Could a High Steem Price Actually Be Bad for Us?!

I've seen a little confusion about how the rising steem prices affect each of us. Most of us are excited about it and rightfully so, our wallet value is going up! But what about the amount that our votes give to posts? What about our payouts?

I came across a post that brought up some interesting points about this issue. It was a good example of a well thought out argument that is completely correct except for one thing. The very basis on which the argument was founded. Thus, they started on the wrong track and ended up with the wrong conclusion. Hopefully I can shed some light on the matter for each of you.

The article's premise was something like this; If our post payout is $100 then if steem's price is $1 you get 100 steem and if steem is worth $10 you get 10 steem. This means that you are actually getting less steem for your posts. The article continues on this thread to show that this means that it becomes increasingly hard to increase our steem holdings and it will be increasingly hard to grow our steem power and catch up to the "whales" (people with a lot of steem).

The article also rightfully points out that if the above is true, then when steem's value spikes, we get less steem and then when it comes back down, we basically lost out on how much steem we should've received.

OK, so what's the problem here?

One thing you have to take into account is that the rewards pool is denominated in steem not in SBD so when steem's value goes up, the reward pool doesn't change in terms of steem. The example starts by saying that your reward is $100.

This is where the mistake is! This is where the article gets off track!

Your reward isn't $100! It's an amount of steem that is currently worth $100.

This is how post payouts work. When people vote, they are giving you a percentage of the reward pool. The reward pool is in steem, therefore it is not affected by the current price of steem.

25% of the post payout goes to the curators (anyone that voted on the post with the people who voted first getting more of the reward.

37.5% is given to you in SBD (Steem backed dollars) SBD given to you as $1 worth of steem, it is not affected by the current high price of SBD.

37.5% is given to you in Steem Power. Remember, steem power is simply steem that is locked up for 13 weeks that give you the ability to have higher voting power.

When it shows you your post payout. It shows you the value in USD but it is actually valued in steem. That is why your post payout amount changes even when you don't get another vote. It changes based on the current market price.

Quick example:

Your post reward is 10 steem. Let's assume that the current value of steem is $1:
Your payout amount will show $10 (10 steem x market price of $1 per steem)
Your curators will receive 2.5 steem in steem power (25% of 10 steem)
You will receive 3.75 steem as steem power (37.5% of 10 steem)
You will receive 3.75 SBD (37.5% of 10 Steem x market price of $1 per steem)

So what if steem's value goes up to $10?

Your post reward is still 10 steem. Remember you post reward is not affected by the market price
Your payout amount will show $100! (10 steem x market price of $10 per steem) Instead of $10 from our previous example
Your curators will receive 2.5 steem in steem power (25% of 10 steem) The same as before
You will receive 3.75 steem as steem power (37.5% of 10 steem) The same as before
You will receive 37.5 SBD (37.5% of 10 Steem x market price of $10 per steem) Instead of 3.75 SBD

As you can see, you are still getting the exact same amount of steem, but steem is now worth more! Your post that showed $10 is now showing $100

Quick note on SBD. Many of you have noticed that the price of SBD has been as high as $10 lately. As I said above, this doesn't change our example one bit. All that is happening is when your post pays out, it assumes that SBD is worth $1 worth of steem, so you still get the same amount of SBD, but now you can go to the market and sell them for 10x that amount. That is why we should all be doing 50/50 rewards right now and using our SBD to buy extra steem.

Okay, so what about our voting power, how does that change? Well if you noticed in our example, we never changed the amount of votes we received and yet, the post payout was much higher. So what that means is that each one of our votes is more powerful the higher steem's value is. If your vote was worth $.10 it is now worth $1.

But what about catching up to the whales?! As far as receiving rewards from posts, it doesn't effect that at all. But if you are trying to buy your way to the top, it is now harder to do so because you need to pay more for each steem. So if you are posting your way to the top, you are not affected, if you are buying your way to the top, it is now significantly harder. But that's probably a good thing because it means that the people getting the most votes on their posts will be the ones that grow in power the fastest instead of the people buying their way in.

Conclusion

So really the only way this is a bad thing is if you are trying to buy your way to the top of steem. It is now much more expensive to do so. Other than that, Yes! A high steem price is good for us all!

Hopefully that makes sense, if you see any errors in my logic be sure to let me know.

If you see anyone else that doesn't understand this be sure to share this with them.

Do you notice any other common flaws in people's logic? We all have them and it is important to try and see them in ourselves and get rid of them so they don't cloud our judgement. It is also important to learn from others. The point of this article was not to pick on the author of the post, I actually enjoy most of their posts. It is so that we can see that even smart, well informed people can come to the wrong conclusion by just making one little assumption and getting off track. Let me know of any examples you see and I'll try to address them in a future post.