My Steem Power grows by itself, or does it?
So there I was, still strugling with the worst cold so far. Things move on, SteemFest went by, in front of my nose, so close and yet so far away. Other important things were building up and SteemIt moved a bit to the background. There is just so much one can actually do in a day. Choices to be made, ah well, you know how it goes, right? In the meanwhile my Steem Power was growing on and on. And I'm about to reach the next thousand.
Somehow I must have written this all before, sometimes life almost seems like one big repeating cycle. But instead of going through all my previous posts, I'll just write another one. Just like that... Would the late Tommy Cooper have said, while messing up the trick. Actually that is not as easy as you may think. Sorry... Drifting off a bit, as usual, so that stayed the same. Back to the subject: Steem Power growth.
This is because I got asked in a personal chat with @englishtchrivy at steemit.chat to explain in simple terms how it is possible that Steem Power seems to be able to grow by itself.
You need to have some to grow more
The most simple statement is that the more Steem Power you have, the more it will grow, every day. Not exacly the same as Steem Backed Dollar currently does, at a rate of 15% a year, about 0.04% interest per day. You could see it more or less like a kind of dividend on your investment in the Steem social media platform. In the underlying blockchain technology this is known as VESTs. In an account wallet this shows up as Steem Power.
As an account holder on the Steem on Graphene blockchain, the motor that drives SteemIt dot com, you are automaticly also a fellow shareholder. The Steem social media platform is a kind of decentralized company on a blockchain. Any account gets VESTs right away, at signup. And from this first moment on, it can grow right away. Although, when an account holds low amounts of Steem Power (known as VEST at the blockchain level) this growth might not seem so obvious at first.
But for now, to keep it simple, the more Steem Power an account has, the more 'dividend' it will get every day.
VEST is Steem Power on the blockchain level
The technique is unique, there is no company that owns the database. It is decentralized and shared on many computers. No matter if some quit, it still will go on, or can be restarted. It is secured by complex math that interlocks all data in blocks and connects it as one long chain of information. And everybody can read what is on it. Even without SteemIt dot com. It only gets data from it and shows it in a fancy way. Just like an account can add posts, do upvotes and so on, through SteemIt dot com.
Still, the website is just an interface to this blockchain. Just like apps as eSteem. All these interact with the actuall Steem blockchain technology. And while this is happening, updating every 3 seconds, also value is being created, it is called Steem. And part of the created Steem will be put in the reward pool.
Part of the Steem created is distributed amongst Steem Power holders. That means actually every account that has Steem Power in it's wallet. At the blockchain level this results in a huge number, known as VEST. But in the account wallet it shows itself as Steem Power. This could be considered more easy. Instead of 10 million VEST, you will talk about having 4000 Steem Power in your wallet.
Math wise it could be considered easier to divide large numbers in VEST amongst 110.000 accounts. Specially when the amount of accounts will grow even more in the near future, hitting the magical 1 billion in about a year? Who knows...
But then it might be easier to even share 2.5 VEST, which would be about 0.001 Steem Power. And even lower values would not show up as Steem Power, like 1 VEST. But after 3 VESTs have been added on the blockchain for an account the wallet would show 0.001 Steem Power.
It will grow per minute
Every 24 hours a lot of new Steem gets created by the blockchain network. Part is used for rewarding posts, curation and so on. This shows up during a round as 'potential payout'. This value gets influenced by more upvotes with Steem Power behind it, the amount of other posts and the market price of Steem. But also a part is being divided among the Steem social media platform share holders.
So every minute new Steem is being created by the blockchain network, of which a part is being divided amongst Steem Power holding accounts. And that means that every account gets a part of that. Because every account is a share holder in the Steem realm. And the more Steem Power an account holds, the bigger the part it gets of the Steem created every round!
And as far as I know, after doing some quick math, my @oaldamster account makes about 21 Steem a day... So I'll reach another limit this weekend. This is a good reason for me to keep my Steem Power where it is right now. Because if I would start to 'Power down' of my account I would get less and less new Steem Power per round. Lowering my share in the Steem social media platform.
As long as the Steem Power is being held in a wallet it will grow. Underneath it all it is in VEST on a blockchain level. And you can see what the amount of Steem Power means in VEST at www.steemd.com/@youraccountname It shows in VEST. And it also determines the level at were the account is at. (I don't use the animals that live in the sea references myself, but instead the 'level' classification, like 'hero' and so on.)
That is why accounts Power their Steem up!
As a poster, curator, investor and so on, it pays to inVEST. Constantly, even if you decided to take a brake, or have a bad cold like me, your Steem Power will grow on. That almost sounds like a well known popular song of a feature movie. Ah well, I keep drifting off...
Anyway, I hope this helped you understand this matter a bit more. Or at least get that it pays to have Steem Power inVESTed. And that the more Steem Power you have, the more it will grow. All thanks to the way the Steem blockchain network works.
Try to find a company that gives you the kind of revenue you get on the Steem social media platform. Where we all are share holders, like one big co-operation, one great community!
Steem Power for you will grow on and on!
image cc-by-sa @oaldamster
- 50/50 payout post
You're my light in the dark ;) Thank you for your explanations in details of the mechanics of steem. It's more clear for me now.
You're welcome, glad I can be of service! :-)
I have a VESTed interest in this article... as well as everything else here. Good job on this one. I've been figuring out much of this on my own, from time to time. This cleared up a few things for me. Will this be halted with the new update though?
Thank you! Glad I could be of help.
About the changes that are supposed to reset the inflation rate to less then 10% (was 100%). So this will still create Steem, but a lot less.
Let's asume you got about 24 SP growth per day currently, then after the update that would be about 2.3 SP per day. Which is, in effect, a huge inflation correction.
This would really need a ten fold rise in prise on the market, to get the same value in US $. After the update.
So, to summerize it: Steem Power holders will still get 'dividend' every day after the update, but only about a tenth from what they get now.
(The exact figures I do not know yet, but I will post about the update when it has been done.)
So there's a chance the value of Steem could increase (no guarantees) and that would in turn negate some of the effects of this drop in dividend for the short term? We'll certainly miss it in the long term.
The idea is indeed that this would make Steem more scarse, and that could have a positive effect on the market price of Steem. And very true: no guarantees...
The rise of the price of Steem on the market would need be enought to at least match the tenfold drop in dividend. Hoping for a least a market price of between 1.00 .. 1.20 US $ per Steem?
And that should hold for the long term to compensate for the dividend drop. Stay at least at about that price.
One thing to take into account is that if the price of Steem would get to about 1.00 US $, that would mean a ten fold rise in value of all accounts of course.
That would be nice, I guess. But it is hard to predict if that actually would happen.
Thanks for the help. I can't always be a goof, writing my jokes and making my pictures. I'm doing all this for a few reasons. Money is one of them. Patience is key with something like this. It's too bad I didn't have a little extra cash to invest. Now is probably the time to buy. Unfortunately, I predict a huge sell off, which will drive the value back down. It's still a bumpy road ahead.
You are welcome!
Hope it will bring you what you need in the long run. Things lik these have a certain crystal ball factor to them.
My idea was that the price of steem would more or less stabilize at about this time. Wobble a bit around the level it is right now, more or less stable. And then start to climb near the end of the year, begin next year.
But even trowing dice would give a more accurate prediction then this. And there will be bumps in the road ahead, absolutely.
Whish you prosperity and best of luck.
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Thanks! :-)
Well, new patch that should of been out today would reduce the hyper inflation of steem and there would be no more big interest on steem power. I don't know why that is delayed, there are no steemit HQ messages about the delay. I wonder when is the date for implementation of the new changes proposed.
Already thought that was fixed last week with hardfork 0.15.0
Wondered why I still made about 21 SP per day.
If I'm correct it will still be about 2 SP per day. If the inflation correction is done.
Do you have link for me to the patch subject?
It seems that hard fork is scheduled for nov 29 so it is delayed by 2 weeks. Here is the link for changes:
https://steemit.com/steem/@steemitblog/proposed-changes-to-steem-economy
New date probably:
https://steemit.com/news/@dragosroua/hardfork-16-will-not-happen-today-temporary-delay
Thanks!
The inflation correction proposed is quite drastic, guess it is a bit more complex then thought at first. Ah, well, positive side is that I still will make 21 SP a day for a while longer.
Will keep an eye on it. Thanks for pointing it out.
Np, it is also probably a wise choice to power up some more until the hard fork to get some more interest while it lasts.
Indeed, I agree that is the best thing to do right now.
A lot of gain still to be made, as it seems for almost two weeks.
Steem Power On!
@oaldamster hahaha guilty as charged :D
thank you for always helping out!
Well it inpired me to post again @englishtchrivy. ;-)
And you're welcome!
In https://steemstats.com you go to Accounts, there clic on SteemPower and you can get an idea of how much % you are winning per hour, day, week, month and year. But will be inaccurate with the new update I think.
Thanks @juanmiguelsalas, sometimes I tend to forget that is almost a Steem Tool for every thinkable job out there. :-)
It seems it will be accurate for a few weeks at least.
Yes, I was reading the post from @dragosroua ... so still almost 2 weeks for power up a bit more ;)
Yep, we can enjoy some Steem Power rise for a while longer. :-)
I hold some Steem Power so I like what you say here :)
But I see it slightly differently. We're just getting our share of the inflation-- if the supply doubles and all our balances double, nothing would have changed.
We actually are paying, if I understand everything correctly; whatever amount goes to content creation comes at the expense of holders, through the mechanism of new tokens being created.
I don't mean for that to sound like a knock against holding Steem Power (I always power up what I earn and I've bought in some .. the future seems bright), I just don't think it's like a dividend since it's just coming out of inflated units. We would have to take advertising or some sort of external revenue for that.
I' ll get back to you on this
Now time for ZEN, a walk. :-)
Haha nice, walks are the best.
Ya, curious what you think and if I'm missing something.
And I even did not get to the part of getting dividend from something like advertising, hahaha ...
But I did write a related post about that:
https://steemit.com/steem/@oaldamster/monetizing-attention-creating-content
So, for now to keep our share stable we have to earn by content creation or curation about 10% of amount we earn as interest for SP. ( in your case it's about 2 SP daily)
To make it is no big deal for middle class , but almost impossible for a whale, so currently some power redistribution is happening automatically.
I wasn't able to figure out how it will change after hard fork though.
Currently the situation is still like it was. And everybody still gets Steem Power for holding Steem Power, at least until 29th of november.
After that it is unknown what the effects will be of the lowered inflation.
For every level it will make a difference. We'll see what the effects are. Hopefully it will move the price of Steem up
For now any account level still can get a piece of the Steem Power distribution.
You nailed it. As of right now... of the 100% inflation, 90% of it is distributed to SP holders... However, there are supposed to be major changes to this model starting yesterday, or so I thought. I expect it will go into affect in the next couple days. The inflation rate will drop all the way to 9.5%... not sure what percentage of that will be distributed to SP though...
@jrcornel - glad you brought that good news here :)
thank you !
Your welcome, unfortunately it wasn't as much news as I had hoped to bring. Check my response below to @oaldamster for my opinions on what is to come :)
@jrcornel that's where I found you - I sent you a comment there :D
It seems the big changes were more difficult to implement, so it is expected on tuesday 29th of november 2016.
In the meanwhile holding Steem Power will grow according to the 90℅ of the total created Steem. This is 720 Steen per minute still.
The current 800 Steem created per minute will drop a lot, to 76.8 Steem per minute.
Big changes, that could give the price of Steem a boost. But I guess we need to be patient for a bit more.
And in the meanwhile enjoy the Steem Power stil growing fast.
Ok, thanks for sharing! Where did you find that info btw? I have been looking around but couldn't find it yesterday or today...
I am enjoying the SP inflation. My opinion is that it will be a lot more difficult to obtain steem after the changes go into effect. I think the reward totals will go down as well even if steem prices go up a little because there is a lot less steem to go around.. but I am not positive on that, just a theory I have.
Regarding the effect on the price of steem... I think the price will likely go up but not in relation to the amount of supply being cut off, so we will lose some market cap. In the end I think those holding lots of steem before the reduction will be the big winners... We will know for sure in a couple weeks :)
The info was shared in a reply on this post by @moon32walker here is the link: https://steemit.com/news/@dragosroua/hardfork-16-will-not-happen-today-temporary-delay
My pleasure to share.
It will become harder to get a share of the pie, I agree. The amount of 80 Steem per minute will drop a couple, so rewards for posting and curation will drop.
And specially the growth of Steem Power will be a lot less. That gets the biggest cut.
And how this will effect the market price of Steem, that is a gamble. That could become a betting game.
But you are right I think: those holding on to their Steem Power, growing it more and more, might have something to smile later this year. :-)
Do you think they would raise it back again at some point? I mean I was about to earn 1 full sp a day and now that will be out the window kinda sucks.
As far as I know there will be parameter settings that will make it adaptable to a certain situation. And if I'm right the witnesses will be able to set it.
We vote for witnesses and might also convince them to change future inflation settings. So the community could ask the witnesses to change inflation.
Also when more accounts sign.up this might be a good reason to raise inflation.
And I understand how that would effect your SP growth. It will become much lower. Only hope is that Steem will become at least ten fold more expensive to compensate.
But maybe it should even be more.
Still, the changes are not there yet.
Thanks, @oaldamster, for your patient explanations of how things work, even in the comments! ;)
My investment in Steem is in my blog and my writing, and I've set my default to 100% power-up... ;) But what I hope for most is readers who enjoy and appreciate what I write. :)
You are very welcome @creatr. :-)
Followed you, will look out for some of your writing. Like the way you made a nice structured list, very convinient.
Kind regards
So glad to have you with me!
Let me know in comments what you find interesting in my writing. I love interacting with my readers! :) :) :)
Will do so! Glad to be on board! :-)