Is Steem Hyperinflating? Update

in #steemit5 years ago (edited)

What is the inflation rate of Steem? Every once in a while I jot down the circulating supply by hand.

Date / Steem / SBD
3-3-18 /251,012,736 /10,038,216
4-6-18 /255,912,562 / 11,382,505
5-6-18 / 254,596,936 / 13,169,768
6-6-18 / 258,722,593 / 14,784,856
7-7-18 / 264,129,936 / 15,408,050
8-7-18 / 269,744,995 / 16,848,166
9-5-18 / 273,960,849 / 15,471,646
12-12-18 / 302,464,146 / 12,738,300
1-6-19 /307,577,184 / 11,703,508

In the ten months I've been tracking this, the average monthly increase has been 5.6m Steem. But, the first 6 months and last 4 months are very different. In the first 6 months the increase was 3.8m Steem per month, for the last 4 months it has been 8.4m Steem per month! That is about the time of the hard fork btw. If you annualize the increase for the last 4 months you get a shocking 36% annual inflation rate.

What the fuck is that?

If you are not making at least 36% a year return from your posting, voting, delegating etc you are losing purchasing power in Steem.

In basic economics it is vital to know the difference between nominal and real. Imagine walking the wrong way on one of those horizontal escalators at the airports. Sure, in nominal terms you can take 10 steps forward, but if the walkway takes you backwards twice as fast as you are walking forward you are LOSING GROUND. It's relative. Anyone who thinks the US dollar is strong while trillions are being printed out of thin air every year should have their chromosomes examined.

Is anyone making 36% a year? Is it possible to make 36% a year? Are the witnesses' block rewards enough to cover that kind of inflation rate?

What is going on here? Looks like anyone who considers Steem a viable currency didn't receive the scarcity memo.

venezuela1.PNG

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I think it may have to do with the fact that after HF20, the printing of SBD does not start to slow down when the market cap of SBD reaches 5% of the market cap of the virtual supply (STEEM+SP+SBD) but only does it at 9%. Simply put, more SBD got printed until the price of STEEM collapsed from 80-90 cents to 20-30 cents. The SBD haircut through conversion has to continue until its supply is again at a level where the SBD to 1 USD peg can hold. That will keep the number of circulating STEEM at a high level because in the conversion SBD gets burned and 1 USD worth of new STEEM gets minted.

I am not talking about "circulating Steem," I am talking about Steem supply. Since SBD is meant to track the USD its inflation rate can understandably fluctuate. I am talking about the supply of Steem. Increase in money supply is the definition of inflation and the inflation rate of Steem is currently 36% a year. Not a recipe for success as a currency.

Circulating STEEM is part of the total supply. My point is that an increased supply of SBD will lead and has, in fact, led to a faster-than-normal increased supply of STEEM. The reason why constraints on the supply of SBD were relaxed was that witnesses did not want the kind of pump we saw in December 2017. That backfired.

My point is this huge inflation rate is damaging to the value of steem, as inflation always is.

The price of one token is one thing and the market cap is another. Our of those two market cap is more important in my opinion.

Posted using Partiko Android

Market cap is a function of the price of one token.

Also of their quantity.

Posted using Partiko Android

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