RE: OMG INFLATION!!! THE SKY IS ABOUT TO FALL!!!
You're falling into a mental trap called a faulty syllogism. Steem (like most "cryptocurrencies") has several similarities to money. Its transferable. It holds value. Because it has these similarities, you assume it must be money. Youre just as incorrect as if you would be if you assumed that fido was a cat because he had 4 legs, fur, a wet nose and a tail.
So lets think about it. IS steem used as a medium of exchange? What can i exchange steem for, except the bitcoin that i used to buy it in the first place. Nothing at all.
So lets take the dictionary defnition of inflation that youre using. It makes intuitive sense. If more people with more money are bidding on the same amount of goods and services, it makes sense that those goods and services would fetch a higher price.
But steem is not used to buy goods and services. It can be sold for bitcoin (and ultimately cash in most cases) which can be used to buy goods and services, but it isnt really exchanged directly for those goods and services.
A great (and very similar) example is gold. An increase in the supply of gold has not, generally, caused an increase in the price of other goods in relation to it and a subsequent devaluation. Why? because its not traded directly against a wide basket of goods and services.
In order for the model you present to work, in order for the relative availablitiy of cryptocurrency to goods and services to effect the price, those things must be traded directly. That happens with money. It does not happen (at least not yet) with crypto of any sort. Even bitcoin, for the most part if i want to buy something with bitcoin, I either cash it in or maybe use gyft.
But once i involve that intermediary, the thing i am buying is no longer trading against the crypto. Its trading against the actual money i use to make the purchase.
So because steem is not a medium of exchange you argue that it cannot be a currency then. Well if bitcoin can be used to buy something, exchange with and trade to other people would that make it a currency? Keep in mind when bitcoin started you couldn't do anything with it. It was a milestone in the history of cryptocurrency when it was used to buy a pizza. Would that mean before that it was a commodity but now it is a medium of exchange?
Because bitcoin can do these things, can it be considered a currency? No, because it can't do them alone.
The price of the things youre buying with BTC are, for the most part, denominated in dollars or euros or whatever-- in an actual currency. So, for example. Lets say Cryptic Pizza charges a dollar for a slice of pizza, but they allow you to pay in bitcoin. There is no "bitcoin price" there is a set dollar price for bitcoins and a set dollar price for pizza. The exchange of two things are mediated by the dollar, even though dollars are never actually exchanged. The ability to do this -- to set valuations for two independent things in order to mediate their exchange, is what makes a dollar currency.
In the very same way, i might arrange to pay for my pizza with $1 worth of pepperoni. That does not make pepperoni a currency. The reason for this is that the owner of cryptic pizza has to pay for rent, gas, electric, dough, cheese etc with dollars, not with bitcoins..
The owner of cryptric pizza has to charge enough to cover his expenses and make a profit. And, for the most part, he can only pay those expenses in dollars.
This is because it is not possible to exchange bitcoin for a wide enough basket of goods for it to actually have an independent valuation against something like a pizza.
Now, you might be asking, is it possible for bitcoin to become a currency, once its gained wide enough adoption. Sure. currency evolves from commodity. But in order for that to happen, it has to gain much broader marketplace acceptance.
Incidentally, one might argue that in the very narrow marketplace of altcoin trading, bitcoin is, in fact a currency.