High inflation in Steem is an interesting experiment

The price of steem has been declining for a while now. Some have expressed ideas that the solution is to decrease the inflation. It would probably work, but it's not a real solution.

Among the most popular blockchains, Steem has the biggest inflation. For some people, inflation seems to be a horrible monster that should be killed before it's even born. But if we take a look of the bigger picture of the system, it's actually really interesting experiment and it should be closely observed and researched. Let's not kill it until we can truly see the impact it will make.

Basically Steem is continuously redistributing ownership of itself. When new steem is created, it will make the existing steem less valuable. Owners of "old" steem are decreasing their proportional ownership of the Steem blockchain compared to owners of "new" steem.

This happens in all inflationary systems. When central banks print more money, biggest winners are those who will get the new money before it trickles down to the rest of the economy and makes old money less valuable.

So, isn't it a bad thing? Not necessarily. We have to understand that those users who are getting the new steem are actually deserving it. They are doing work that the Steem community values. They are getting votes because they write stuff that other people like to read. By writing good stuff they are making the Steem blockchain and the whole community more valuable.

In systems with high inflation it's not necessarily a good idea to stare at the price of one unit. Better metric is the whole market cap. If the market cap stays the same, price of one unit will go down. But if the market cap doesn't change, the value of the system isn't going down although it might seem like that because of the declining price.

For the success of Steem blockchain we should be focusing on the value of market cap instead of the price of steem. Instead of some gimmicks to raise the price of steem in short term, we need to think about the future. How can we make the whole system more valuable for the users? It's the only way we can truly be successful in the long term.

So basically we need to create more demand for steem, not make it artificially scarcer by decreasing the supply.

High inflation might be even a good way to force developers to innovate. We can't rely on scarcity and make money with short term speculation. We need to actually come up with features that offer truly needed functions for real users.

There are two kinds of features that should be developed:

• We need places where users can spend their steem dollars (and maybe steem too). Marketplace is an obvious thing in this regard. We need to get into a situation where steem dollars become more valuable because people can actually use them.
• We need features in Steemit.com (and in the future in other UI's) and smart contracts in the Steem blockchain that require payments. Best example so far is the post promotion. Users can destroy steem dollars to get attention of other users for their posts. This removes tokens from circulation and decreases the inflation so the whole community benefits.

If you want to help Steem, try to invent new ideas how people can actually use steem dollars and steems. If you are a developer, listen to these ideas and implement them.

I'm not big fan of gambling but maybe something like SatoshiDice might be easy option. It was really popular and probably still is. To get greater acceptance of the community, it could send some percentage of the profits to @null to destroy them. In that way it would benefit everybody.

Finally, Steem is already one of the most successful blockchains. We have real users. Most of the other blockchains are just playfields for developers. Let's not forget that.