Steemonomics: Shrinking reward, growing value

Above is the current supply of Steem ≈301 million and the current convert of SBD equivalent ≈330 million.

I got a comment today questioning the total supply as they thought Steem would stop printing at some point. Not really, it will print forever, just not at the same rate it prints now.

Currently, the new Steem being printed (the inflation/reward pool Steem) is coming out at 8.5% over 12 months. Every year it drops 0.5 percentage points so next year it will be 8(, the year after, 7.5%.. you get the idea.

There was 250,000,000 Steem infamously printed at the start of play and since then, another 51 million (20%) has been added to the pool. Even though the inflation rate is dropping, this means that for a little bit of time the reard pool supply will increase slightly until Yr7, where it starts to drop away.

Yr1 - 250,000,000.00 - 0.095 - 23,750,000.00
Yr2 - 273,750,000.00 - 0.090 - 24,637,500.00
Yr3 - 298,387,500.00 - 0.085 - 25,362,937.50
Yr4 - 323,750,437.50 - 0.080 - 25,900,035.00
Yr5 - 349,650,472.50 - 0.075 - 26,223,785.44
Yr6 - 375,874,257.94 - 0.070 - 26,311,198.06
Yr7 - 402,185,455.99 - 0.065 - 26,142,054.64
Yr8 - 428,327,510.63 - 0.060 - 25,699,650.64
Yr9 - 454,027,161.27 - 0.055 - 24,971,493.87

This is year 15:

Yr15 - 582,707,754.22 - 0.025 - 14,567,693.86

This is year 20:

Yr20 - 630,788,292.75 - 0.010 - 6,307,882.93

As you can see, once the ball starts rolling, the steem stops flowing pretty fast. I have talked about this before. What is interesting though is that Yr 20 total of 650 million Steem. After that, there will only be the 1% printed for the inflation pool each year which means, around Year 25, there will only be 7 million in the reward pool over 12 months.

But more interesting than that is, we currently have about 50% of all the Steem that will be printed in the total first 20 years of Steem. I can't calculate the SBD printing and conversion though, let's hope a peg can be found or, SBD is removed. So, in the next seventeen years there will be the same amount coming from the inflation pool as there has been in the first three years and, 250 million of that was mined early.

In my mind, this makes Steem very attractive in the long-term as even though there will be an ongoing 1% inflation of the total supply a year, going forward it is going to become quite scarce, even factoring in that there is 70 million sitting on exchanges right now. That 70 million is only worth about 25 million dollars and that is not much considering it is 10% of the entire supply for the first 20 years.

This means that if there were 1 million accounts with even distribution after the first 20 years of the Steem blockchain, each would have a total of 650 Steem. Interesting yet? 10 million accounts would equal 65 Steem distributed equally. Of course, 20 years is a long time to wait but, in the meantime what is going to be happening here?

Think about the holders of Bitcoin who managed to make it 8 or 9 years without touching it, what were they doing in the meantime? It is pretty interesting to consider that while there isn't going to be much added to the supply every year going forward, there are still ways to earn and those with Stake are going to lead the charge and distribute also. While holders of Bitcoin had very little to do and the only way to add volume was to buy or trade up, Steem users can do much of what they do on other sites already and increase their stake significantly over the next few years.

Those who are here now and are buying or earning are very likely to be immensely happy as people start to discover crypto, blockchain and for Steem, getting real value for doing what they have previously been doing for free. It really is a no-brainer move to post on Steem and not much of a brainer to buy a little if one can and put it away and forget about it. This doesn't just go for Steem though, but Steem is a very likely candidate to benefit from mainstream adoption of crypto as it is one of the simplest and most enjoyable (not to mention rewarding) blockchains and currencies, in my biased opinion.

The challenge is of course whether people are able to hold long-term and everyone has a story about. "once upon a time they owned this many so and so..." It doesn't matter what you owned, it matters what you hold. I wonder if people will ever say, "once upon a time I owned some Steem but, who could have known it would go so high?"

So, the inflation pool size will begin shrinking at somewhere around the point mass adoption of crypto really begins and the real power of blockchain economics comes into play to manage all manner of internet transactions, IoT and of course as we are starting to see already, gaming and entertainment. As the flood and fun truly starts, Steem will have a host of learning behind it and on it as well as many vested and seasoned users who understand how to use the blockchain and, how to empower new users. This is when the communities will really step into the fray and, this is when all those Resource credits start earning there keep as a non-staked economic mechanism on the platform that can both create tools and provide bandwidth for users.

As I said in the last post, being on Steem gives front row seat and access to the stage of the change in the way economies and communities function at just about every level going forward. Being here is being a witness to and a part of a crypto revolution and to participate, all it takes is what you are already doing. Except, instead of enriching a few, it will empower the many.

Taraz
[ a Steem original ]