--Or-- The Taxman Cometh

I don’t know Dan Larimer – though I imagine that I could be just like him . . . if I were freakin’ smart enough to come up with an idea like the Steem economic system. 

So, instead, I’ll just be a pro-social remora

Ewww -- maybe not . . . . but how about one of those crocodile birds?

Yeah!  That's the ticket . . . . 

But, at any rate, I'd like to do my part to support the growth of the community -- and I've been thinking a lot lately about the mechanics and implications of Power Down -- and I've come up with a number of conclusions, predictions, suggestions for the developers and pieces of helpful advice (I think - as always, YMMV).

The first prediction is . . . . [drum-roll please]

@DanTheMan will start powering down no later than . . . . 

WAIT!  What?  Dan has already started powering down?

  

He's always one step ahead of me . . . It's like I have my own arch-nemesis

 I'm hoping that Dan hasn't explained this somewhere and I just missed it but . . . . 

Or more likely, he's writing a post RIGHT NOW just to thwart me . . . .

It's likely he had little choice in the matter due to US tax regulations. 

Dan has suddenly made upwards of 2.5 million dollars.  Where do you think that he's going to get the money to pay taxes on it?  

And I thought that I was going to look brilliant by pointing out that he's likely already passed the point where he is going to take penalties and interest . . . .

[Yeah, I wanna be the octopus in the Steemit sea -- and yeah, I know all the octopus jokes]

He can't just wait until January 1st because, while that does give him enough time to get the money by April 15th, the US expects you to prepay your taxes in the quarter in which they were earned.

Dan is clearly brilliant and obviously has plenty of brilliant people giving him good advice.  You want to know where I think the July 4th initial payout date came from?  July 1st is the start of a quarter.  July 4th just happened to be an awesomely patriotic day very close to that (i.e. great excuse for picking that day).  Arguably, he didn't "really" have the money until that first payout (or he'd be paying even more interest and penalties).

Given a choice, I'm positive that Dan would have preferred to

And this is where I have several suggestions for Dan and the developers (and the marketers -- which includes all of us) . . . .

I haven't checked it out for sure, but if I were programming the power down function, I'd have programmed it so that it redeemed 1/104 the first week, 1/103 the second week, 1/102 the third week and so on . . . .

Unless the price of Steem drops in proportion to the inflation of the Steem money supply -- an occurrence that is very unlikely in my estimation -- even someone who vests and then immediately powers down is STILL very, very likely to see some *serious* returns on their investment during that two year period.

There is also the fact that many of us see the potential for having a revenue stream while still adding to our investment in Steem.  That would work as follows:

Assume that you decide each week to power down, stop to reset and power down again (this really should be automated by the developers soon because I'm sure that it is what *they* are actually doing when they are "powering down")

BEGIN BORING MATH (uninterested? just jump to END OF MATH)

69.38% interest compounded daily leads to 100% per year or 69.38%/52 = 1.33% per week.  That is the rate at which the Steem supply will be increased when we reach steady state (note that the rate is *much* higher now due to the influx of new users in proportion to the total number of users).  90% of that (the amount of Steem Power that actually arrives in your account due to inflation) is 1.2% Steem Power increase per week.

Now, withdraw 1/104th = .96% per week.  You are still gaining .24%/week or .24% * 52 weeks = 12.48% compounded weekly = 13.28% Steem Power increase per year.

END OF MATH

As long as the value of Steem doesn't decrease by more than 13.28%/year, you are STILL adding value to your Steem account.

Think of the history of Bitcoin.  What do you believe are the odds that Steem is going to decrease in value at all?

In fact, if the price of Steem merely holds steady . . . . after a year you have half your original money back AND an investment that is worth over 13% more than the amount of money you originally put in.

Yet, this is all complicated enough that it's nearly impossible to explain without a post like this -- I had trouble convincing my wife to buy in and my father and son are still on the fence (although willing to dip a toe in the water just because I am so sure).

As for me?  I'm powering down this personal account (to prove the theory it'll continue to grow AND make money) while dumping all the money directly back into my corporation's account (digital-wisdom - already set up so we can start offering Steemit tools shortly).  I see a lot of money in my future with that strategy.

P.S.  I'm still trying to decide if Dan is my arch-nemesis or not

He's clearly a super-hero

But . . . if he's my arch-nemesis, I'm probably a super-villain -- pretty cool but definitely not my preference.

Unless

P.P.S.  I'd like to call out the following three posts (not by me or anyone I had even heard of before today) as the best that I read today:

https://steemit.com/introduceyourself/@hr1/ai-squat-manifesto
[a newbie after my own heart]

https://steemit.com/steemit/@nonlinearone/steemit-is-a-scam-the-top-7-reasons-why-steemit-is-a-scam
[an unfortunate title since people not knowing that it is ironic caused them to bypass this excellent post]

https://steemit.com/gambling/@sebastien/proposal-to-limit-upvote-gambling-limit-upvote-power-in-thumbnail-mode
[the best curation improvement idea that I've seen]

Minnows UNITE! (use the keyword minnowsunite)

[Image credits?  All images are linked back to their original sources -- except for the unlikely danger that they'll move in the next 30 days, that's the safest & easiest credit attribution strategy for a lazy programmer like me.  Just  right-click on the images and open in another tab, and you'll see them in their original/native habitat.]