I am normally very upbeat about this platform, but it dawned on me recently there is a serious supply/demand imbalance baked into the system. This gives the price curve a naturally downward tendency, as the supply of Steem keeps building up.

There is two ways to resolve this problem

One is to induce more people to buy it. However, this method has more than a little bit in common with a Ponzi Scheme. You would be selling the idea of buying Steem as an investment, yet it cannot possibly be this, it is just a redistribution.

Two is to encourage people to burn it somehow. The promoted posts is a hint in this direction. I hate to say it, but the best way to get people to burn Steem would be to actively encourage advertising. The fees for sending out an ad to a user would be a transfer to the null account that nobody has a key for.

There is a vaguely possible third way, which is to slow down the rate of issuance, but this gets in the way of the redistributive elements of the architecture, the rewards for posts, the interest on Steem Power, and the pegging of SBD, which as was recently discovered, when too much SBD is created, it pushes down Steem's price even faster.

An analogy that I have to make is to the system of currency issuance operated by Central Banks. They also intentionally issue too much, to 'stimulate' the economy. In fact, this is lies, of course, they are doing it so they can lend the money to governments, and essentially tax the economy without it being easy to see.

And this is also why Steem does this, because, in particular, rewards for posts cost nobody from the voting side, and the bigger your holding of Steem Power, according to a power law distribution, your influence is greatly increased.

It would not matter a lot if this formula were changed to become linear, what matters is some amount of Steem is allotted to paying the writers, and this Steem is new Steem, and thus dilutes the value of the token.

Going back to the analogy of the Central Banks system of issuance, they also have the ability to 'burn' the money as well. Most money is not in fact ever made into cash, it is just a number in an account. In fact, there isn't really much of a check on what this number even is, it just has to look right, as this number is based on the amount of money 'loaned' out and the required backing for this money.

Burning Fiat money is done regularly by banks. As I said, the money is never printed, it is just numbers in a database. The burning process is called 'writing it off'. This is done when a borrower fails to keep paying. However, the bank does not necessarily lose money, since what they 'lend' does not exist when they lend it, it only has to be backed by some amount, usually 10%, so, in other words, they only have to get 10% of the loan repaid and they break even.

But what happens is eventually, because of the ease of acquiring these loans for certain kinds of 'investments', causes the prices of these assets to balloon far out of proportion with the rest of the marketplace. For example, mortgages on property. The price eventually has a negative impact on the rest of the marketplace, because the cost exceeds the potential for profit (aka, not losing money) of the asset. This is already the case in much of the Western World, and is why there is so many homeless people in these countries, and why retailers are starting to shut down in greater numbers, and why unemployment rates are going up, and more money is going into the welfare system ponzi.

So, back to Steem

Steem paying for writers according to votes and vote power, essentially is a type of welfare system. The money has to come from somewhere, and probably not, from the people who get paid. So how do we get people to put money into the system, while providing them a benefit that is not monetary? There has to be a balance since people put effort into the system, and get money, so there needs to be the reverse, to enable this system to come into balance.

I hate to say it, but this is the solution:

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ADVERTISING

Come check out our range of products at blablabla.com, mention promo code steemed123 and we will give you a 10% discount

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The ad has to be at the top of posts, and the top of feeds, or it won't get seen. The platform has to have this built right in at the core, in the witnesses, because it can't just be on steemit.com, because as the prevalence of adblocking shows, you can't trust advertisers. But... Part of this now is because ads are carriers of malware. It is simple to sanitise the advertisement code the same way as posts are. In fact, advertisements could essentially work like this:

The account of an advertiser has a special balance of Steem that they designate as the source of funds for ads. Every time a witness places their ad on a feed, or at the top of a post, the witness then propagates a transfer from that account, using some kind of dual signature arrangement, and some kind of proof of service that goes with it.

The transfer of funds does not go to anyone, it is burned. This takes it out of circulation, and thus provides a buying pressure that allows the price to at least stabilise, if not grow.

It also puts ads in your face, but they will not be obtrusive, as they will merely be an image and a block of text. When the user clicks on it, this will post a 'vote' transaction on the ad, and then open a new browser tab that the advertiser wants you to go to.

Sorry guys and gals, there is no other way to solve this problem...

Someone has to pay for our writing, right? And it's just not right for that to be investors, because that makes it essentially a ponzi scheme.

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_{We can't stop here! This is Whale country!}

_{Loki was born in Australia, now is wandering Europe again after 9 months in Sofia, Bulgaria. IT generalist, physics theorist, futurist and cyber-agorist. Loki's life mission is to establish a secure, distributed layer atop the internet, and enable space migration, preferably while living in a beautiful mountain house somewhere with a good woman, and lots of farm animals and gardens, where he can also go hunting and camping.}

_{I'm a thoughtocaster, a conundrummer in a band called Life Puzzler. I've flipped more lids than a monkey in a soup kitchen, of the mind. - Xavier, Renegade Angel}

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_{All images in the above post are either original from me, or taken from Google Image Search, filtered for the right of reuse and modification, and either hotlinked directly, or altered by me
Uploaded images hosted at postimg.org}