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RE: Steem @ $1.07 - Plumbing The Depths of $1 Support At Bittrex Today
Bitcoin is still slightly inflating, but with Bitcoin you know the rate of inflation declines exponentially, and more than exponentially, because it will get to a 0.
With Steem you have a constant rate of inflation.
Totally different than Bitcoin. Similar only for the short term.
What is good about inflation?
Steem's inflation doesn't dwindle over time, Bitcoin's does.
Why is it so important that people will take loans?
So important that it is worth devaluing other people's rewards for effort or talent?
Functioning economic systems have loans, and you can't take loans in deflationary currencies. That's all I'm saying, there's room for both.
Steem has to be inflationary to create rewards with (less) opportunity cost. If it were fixed, it would become zero sum.
My understanding is inflation is 9.5% -> 9% -> 8.5% etc. each year until .5%. That's pretty low.
Inflationary currencies are zero sum as well, adjusted to inflation.
Supposing Steem's model of inflation is how you described it, after its first 5 years it would be devalued by 50.3%.
If the count starts from this year (2nd year), 5 years from now it will still be devalued by 46.9%, which is still atrocious.
More importantly, Steem will reach 0 before its creation rate reaches 0.5%.
Regarding loans, lenders will not agree to lend money without an interest higher than the rate of inflation, so what did inflation gain?
You seem to have fallen too hard for the bankers' propaganda.
"You seem to have fallen too hard for the bankers' propaganda."
You make a lot of assumptions about me. I just happen to understand how currencies work, and I pointed out one reason why inflation isn't always bad. In the current market paradigm, it's hard to run any country with a deflationary currency because the populace has come to demand entitlements that can't be paid for without seigniorage and inflating debt.
FYI, I'm not endorsing it, and I consider inflation stealth theft from those unable or unwilling to avoid it, and those that don't understand it. One of the main reasons I love crypto is open-source and transparent distribution models.
As for Steem, yes, it is inflating. Any bet on Steem price is a bet that it will gain more value from network effect than it loses from inflation. I happen to think that's a good bet in the short/medium term, particularly if one is actively using the stake they have on the platform.