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RE: Is Steem Hyperinflating? Update

in #steemit6 years ago

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.

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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.

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

Also of their quantity.

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