Why you SHOULDN'T INVEST into STEEM, this is so inflationary
Why would anyone buy STEEM? You don't need more than your 10 starting STEEM to post, comment or read stuff on steemit.
The only reason to own STEEM that I can see is to get even more STEEM by posting and curating content. If the price of STEEM remained steady or increased, that would be good enough.
However, there is a 100% yearly inflation. Assuming the market cap remains constant, that means each STEEM will lose half of its value by next year. That is a tremendous downward pressure: why would anybody invest into something that loses half of its value every year? Unless the market cap increases, but that brings us back to the first point: why would anybody buy STEEM with USD or any other fiat?
There is also another risk: even if you buy STEEM and power them up, you might end up losing more money to inflation than you will make from contributing on steemit, if you are a less popular than average contributor.
I really cannot figure out the economic model of STEEM.
If nobody has a good reason to buy STEEM, then the currently rising price is a bubble resulting from pure speculation. What is going to happen 2 years from now, when huge volumes of STEEM have been powered down and nobody is there to buy it?
I hold steem and buy steem because the demand for steem surpasses the inflation rate. When I get paid steem dollars I always convert it to steem ASAP, and every day I convert some of my steem to steem power.
The goal of Steem Power is to protect you from the inflation...
This!
The creators were aware of your view already before you thought it :)
Its way less inflation then and for sure steem will grow enough to compensate it.
Exactly. No way the Steem founders would have chosen an inflation rate that big without a thing to protect you from it.
"I really cannot figure out the economic model of STEEM."
You are right about that, you are not right about creating a post with that title though when not knowing what you are talking about.
Thanks for your reply.
This answers the part regarding inflation. However, there is still something I do not get.
Can the market cap be expected to increase? And if so, why? Is there any intrinsic benefit to owning STEEM, except earning more STEEM?
Because A) " Assuming the market cap remains constant" is a very bold statement and B) Any Steem that's earned from inflation cannot be withdrawn as soon as earned.