RE: Answering: Why Am I Getting Liquid STEEM from Author Rewards?
Holy crap! Thank you for that post. It showed me the way to @eonwarped, who I'm following now, because I finally understand this:
If the SBD's portion of the virtual supply exceeds 2 percent, we start to throttle the SBD production, and at 5 percent, SBD stops being produced altogether. (We get paid in STEEM instead).
I've been thinking for months now why people would buy SBD on the market at these ridiculous prices. I've seen buy orders on Bittrex for 13 USD per 1 SBD. Until today, I have concluded these buyers did simply not take the time to study or understand the way Steem works, or maybe were just blinded to the total supply at that time.
But now, I can see under what conditions SBD really becomes a limited (and thus valuable) asset.
The world makes sense again to me.
Thank you for that!
Odd. I had the opposite reading of the market. I don't have much faith in their understanding of steem's internals :) . But you may know something I don't about the wisdom of the market.
Certainly around that time of 12$ SBD there was an air of "SBD to the mooooooon!" attitude. I attribute the spike to just general excitement.
One thing to keep in mind is that even if 5% of steem market cap is hit, it doesn't mean SBD will shut down forever. As the steem supply continues to grow and have value, the ratio will start to go down until it starts to produce again. In effect, the inflation rate of SBD will be rather pinned to STEEMs inflation in some way.
No, but now I understand there is the possibility that the production of SBD's is capped, due to the supply exceeding a certain percentage of debt.
Capping supply while demand stays constant can lead to price jumps, so at least now, while very hypothethical and still very unlikely, I can see some sense to betting the market that way.
Previously I just thought these people were just burning away their money. Personally, I don't hold SBD's, I don't see those as an investment. And besides, SBD's don't contribute to voting power :)
Ah okay, I see how you are thinking now. But few months back, would be really impressive to see them predict the current situation, and even that may not go the way they think.
Agreed on other points.
No prob man, yes @eonwarped is the go-to guy for stuff like this. Quite a little genius!