RE: Not Like the Others -- Why Steem Price Hasn't Come Close To Peaking
I like steemit as a concept (though i think it barely scratches the surface of steems potential) but i don't really buy into all this "power to the people" stuff.
At the end of the day, people are getting paid more on steem right now than they would on other venues because a massive premine gave some of the original developers and miners a huge amount of steem power to invest in attracting good content.
Yeah, its awesome that people are making so much right now, but its an artificial stimulus that will eventually run out if its spent too haphazardly. I don't think anything is wrong with it (on the contrary, i think its a great strategy) but wrapping it in the populist flag and pretending its something that it isn't, will, i think, be ultimately counterproductive.
Actually if you read the white pages you would know that steem is hyper inflated. There isn't some premined amount set aside for voting or others. Each year the value of steem will halve, if it stayed at the current amount of quantity demanded and supply demanded.
You also gotta keep in mind at the beginning people thought one guy owned bitcoin and was gaining all the money which kept people from investing. They believed he could just "write code" to change the system and have everyone lose their bitcoins and have himself gain all the bitcoin. If this system is just controlled by the few, then the faith in steem will fall and the few will fall with it. So it is in the few big whale's interest to invest in everyone else and allow other's to rise up and have a loud voice.
this is from the april 1 announcement of steem on the bitshare forum.
So yeah, steem power was premined. All of those giant balance steem power accounts that can reward thousands of dollars with one vote have that power because of premined steem power.
I don't have a problem with this. Like i said, i think its good for the site. But at the end of the day, youre only paid more than you would be by google or youtube if one of the founders uses his massive premined voting power to reward you because youre somehow seen as beneficial to the site.
To give you an idea of what you say doesnt work, it would be exactly like saying bitcoin is inflationary because mining causes an increase in the money supply. This can be potentially true, but at the end of the day its not the primary driver of price. In fact, the most rapid increase in bitcoin value was when during the time when the daily increase in supply was largest (be percentage). The primary driver is not the increasing supply of money, but increasing adoption causing an increase to the reasonable value for market cap.
If increased supply meant decreased price, we would see currencies like bitcoin with stable market caps, increasing supplies and decreasing price... that simply isnt the case.
Here is a snippet from the white paper:
"STEEM is constantly increasing in supply by 100% per year due to non-SMD incentives. Someone who holds STEEM without converting it to SP is diluted by approximately 0.19% per day. While the rate may appear high, for transactions that take less than 10 days, it is still cheaper than credit card processing fees. Furthermore, the daily token creation is insignificant next to the daily volatility.
Someone who buys Bitcoin or any other cryptocurrency and sells it 10 days later could easilylose3%ormoreduetopricefluctuations. SomeonewhobuysBitcoinandthensells it the same day will usually pay more than 0.4% in market fees alone. In other words, the inflation rate is effectively insignificant during the period of time the typical individual will hold STEEM.
The majority of inflation is actually an accounting artifact rather than true reallocation of wealth. 90% of non-SMD inflation is distributed back to existing holders of STEEM
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proportional to the STEEM value of their SP balance, making inflation more of a “split”. Only about 10% of non-SMD inflation redistributes ownership in the network."
Anyone can mine and use the steem to promote the network, but understand that is not how the system runs.
We've reached the depth limit, so im replying to my own post.
Its pretty clear that you don't understand what youre reading. What you quoted is a great explanation of why inflation is not a significant factor when holding steem.
Yes incentives increase the supply of steem (as free and as steem power), and thus, theoretically decrease the value (provided the current market cap is a reflection of the real value of the currency as a whole)...but it gets basically (mostly) distributed back to the people who had it in the first place.
ALso, though it doubles every year, its a cycle because it also splits into 1/10th after a time... ultimately, the supply is a wide but fixed range.
Interesting. So the rich get richer is what you are trying to say? And you mean that steem power will not be affected by inflation? If the inflation doesn't pay for the steem, where is it coming from? I thought our posts were being upvoted from a percentage of the miner's income.
Do you possibly know when it splits? Is there somewhere in the white papers it states that?
I think the yearly double comes from interest earned on steem power, and accrues incrementally. It continues to double at a rate of one double per year until it reaches 10X, then it cuts down to the original levels. SO if you start with 100 steampower, youll have 200 after a year, 400 after 2 years 800 after 3 years.. then when it gets to 1000 some time in the third year. it reduces back to the initial 100
Im not sure how you protect yourself from the 1/10th splitting... maybe by powering down.
Your problem with understanding inflation is that there really is no inflation. That's a term that applies to money, not commodities like Steem. I really kind of wish the white paper didn't play into this as much as it does, but i think the founders were trying to address objections they knew the crypto-monkeys on bitcoin forums were going to bring up.
incidentally, i wrote up a post about inflation here https://steemit.com/steem/@sigmajin/omg-inflation-the-sky-is-about-to-fall
I'm reading the discussion between ungratefulchump and sigmajin and wondering how on Earth normal people are supposed to understand all that stuff and make financial decisions about investment with STEEM?
Some will be put off by the gobblediegook, while others will see the complexity as a red flag, smoke and mirrors. If STEEMIT want people to buy more STEEM and SP, they really need to show people whats going on, in a simple, elegant, meaningful way. And no, a "whitepaper" doesn't count.