that my payouts will go down on Steemit.com? Nope! I am giddy over here, knowing that I may have stumbled across another opportunity of a lifetime. Bitcoin 2.0 for me. It is amazing what opportunities you find when your eyes are open.

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The idea that the inflation of Steem was dropping so much clouded my mind to what would happen when the power down was also decreased.

One of the things thats important to remember is that inflation of m2 (actual spendable money) has a far greater effect on the value of money than inflation of m4 (total money supply).

When we decreased powerdown time, we actually increased m2 inflation and decreased m4 inflation, at least in the short term.

In the long term, we are decreasing both. Because had we continued to hyperinflate non spendable m4 (sp balances), eventually that would have spilled over into higher m2. the chart posted by steemit blog shows the worst case scenario for HF16 m2 vs non-HF16 m2.

The blue line is "liquid steem" as it would have increased with no HF16. The green line is sort of a worst case scenario for HF16 liquid steem supply (it assumes everyone powers down as fast as they possibly can). The reality of the liquid supply after HF16 is a line the same shape as the green line, but shifted downward somewhat.

The pount where the blue and green lines converge is the worst cast scenario for when HF 16 liquid money supply will be less than it would have been had we stayed with HF15.

It looks like about 18 months on the chart, but thats a worst case.. obviously as the green line shifts down, convergence comes earlier.

This chart takes into consideration the new 13 week power down? Very interesting!

One day there will be millions of people on Steemit and we'll miss these auspicious if humble days of cheap steem. But it'll be another new thing to explore, and we know how much Steemians love NEW :)

It's been and will continue to be a fun ride !

I am thrilled to be part of it.

I was just talking about the price in steemit chat.

This is how I've been thinking about it. Who wants to be the next speculator to buy in at $4 and see it go to $0.13? By the same logic, why buy at $0.13 when you might be able to buy later at $0.01 or lower?

I think this thing has a great future and my first purchase was around $0.28. I bought a lot more at $1.00. I feel more confident about this platform now than I did then. I have a bit of SBD ready to buy more once the price stops going down. The reasons I don't buy now at $0.13 isn't because I don't think there is value, I'm just wanting to be smart about it and get as much value as possible for my purchase. There could be many others in the same boat, just waiting things out. I think it's why people like Charlie Shem are powering down as well. He mentioned he would buy on the lows and sell on the highs. Right now may be a local high if we're heading towards $0.01 prices. Even then, would you buy at $0.01 if there's a chance you could buy later at $0.005? That said, once the downward trend stops, I also think it could shoot up very quickly as those who see the value rush to get back in.

From my perspective, the downward pressure isn't as big as I expected. Not all of the whales are powering down. In a way, the price isn't low enough.

This is a good reason to spread out the purchases. As a precious metals buyer I have been doing this for years. Buy a little every week and have piece of mind no matter which way it goes. If we take away the emotions and make it a technical purchase we make better decisions. Thank you for stopping by Luke!!

Inspiring stuff. Thanks for the post. I hadn't connected the dots myself on the hard fork and the price drop due to increased power downs.

I agree 100%. This is our chance to shine!

Good information! Keep it up.

I am giddy over here, knowing that I may have stumbled across another opportunity of a lifetime.

🎉 👍
You are absolutely right! Thanks for the mention Randy!

No problem and thank you for your amazing app!

I think Steem is an incredible opportunity and I'm really excited about the potential I see. I would say that Bitcoin shares similar merits between physical gold and silver...Gold like bitcoin is a certain standard for protecting wealth that people are use to but there's way more potential in physical silver and I feel the same about Steem.

Same for me, I think Ethereum was the go to back up for Bitcoin over the last year but Steem is rising quick for me.

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