RE: Secrets to be successful in steemit. Carla Gonzalez.
Thanks very much for your potential vote! ;)
About the inflation, it is a very good question.
In fact the STEEM as it was last year was probably the poster-child of just how terrible high inflation can be on the price of an asset.
The implementation then was that inflation in STEEM was set to around 100% per year!!
The theory was that if you held STEEM POWER you would be compensated with very high interest rates which was supposed to counteract this.
However, in practice, because the inflation in STEEM was so high, any traders e.g., on poloniex, would never want to hold steem except for the shortest possible times when there were small spikes up in price; they would always want to sell again straight after. So in order to address this, they changed the model completely (to the one I just described), early this year I think.
Just have a look at the graph of steem before that time: https://coinmarketcap.com/currencies/steem/#charts !
But now, 10%, and falling each year, is not unreasonable I think...and in line with what other cryptos have had. Ethereum for example currently has higher inflation than this, and it was still able to rise to a market cap of around $40 billion recently.
In answer to your question about whether more upvotes will cause more inflation, this is not the case. Instead, the inflation rate is fixed, which means that every day some small fixed percentage of steem is created and awarded out. When upvotes occur they just get totalled up and then the amount of steem to be awarded each day is divided out proportionally by each vote's weight. So, less votes per day mean each vote pays out more, and more votes per day means each vote pays out less (relatively).
Have a read of https://steemit.com/faq.html, which explains a lot of this pretty well.
Ohh, okay wow. Thank you for this. Makes me feel better to know that it is regulated. Is that part of the witness job does? Or is it automatic?
I guess like all things in life, you must experience it in order to grow! That's awesome that Steemit was able to survive the inflation that occurred last year. I wonder why people didn't abandon ship at that point... or did it hurt Steemit? Well... the graph you gave me looks like all currency went through this high and then drop from July to September 2016.
I'll also have to take a look at the FAQ, very helpful tool.
Most of the rules are regulated by the code that each node runs and all these nodes have to be in consensus for the block chain to work! This means that a witnesses can't change the fundamental rules, just by themselves. I'm not really that knowledgable about the steemit blockchain (yet), so I'm basing this a lot on my understanding of how bitshares works.
But there are a few things that they are responsible for and one of these is providing a 'price feed' for the price of steem, derived from prices on external exchanges. This is required for the automatic sell feature for SBD in the wallet.
However, from time to time, the powers that be - developers, steemit, witnesses, im not sure entirely - decide that it would be a good thing to change some of the rules. This occurs with something called a 'hard fork'. You may have heard about the recent hard fork (HF19), which changed way voting worked so that it was linear instead of quadratic, among other things :)
ahhh yes. I was a part of Steemit when HF19 occured, and suddenly we were all swimming in dough... :P The more I chat with you, the more I feel you should run! It would be awesome! You are able to explain it in simple terms.... for peeps like me :) Are you a big fan of Bitcoin? My best friend in college loved Bitcoins, and he would always chat with me about Bitcoin. (this was before it got popular). He always tells me to hold on to my bitcoins, because they will be worth millions one day. The future currency!
Hey thanks! Yes, I remember when we just switched over to HF19, and suddenly I was able throw around $100 upvotes like confetti! Haha... maybe it was because something like the reward pool got reset when they did the HF which meant it was giving more than it should have done until the algorithm eventually equalised properly (or something). And, of course I'm into bitcoin, although actually not holding any at all right now :). if it hadn't been into bitcoin I wouldnt have been able to make the money I did this year through trading, or buy up all that steem that I did ;)
hahah I just imagined you sitting in a pool of dollar bills and making it rain! :P Silly silly.
Ahh so you traded all of your bitcoin for Steem? Do you think Steem will out perform Bitcoin? The new currency? My friend I mentioned earlier is a diehard bitcoin fan... he use to work for a bitcoin company. So I've continue to be a bitcoin loyalist via his advice. :)
Well the crazy thing with steem is that people can award out money but it's not actually their money that they are awarding out! if it was I don't think I'd be very generous at all ...haha ;)
I used to be a bit of a diehard bitcoin fan...but then along came ethereum which does completely amazing and different things .... then once you start to have more than one asset you like it's not much of a step to just evaluating each one on its merits. A key thing people recommend when trading shares is not to have 'favourite companies', because even if it's a great it can still be overpriced and thus means you arent making the best trading decisions.
I was really expecting steem to increase due to the new number of users....but somehow it's not happened yet. Really hoping it does have some effect soon!
LOL yes you have been really generous. I appreciate it. Look at that... Steemit is changing us for the better. :) It's like Christmas everyday. I sell handmade greeting cards at the local farmers market and whenever I print out a card, I feel like I'm printing out money. Hehe. Kind of like how it is when we upvote each other.
You are so logical. Yes it is wise to not have favorite companies. I think, I am just not well versed in trading to know what to really trade. It's pretty cool that you can make a living off of just trading and curating on Steemit.
Maybe Steem fell because everyone started to trade out when it hit $2.00. I remember when Bitcoin first came about it was up and down for a long time. I'm sure in the long hull you will get your return on investment.
It all comes down to supply and demand. An equilibrium will eventually be reached at some point (the historical chart of Litecoin is a great example of one that eventually came to its equilibrium point after a huge bubble, when it then flatlined for ages (until a new speculative bubble formed)).
And there are many factor which contribute to buying vs selling presure. On the sell side there is profit taking from the recent rise, lots whales that got in early that are constantly powering down for an easy income(!), witnesses paying for server costs, and users caching out because they view the platform only as a way to earn fiat money. On the buy side, it's basically users and investors who think the value of steem should grow if the whole ecosystem grows (so just like bitcoin for example, which has no intrinsic value). Only when these opposing forces balance will we reach a stable price! :)