Truth and fairness vs popularity. What to do when a post that says another post is wrong and gets more reward than the original post, which was the one that is correct?
The first post: https://steemit.com/steemit/@anonymint/it-s-so-easy-to-become-a-millionaire-with-steem
The second post: https://steemit.com/interest/@bacchist/steem-power-interest-is-not-compound-interest
The second post says that the first post is incorrect. However, the way I see it, SP compounds if only due to the simple fact that all else being the same, you get more curating rewards if you have more SP. And once you have more SP, you get more SP. THAT is exactly what compounding is. The more you have, the more you get.
OK, so maybe technically under the hood, the SP doesnt really exist and it is in a constant amount of "vests" and if you never did any curating, posting or commenting, then the vests you have will stay the same. However, even in this extreme case of a non-community participant, your SP is still compounding since the SP is getting 90% of the new STEEM that is generated and that is based on overall marketcap.
So, to say that SP doesnt compound to me seems quite wrong.
Why am I complaining about this?
Well at this moment, the post that came after and is wrong has $1236 and the original one that is correct has $682 with only 2 hours left.
To me this is totally backwards, but I cant do anything to fix it, other than downvoting the incorrect one. But I am still new around here and I am not sure if that is a valid reason for downvoting. Ideally, the people that upvoted the wrong one would reverse it to correct this injustice, or maybe some giant whale can upvote the correct one to get double the incorrect one.
James
The one you think is incorrect is in fact correct. There is no compounding of interests. The reward you get for curation isn't "interests". Interests are a very specific form of income on deposits that doesn't require any form of action and is entirely passive.
I am not obsessing over exact terminology of simple interest vs compound interest as for a one dimensional bank loan.
My point is that steemit is multidimensional, not one dimensional. And that SP is a compounding asset as long as you are active in the community.
An objective way to measure this is that given the same level of activity to the identical set of posts compare the amount that someone with 1 SP would get vs. 100 SP. The latter would get more, right? If so, it is compounding (in the presence of engagement with steemit)
STEEM is a depreciating asset, like a car
SP is a compounding asset, like nothing else I have ever seen
vests are internal and not really relevant, but the nominal amount of vests increases while it compounds in value
Words carry meaning. It's important to use the right words to convey valid meaning when communicating with other people. When you are talking about interests, 99% of people will understand that you are talking about passive fixed income on deposits.
I'm not disagreeing with your point at all. I agree that you can have snowballing compounding returns on the principal if you are active in the community and good at what you are doing be it posting, curating, market making, mining or being a witness. But these returns are not coming from passive ownership of the VESTs but from active work in the community. There is a limited amount of rewards every day, and competition to obtain these rewards. The better other people are, the harder you have to work to beat them. Content has to be better and better to receive attention. Finding new premium content requires to actually read posts if you want to beat the bandwagon. Market making has always been a cat and mice game. Mining is doomed to getting increasingly hard. And being a witness is quintessentially political and you need to campaign, lobby whales and pose a lot to keep your position. As you see, it's really not all that easy to increase your stake by participating in the community. Now, the competition is low and it's sweet. But that won't always be the case.
But that's not what the author of the "it's easy to become a millionaire with Steem" post meant. He literally meant that all you need to become a millionaire is let interests (passive fixed income on deposits) compound while you are sitting on your a##. Well, that's not true because Steem doesn't pay actual interests on vesting Steem deposits. The only thing that Steem does is to hedge at 90% your deposits against inflation. Because you are still exposed to 10% inflation, if you are sitting on your a##, your percentage holding of the network is actually decreasing, and this decrease is the thing that is actually compounding. So if you had say 10% of the stake and do nothing for a year, at the end of the year you have 0.1 / 1.1 = 9.09%. And the next year 0.1 / (1.1^2) = 8.26% etc. In fact this is not entirely true because inflation is a fixed amount of Steem, so the inflation rate is bound to decrease over time as the ratio of the dilution over the total is getting smaller but this is irrelevant to this argument.
Of course, even if you do nothing and get diluted, since this dilution was used to promote adoption of the network and create quality content, the value of the network will have increased following metcalfe law and the value of the intellectual property it holds will have increased too. So you may end up having more in dollar terms. But this has nothing to do with compounding. These are capital gains, and as such are of a speculative nature that it would be misleading and desingenuous to call "easy money".
But anyway, that's not what you were saying and I generally agree with your post expect for the part where you think that @bacchist is wrong. He is not. He is spot on right in his analysis. There are no compounding interests that will give you a risk-free and passive fast track to becoming a millionaire, this is a completely groundless idea wielded by someone who doesn't know what he is talking about. To be a Steemit millionaire, you'll have to take risks with your money by speculating, be smart or work hard to provide value to the network and be rewarded.
I think we are all saying the same thing. SP is a compounding investment assuming you are active in the community. I am not saying SP pays compound interest, but rather that it is an investment that compounds.
Like stockmarket DRIP is a compounding investment. Many are hung up on mapping this compounding to bank deposit account behavior, but that is like mapping a 3 dimensional object to 1 dimension, at best you get a limit approximation, at worst a totally different idea of what it is.
So the tl:dr is that SP compounds but only if you are active and it is not like a passive compound interest instrument.
Sorry but you are incorrect!
You can twist the terminology but that is irrelevant. The math is quite clear as I have explained in the various comments here and at @bacchist's incorrect blog post.
You are really not doing yourself any favors by being a math retard and then writing incorrect posts because you don't realize you are a math retard. I suggest you do a little bit more reading and less writing about things you don't understand well.
Would it be possible to have conversations like this without reverting to name calling such as "math retard"? From an outside perspective, it weakens your argument to an emotional one, not a rational one. It probably doesn't do much for your reputation either. So far, I've enjoyed a lot of really great discussion on Steemit, but this is the first one I've seen with so much juvenile behavior.
I think you'll find the problem is down to auto-bot voting. The second writer is probably on a bot list, and so got an auto-vote regardless of whether he was writing rubbish or not.
Thanks for the write up good fruit for thought!
I am strongly considering giving a downvote. So far the only post I ever downvoted was my own. I had a duplicate post as the first one got no traction at all and I knew it should have gotten more than $10. Then when the repost got $100+, the original was downvoted and that made sense to me, so I also downvoted it to kill it.
Here it is about affecting somebody else's money, but it is being earned by being wrong about the original post...
I think a lot of it is the fact the most people don't necessarily understand the mechanics of up-voting with Steem Power and how curation rewards are generated. Most don't know how to effectively take advantage of the curation rewards by reading, up-voting, and participating in the discussion early on in a quality post. Rather they just up-vote what everybody else is up-voting instead of reading it; they just think "Hey this post is popular I'm going to up-vote it as well and get paid big for it!" and thats exactly what they do unfortunately.
that's a very rare commodity.. honesty
I haven't posted anything as yet, still learning about Steemit, I suppose it depends who sees your post and who it appeals too, still very good amounts... I think . like I said I am new :)
That's life! Fierce and happy!
I'm not sure which one is wrong or which is correct but I think they both deserve upvotes for sharing their analysis on the subject. Keep in mind this is a good example that you shouldn't believe everything you read here unless maybe it's from ned or dan :)
the problem is dan upvoted the incorrect one, probably as he didnt fully read it, but maybe he upvoted both of them like you would. maybe it is like having controversial topics will create a controversy and that is more engaging than not having a controversy? So an upvote doesnt mean agreement, just that it is an upvote
From what I've seen mentioned in Slack, the downvote flag is more for preventing plagiarism and identity theft than it is for voicing disagreement. I might be wrong about that, though.
I've participated a bit in this conversation, and I'm kind of surprised by the lack of humility involved. This stuff is really complicated and many of us will get it wrong (myself included) as we figure it out.
To your point, VESTS do compound the amount of new VESTS you can earn through your actions. That part, I think, has a form of compounding action to it. That, to me, is different than interest which I think of in terms of no other action required.
But not absent any other activity, right? Maybe I'm just thinking about that incorrectly. That said, the original claim did involve $2 worth of daily activity, so maybe that's also where part of the confusion is coming from.
This, to me, is the part where everyone keeps missing each other. Some are assuming a hard connection between the USD price of STEEM ("marketcap") and others are thinking purely in terms of the functional code which has no understanding of USD values. Even the latest reply to me on my last comment started talking about fixed USD amounts which obfuscates what's going on here. If the supply of STEEM is increasing, all things being equal, the conversion value to USD would proportionally decrease via that inflation process. I know it's a little more complicated than that because those shares are VESTED and not liquid, but it's still a stretch to me to make a direct connection to USD value and then use that connection to argue for compounding growth. Maybe all of this makes sense if you take into account an assumption which was made which included a specific price for STEEM. With that assumption, the end result in USD terms might be argued as having grown via compounding growth. That doesn't mean the actual mechanism of the protocol has any compounding interest aspect to it. Instead, to me, it means the market demand for STEEM continued to grow exponentially, regardless of the inflation rate.
I think the confusion is that vests are a compounding entity, so by denominating your thinking in vests, the compounding is absent in terms of vests, even though the compounding still exists.
and as far as activity being required disqualifying something from being compounding or not, it really is dependent on what activity. For example, a lot of banks simply close inactive accounts and if you dont proactively do something all your compound interest and even principal is lost. Does that make it that there is no compound interest?
And really, what activity is needed to obtain the benefits of compounding? Basically what you would be doing anyway, so it does not seem like any onerous activity requirement that negates the compounding.
I read a post today where people were downvoting the makeup video as they felt it was getting too much. Spam is downvoted, plagiarism is. But this case is very close to the borderline and I am not sure if I should downvote it or not. Not because I am not sure if it is wrong or not, just not sure if it is an infraction that it got some whales to upvote for it and that the original post got a lot less
well bacchist made my decision much easier as he downvoted this post!?!?
That pushed me over to the downvote side as I have not done anything in this post to warrant being downvoted, other than disagree with bacchist. Here comes my first downvoting of a blog post
well it was anticlimactic as the total went down by $2, still it is the principal of this
I can't believe he downvoted your blog post. He is going to turn Streemit into a flame war clusterfuck.
He can't provide a cogent rebuttal, so he resorts to dirty tactics.
And his accomplice tie-warutho who keeps downvoting the truth.
Did you mean to say is not a compounding entity?
To me, the only way for compounding to still exist is if we assume the market demand for STEEM keeps up with the inflation rate of STEEM. That, to me, is a really big assumption which doesn't really add a lot to the discussion, IMO. I think investors in the market will figure out how to properly price STEEM as the demand by those who want to power up becomes known given a user adoption rate along with the number of people divesting their shares to sell.
You make a good point about the activity involved shouldn't be excluded from a concept of interest. I just hadn't been thinking along those lines at all.
As to why some people are downvoting? I don't know. We'll leave that for them to discuss, I guess.
If you have a seed for a tree and you plant it and do what is needed to make sure it doesnt die, you have exactly 1 tree, regardless of how big it grows. But at some point the tree will make more trees. So let's call a seed a compounding entity.
If you have 1 seed and you talk about 1 tree, then the number of trees has not grown (until it spawns more trees), so there is no compounding of the number of trees, just its mass.
Not a perfect analogy, but the vests are like the seed for a tree. If you dont plant it, dont nurture it, you still have the seed, but you will only have one seed. still it can always grow into a tree.
So if to change the coordinate system where each unit represents a compounding entity, you can pretend it isnt compounding as the numbers stay the same. However look at all the contortions you need to do in order to claim that SP doesnt compound.
If we are parsing at the level of what is the meaning of the word "is", then bad is good and good is bad and SP doesnt compound, even though it does
That's the current consensus but this changed from what I was told by the founders signing up. Originally the founder even said it should be used to adjust payout from a post you think has too much. Then even just a few days before the down arrow next to the up arrow was changed to a flag the fonder responded to a similar question saying you should downvote anything that you felt detracted from the value of the platform, which is obviously subjective. I understand this is a beta system and will change, but its a little frustrating that everything including many payout rules change so fast and so frequently, and are hard to keep up with.
Even though I share a little frustration, I don't really mind, we can still all use the system however we feel is best.
Well said. I too think things are being figured out as we go along. That, to me, is the nature off a beta. So far, I've been impressed with the releases I've seen over the last couple weeks (including what's coming on Tuesday). Yes, I naturally fear change, and it is uncomfortable, but I think much of it is good change.
Downvoting the truth as you do to my posts, pissing people off, and creating flame wars will detract from the value of Steem. I was trying to keep my blog posts and comment posts positive. But somehow you negativists want to stir up trouble and destroy your own platform. You really don't want to piss me off. I have the ability to fork Steem and compete with it.
Making posts claiming "Its so easy to be a millionaire with steem" and encouraging people to spend $400 in hopes that with some blogging they will be a millionaire is very harmful to Steem. Are you intentionally trying to create a penny stock get-rich-quick "pumping" environment?
anonymint said:
@bacchist, @pigeons, and @stephencurry downvoted my blog post (linked in the OP), because they thought it was 'shilling' and incorrect information. So please go explain to them the intended use of the downvote.
Are you trolling against Steem at Bitcointalk? I've been told you are, but I haven't bothered to check myself. If you were, from that perspective, I could see some validity in the claim that this is a well orchestrated attempt to troll here as well. But I don't know, I just find this all quite interesting.
@lukestokes:
If you call analysis trolling, then yes I am doing analysis at Bitcointalk.org. Some of it is postive for Steem and some of it is critical. Otherwise it wouldn't be analysis.
@bacchist wants me to be 100% loyal. He doesn't want the fact that Steem is an exponential compounding system to be exposed. Which may explain why @dan upvoted his (or may not if @dan didn't even read it).
Interesting perspective, thanks for explaining that.
I do see a potential for a lot of downward price pressure. At the same time, I see bitcoin creating new value every day and the price holding. The difference here, I guess, is that I don't get new bitcoin just because I hold bitcoin and participate in some activity. When I have a certain amount of VESTS here, I do have the opportunity to gain more VESTS proportional to my holdings due to my actions in the system (posting, curating, etc). That seems to be the compounding nature you're talking about?
I wish these conversations could be had without so much negative emotion involved on all sides. We might all learn a thing or two. :)
(btw, I also wrote a post about how it appears Ned was making $700k a week which seemed a little bit crazy to me)
If we contemplate the value of VESTS measured in STEEM units, then clearly we can see that when 9 new STEEM POWER are created for every 1 new STEEM (and given that STEEM POWER are 1:1 convertible to STEEM and the new STEEM POWER are distributed to existing SP holders), then clearly we can see that (the value that) VESTS (represents) have been transferred from STEEM holders to STEEM POWER holders. And that interest payment compounds the next time this done.
I like your title, and may write on related subjects, lets keep in touch. Thanks for your thoughts.