I'd compare it to a massive gold discovery. It's in the ground, and it will take 2-3 years to dig out, but it's not in our hands now. But the market would see the future supply is going to swell, and sell gold now to not get caught..
Bitcoin has a 21 million coin cap, and a deflating inflation rate... Steem runs at 100% inflation per annum into perpetuity..
The comparison would be more correct if I said, They found a gold reserve the size of all gold ever mined...and then found another one the year after...
No that would simply lower the long term cost of gold since its demand would drop to the floor. If they found a comet made of gold tomorrow that could be reasonably and cheaply mined and return back to earth in a reasonable amount of time, the value of gold would start to decline since the supply dramatically increased.
This is neither gold, nor is it a fixed supply side. But the information in all directions is near perfect, and the liquid supply is throttled based on user dynamics. This makes for a far more stable price and much more predictable market dynamics for all.
Basically, whales have a harder time controlling the market.
I'm not going to stand by my Gold example as an eloquent infallible argument. It's certainly not perfect. Mearly representative of an increase in supply and what effect that would have on the price of an asset.
Steem and Steem Power are inextricablly linked, but the Gold thing made sense to me because Steem Power is not liquid 'it's in the ground and needs to be mined to be of value'. I would add to all our banter with, I'm try to simplify aggressively, I want to have a conversation with everyone and help people understand (In the words of Donald Trump) "what the hell is going on".
My replies are explanations not to tell you your wrong. This is what is great about Steem. Civilised discussion
That's not really a coherent or even relevant argument. How can you compare the supply models of a global digital currency with baked in inflation and deflation models to the supply models of a plant that takes months to grow at scale?
If you read below the discussion I had with @jamessmith I wrote;
It's could become a self fulfilling prophesy for sure, the platform become more valuable, payouts become bigger, more users come, and the circle continues. I probably should have been more clear that my 'Opinion' is that people should work for the Steem, not buy it. In many respects, it great for the platform in the short term. Although, could be bad if people lose money (if ever) the price comes off to where I believe true value is now...
You can add as many variables into the model as you like. User numbers are key. I'm an investment professional, and i won't accept anyone who say's at this moment an Opinion that Steem is overvalued doesn't have any kind of legitimacy. $24,000+ per user. This is by no means a model, just some information for people to consider.
$24,000 per user would mean Steem captures user value better than any other platform. This may be because Steem actually pays the true value for what the users are worth while competitors can't do that.
RE: 'Wouldn't it being rare make it more valuable'
My point is; Steem is rare at the moment, but it won't be. It's rarity is currently driven by demand and supply.
Tulip Mania Was driven out of similar economic factors, both demand and supply contributed to it's rarity. It was an example about how short term rarity does not make something highly valuable in the long run..
No, your assumption is that it won't be rare, and I'm not sure what you base this on. Any marked increase in supply will be indicated by a wholesale spike in power-downs taking place, which would be quite easily identified seven days prior to the supply being put on the market.
True, short term rarity can never sustain long term. Fortunately, STEEM has far more fundamentals that lend itself to long term growth and sustainability in both price and user base.
I think we could end up going round in circles here. My point is, Steem is rare NOW, but it won't be. Consider Steem Dollar Payouts are 3.75% (of the 10% Market Cap of rewards per annum, roughly, 75% goes to creator, then split 50:50 Sd and Steem) of market cap per annum. That's currently $17m. And also consider that people will power down. Steem supply will only increase moving forward, and in a big way (relative to current levels of 1.3%).
The inflation rate of steem is peanuts when compared to the demand for steem over time, the price of steem is indefinitely going to rise way faster and higher than any other crypto
Yes but your analysis is based on a static user base, which it most certainly is not.
The only reason we're in an infinite loop is because you don't appear to be accepting externalities into your model, but only the baked in framework to the protocols. One of our assessments will be wrong to some degree, I just don't think Steem will face a problem of inflated supply, particularly not during growth stages.
@traderjeff I more than accept that. your completely correct, and if user number keep increasing the market may be able to absorb the increased selling volume over time. The one caveat to this is that, @1.3%, it doesn't take much powering down or much time to create an imbalance. Essentially, if 25% of accounts powered down tomorrow, within 4 weeks, there would be a 100% increase in potential sell side volume. Hypotheticals I accept
And that is a really, really big if. Furthermore it wouldn't be a surprise because everyone would know it was coming. That's part of the problem in panics. No indicators to explain it.
With Steem Dollars what reason is there to rush to power down? Steem market cap would have to be much higher and there would have to be much more than 14,000 or so users. What would cause the Great Power Down scenario?
Some of us think Steem price is too low. When Steem price goes higher than wouldn't our payouts also go higher? So we should collectively want Steem price higher right?
I'd compare it to a massive gold discovery. It's in the ground, and it will take 2-3 years to dig out, but it's not in our hands now. But the market would see the future supply is going to swell, and sell gold now to not get caught..
That's Bitcoin.
There's not many comparisons to what's going on under this hood that I can think of.
Bitcoin has a 21 million coin cap, and a deflating inflation rate... Steem runs at 100% inflation per annum into perpetuity..
The comparison would be more correct if I said, They found a gold reserve the size of all gold ever mined...and then found another one the year after...
No that would simply lower the long term cost of gold since its demand would drop to the floor. If they found a comet made of gold tomorrow that could be reasonably and cheaply mined and return back to earth in a reasonable amount of time, the value of gold would start to decline since the supply dramatically increased.
This is neither gold, nor is it a fixed supply side. But the information in all directions is near perfect, and the liquid supply is throttled based on user dynamics. This makes for a far more stable price and much more predictable market dynamics for all.
Basically, whales have a harder time controlling the market.
I'm not going to stand by my Gold example as an eloquent infallible argument. It's certainly not perfect. Mearly representative of an increase in supply and what effect that would have on the price of an asset.
Steem and Steem Power are inextricablly linked, but the Gold thing made sense to me because Steem Power is not liquid 'it's in the ground and needs to be mined to be of value'. I would add to all our banter with, I'm try to simplify aggressively, I want to have a conversation with everyone and help people understand (In the words of Donald Trump) "what the hell is going on".
My replies are explanations not to tell you your wrong. This is what is great about Steem. Civilised discussion
Take a look a Tulip Mania https://en.wikipedia.org/wiki/Tulip_mania
That's not really a coherent or even relevant argument. How can you compare the supply models of a global digital currency with baked in inflation and deflation models to the supply models of a plant that takes months to grow at scale?
If you read below the discussion I had with @jamessmith I wrote;
It's could become a self fulfilling prophesy for sure, the platform become more valuable, payouts become bigger, more users come, and the circle continues. I probably should have been more clear that my 'Opinion' is that people should work for the Steem, not buy it. In many respects, it great for the platform in the short term. Although, could be bad if people lose money (if ever) the price comes off to where I believe true value is now...
You can add as many variables into the model as you like. User numbers are key. I'm an investment professional, and i won't accept anyone who say's at this moment an Opinion that Steem is overvalued doesn't have any kind of legitimacy. $24,000+ per user. This is by no means a model, just some information for people to consider.
$24,000 per user would mean Steem captures user value better than any other platform. This may be because Steem actually pays the true value for what the users are worth while competitors can't do that.
RE: 'Wouldn't it being rare make it more valuable'
My point is; Steem is rare at the moment, but it won't be. It's rarity is currently driven by demand and supply.
Tulip Mania Was driven out of similar economic factors, both demand and supply contributed to it's rarity. It was an example about how short term rarity does not make something highly valuable in the long run..
No, your assumption is that it won't be rare, and I'm not sure what you base this on. Any marked increase in supply will be indicated by a wholesale spike in power-downs taking place, which would be quite easily identified seven days prior to the supply being put on the market.
True, short term rarity can never sustain long term. Fortunately, STEEM has far more fundamentals that lend itself to long term growth and sustainability in both price and user base.
I think we could end up going round in circles here. My point is, Steem is rare NOW, but it won't be. Consider Steem Dollar Payouts are 3.75% (of the 10% Market Cap of rewards per annum, roughly, 75% goes to creator, then split 50:50 Sd and Steem) of market cap per annum. That's currently $17m. And also consider that people will power down. Steem supply will only increase moving forward, and in a big way (relative to current levels of 1.3%).
The inflation rate of steem is peanuts when compared to the demand for steem over time, the price of steem is indefinitely going to rise way faster and higher than any other crypto
Yes but your analysis is based on a static user base, which it most certainly is not.
The only reason we're in an infinite loop is because you don't appear to be accepting externalities into your model, but only the baked in framework to the protocols. One of our assessments will be wrong to some degree, I just don't think Steem will face a problem of inflated supply, particularly not during growth stages.
but the steem power is given out over 2 years of small weekly payments. so it wont be anything sudden.
@traderjeff I more than accept that. your completely correct, and if user number keep increasing the market may be able to absorb the increased selling volume over time. The one caveat to this is that, @1.3%, it doesn't take much powering down or much time to create an imbalance. Essentially, if 25% of accounts powered down tomorrow, within 4 weeks, there would be a 100% increase in potential sell side volume. Hypotheticals I accept
And that is a really, really big if. Furthermore it wouldn't be a surprise because everyone would know it was coming. That's part of the problem in panics. No indicators to explain it.
With Steem Dollars what reason is there to rush to power down? Steem market cap would have to be much higher and there would have to be much more than 14,000 or so users. What would cause the Great Power Down scenario?
I do want to make it clear, I believe in this project, I think it's great and revolutionary. Just think Steem price is too high right now.
Some of us think Steem price is too low. When Steem price goes higher than wouldn't our payouts also go higher? So we should collectively want Steem price higher right?