Its about getting enough significant stakeholders so that 5 people don't control more than half of the steem power. I'd be much more comfortable with 100 people, even if that 100 people represented a smaller percentage of the user pool, especially if they were real, non-ninja investors.

100 will look tiny when hundreds of thousands of users use steemit. So in terms of problem solving we are back to square one.

then people will be willing to pay a higher price for the same stake.

And what happens when the bulk of the users pay a higher price for the same stake? The early adopters become the new whales and so we have the same distribution problem.

It will only be a problem for precisely as long as steem overvalued enough so that no rational person would want to spend the money to have a significant amount of influence.

Gaining influence is not the only incentive to want steem power, financial incentives are also a big part of it. Also upvote value increases when the price increase, for these reason they will buy steem power at any price, if they don't the project would fail anyway as rewards would go down while user base is still growing.

This ridiculous notion that people have to buy steem even though there is no rational reason for them to want to is a big part of the reason why were down about 98% from july.

As I said above influence is only one incentive, many people buy steempower to earn profit with curation rewards. A good curator with $ 10000 stake can earn $200 per month doing nothing just by running a bot, this is arguably the main reason people are buying steem power.

We are down 98% from july because the whales decided the price was overvalued, simple as that. There was just too much pressure from them but don't assume there was no buying. If the price went to $4 in the first place it means there was buying.

The people with the most steem will only get to dictate the market if they participate in the market

Sorry I meant to say people with the most money dictate the market . So yeah the whale have the most influence in the market because they can move it both ways.