STEEM POWER LASTS FOREVER (90% Interest Rate + 104 Week Power Down = Growth)
I have seen people asking questions like "Why should I invest $500 in STEEM when I see people making $5000 on a post", and the simple answer to that is: Interest Rates
If you put together both the 90% interest rate on STEEM Power, and the 104 Week Withdraw Period, what you get is a never ending flow of growth. For example, say you have 10,000 STEEM Power (Equal to about $30,000) and you decide you want to cash that STEEM Power out over the next 2 years (STEEM Dollars can be cashed out instantly, STEEM Power takes 104 Weeks/2 Years, and your rewards for posting are paid half in STEEM Power, half in STEEM Dollars). $30,000 over 104 Weeks is a little over $288 a Week. Which is not bad for extra income coming from a Social Media website. But if you put together the 90% (per year) Interest Rate with the 104 Week Period, you actually end up with more money at the end of year 1 than you had in the wallet previously. Each 7 day period accrues 7 days (1 week) of interest, but the 104 Week Power Down takes 1/2 of that each Week. Which means you keep all the money you have in your wallet, and the Power Down is basically taking 1/2 of your interest rate and paying it out to you Weekly. Which means at the end of year 2, you actually have 2x the amount in your wallet as when you started the Power Down.
So for example, if you had 10,000 STEEM Power worth $30,000, and you Power Down over 2 Years. At the end of 2 Years, you actually have 20,000 STEEM Power worth $60,000, and can Power Down again and get 2x as much as you did the previous 2 Years. And if you continue contributing Content that entire time, you will probably have way more. And STEEM could actually still rise in value. STEEM shot up over $3 over the 7 days following the July 4th Launch. Then, someone found a bunch of people's passwords online through another website that had Passwords stolen, or some other source, and took $85,000 from people's wallets (all returned by Steemit). And there was a DDoS attack that had the Website down for hours and hours, and once it was back up no one could access their wallets until the internal investigation was complete. After all that, STEEM stayed steady at $3, meaning it probably isn't going to ever drop lower than about $2.50, and has the potential to rise to $10 each or $20 each with Growth of the Community, and Advancements within the Community.
It's still summer. There are people on Vacation, and taking care of the Kids while they are out of School, etc. When Summer is over, a lot of parents are going to be on Social Media a lot more, and people will be coming to STEEM and Steemit. Then when Christmas comes, tons of College Students, etc, are going to be buying STEEM with their Christmas money, and people are going to be getting STEEM or Bitcoins (to use to buy STEEM) for their Friends who talk about Steemit all the time. Entire countries go crazy over Christmas, over the next 4 months America is about to go Christmas crazy, and STEEM is going to be more sought after than it is now.
STEEM still has various Landmark Achievements to reach that will raise it's value:
1. Steemit Payout Launch (DONE)
2. Get listed on Multiple Exchanges (DONE)
3. Get accepted as Payment by Bitcoin based Websites
4. Get mentioned on TV by the News
5. Reach 100,000 Users
6. Reach 1,000,000 Users
7. First Steemit TV Commercial
8. First Large Gold Retailer to Accept STEEM
9. First Person to Buy a Car with STEEM
10. First Person to Buy a House with STEEM
11. First Major Tech Company to Accept STEEM as Payment
12. First Famous Billionaire to Invest in STEEM
13. Overtaking Another Social Media Site in Popularity
14. Steemit being Listed on a Major Stock Exchange
15. First STEEM ATM
16. First STEEM Debit Card
17. First Government to Regulate STEEM, therefor Completely Legitimazing it
None of these things have been done yet, and when they happen STEEM will go up in value each time. The Pool of people that will Buy STEEM and use Steemit has hardly even been tapped.
Personally I feel that people should really think about whether they want to invest for that long. I'm very bullish on Steem / Steemit but 6 months is an eternity in crypto. It just depends on people's situation. If they need the money I feel that a strategy could be to cash out the Steem Dollars and possibly just let the Steem Power build up. I was gone for a week and my Steem Power is building up. I haven't started a power down. I told myself I don't want to powerdown until I can make $1,000 / week on the distribution and that way I can feel like I'm full time without having to worry so much about each post making a good impression or not. Just focus on what I like and keep going forward.
"probably isn't going to ever drop lower than about $2.50"
checks coinmarketcap
Ya, I think you should update your post!
Actually guys, the 90% interest on steem power only serves to maintain the value. Posisbly there might be an adittionalrise in the value of steem, but the design is that steem rapidly loses value by about 50% a year. So, whereas yer, your Steem Power will rise exponentially without doing anything, it's value in $ will decrease slightly. (unless if there is a rise in the price of steem).
So if I have 100 steem power, and just leave it alone, it garners interest?
If you watch your steempower you will see it rise in real time.
This is because of a system which creates 9 steem power per unit of steem which is created, and this steem power is distributed pro rata over the steem power holders.
So you will see your Steem power rise from 100-101-102,... And it should rise by about 90% or 95% per year.
However, due to the constant debasing of steem, the system is as such, that your 190 or 195 steem power after one year will be worth slightly less than your 100 steem power now.
So where's the benefit in building steem power? Just for better rewards in posts and citations?
Yes, indeed. But is is to be said, the value of your steempower decreases by about 5% yearly IF YOU DO NOT DO ANYTHING.
SO if over the course of the year you manage to gain an adittional 5 SP through contributing, through voting,... You will remain at break even, if you make more, you will rise to have even more steem power.
If I understand directly, this debasing effect takes into account that the total pool of steem = a fixed amount of dollars. if the value of the total steem pool rises by 5% a year (because people are willing to pay more for it) than you will see the value of your steem power go up.
There are other posts which explain this much more clearly than I can on steemit...
Great post! It does answer the question "why should I buy steem power".
I have invested a small amount into Steem Power and I am contemplating investing a bit more into Steem Power. Your post has convinced me to pull the trigger and invest more into Steem Power.
Steem on,
Mike
You kind if completely forgot about the dilution rate, which is higher than the interest rate. So you are effictively losing money by powering up.