Why not inflate steem by only 10% ( or whatever reward pool is) instead of having this crazy "printing" going on?

in #steemit8 years ago

This is a repost as I am still looking for an answer to my question

I commonly hear that steem is not meant to be a currency that you hold and if I want to avoid inflation I need to power up my steem.
The problem is that the price of steem needs to be able to grow to handle the growth of this platform if steem the currency is constantly inflated by at least 100% every year then how can it possibly grow in value.

People already complain and say they are going to leave because they earn 50$ instead of 200$ per post but if steemit.com has 100 times more users they will earn a lot less if the price of steem doesn't grow by the same ratio or these new people will leave because they earn nothing.

I often hear steemians say that new users means more people are buying more steem to power up but this is not true, the people that buy steem are mostly investors not the users who were promised to make money blogging, the people with heavy pockets have always and will always be the ones paying for content/advertisement,etc..

The issue right now is that investors are all asking themselves the same questions how can I make money with this thing and how can the system handle 100x 1000x more trafic?

Imagine a scenario where steem was only inflated by 10%. First the price would have never gone from 4$ back to 0.3$ as speculators would have bought much sooner.
There would be no difference with the power down system, actually maybe a psychological difference as people's SP power balance will go down immediately so they may reconsider powering down.
In an interview Dan said that the growing steem power is a psychological thing, when people see their balance grow they feel good about it.
I would argue that what matters is actually the value of their account, and when it keeps decreasing people especially newbie don't have a clue whats happening and feel pretty sketch about it so you actually achieve the opposite effect.

If you have only 10% inflation the price of steem will likely grow and users will see the value of their account go up, at least it won't go down 500% in 3 weeks...
Another thing that users will be sketched about is the stock split, sure the value of their account would be the same but they might kinda freak out when the see that they lost 9/10 of their steem power, with only a small inflation you pretty much don't need to do a stock split.

A currency like steem with the only purpose of being a mean to buy steem power could survive but not if it is so much inflated , because this inflation removes completely the main use of pretty much every crypto which is speculation.

Some steemians say steem was designed to remove speculation in order to get price stability, I would argue that stability is created by a liquid market, the market of steem is actually highly illiquid as most steem are locked in the contract. That's not even the point though.

Currently people are scared of investing in steem because of the inflation and even if you power up your investment can literally vanish in a few weeks as seen recently ( personally I dont think we ever going to see 4$ again, not with this set up which beg the question how do you handle 1000x new bloggers? )

Today steem power is seen as an investment. I think it should be seen as a tool to earn more steem/ play the steem game and steem should be seen as an investment.
Scarcity or at least the illusion of it is very important for a currency, that's why bitcoin is so popular because it has a limited supply. If steem didn't have so much inflation people would feel good about buying it.
To me this is the logical thing because if steem goes up it means steemit.com can pay more bloggers and so it means that it is more valuable.
With the current set up we are in a conflicted situation where steemit keeps getting better everyday but its price keeps going down, users want mass adoption but this means they also want less rewards, steemit inc wants to grow the user base but the steem bockchain have less and less money to give to users.

If the inflation was 10% only with all the good news of curation guild, escrow market, steemQ, esteem, steemaccess, etc... the price would be going up right now and the depressing atmosphere would be an euphoric one.

Anyway this is my little rant but ultimately what I want to understand is why steem is inflated by around 300% right now and will gradually go down to stabilize at 100% when it could be about 10% and become a very attractive tools to investors and allow the price to grow ?

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I'd be hesitant to try and replicate too many of bitcoin's features, like a capped supply.
If you compete with bitcoin, you lose.
Steem compliments bitcoin nicely.

I never said steem needs a capped supply.

A great many of those questions could be answered by reading the white paper.

Well, the current trend is that the whales and witnesses are powering down and dumping on to the exchange. One school of thought is so that more common investors can afford to buy up. I think it is intentional, and was done for this purpose. You get my vote for a very thoughtful question and earnest attempt to understand the platform.

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