Controversial opinion: Maybe burning money is bad
I saw in @remlaps recent post that the idea of people burning Steem and/or SBDs is back in the air. I am going to suggest that it may be a bad idea for individual users to burn tokens.
As I said in a comment on that post: As I understand it, the usual argument in favor of burning is the assumption that overall market cap represents the total valuation, so eliminating some tokens from the supply should increase the price because overall valuation won't change. The analogy is presumably a stock buyback (or maybe some things that central banks do). But I think the key there is the buy in the buyback, the price goes up because there are buyers in the market. So sure, the thing disappears from the market, but I wonder if that's more of a side effect than a causal factor.
When individual users send tokens to null here on the blockchain, does that impact what people are willing to buy/sell Steem or SBDs for on an exchange? Maybe, if somebody has some sort of trading algorithm based on token supply or market cap. But for most people, what matters is the prices they can get on the exchange they're on, which is primarily affected by the buys and sells on the exchange, not whether some individual burned a token or there was a change in the total supply. In classical economics the beauty of the price mechanism in markets is that value doesn't need to track global information, it all works itself through in terms of what individual agents are willing to buy or sell for locally. So maybe it's not guaranteed that things that operate at the global level, such as tokens disappearing from the ecosystem, will matter to local markets.
I'm making my argument in terms of individual users. It might be a different story for a central agent. I mentioned a stock buyback earlier, and it's useful to think that through. A company has a weird relationship with its own stock. What would it mean for a company to own X% of itself? If it wanted to sell stock for money it could just issue new stock, so it's not valuable in that sense. And the control that stock ownership gives is useless to the company itself, because it can't have preferences independent of its (other?) owners. So it makes sense that when a company buys its own stock those shares essentially cease to exist. I think a similar thing would be true of a blockchain. So when the blockchain itself "sells" something like "promotion" then it makes sense for the tokens used that way to disappear. It is just not at all clear to me that individual users (especially those who are not whales) help anybody when they burn tokens. We'd probably be better off if individual users were powering up their Steem and using their increased power to reward good posts.
I could be wrong, feel free to make counterarguments. But it seems to me that there's just a vague sense in the crypto-spere that burning tokens will always increase the price and I am skeptical of that idea.
I think the proposition remlaps on promoting posts by burning STEEM is great. In general, reducing the number of tokens can probably lead to an increase in their price, provided that demand for them will be stable.
But I completely agree with you that the key factor is the demand for STEEM tokens. I even wrote a post about it. The economy of any token is no different from the economy of the state. If the trade balance is constantly negative, it will depreciate the token. That is, people need to invest in a token, that is, be willing to buy it.
The vast majority of cryptocurrencies rise in price only because people believe that by investing in them, they will eventually make a profit. The STEEM token price chart does not inspire such hope, and Steemit has strong competitors. The platform should attract money in other ways, such as making money from advertising or making paid reviews of goods in the style of the Diary Game, and so on. Of course for all the money earned must buy STEEM :)
I think I agree with your general point, that burning STEEM/SBD isn't necessarily good for the economy, because if there's nothing exchanged for the burn, then it implies a value of zero for the token. That had never occurred to me before you mentioned it in previous comments, but I think it seems right.
In the case of "post promotion", however, whether by sending SBDs to @null or by setting the beneficiary to @null, I think this represents an exchange of value so that it increases utility for the tokens and also produces more of a "circular economy", so (as long as its voluntary), I do think it's a good idea to encourage experimentation.
Also, as I noted in my post, I think that Tron's recent price performance makes a pretty compelling case for burning tokens when it's done in exchange for a service.
Yes, I agree that trading tokens for a service from the blockchain (and the blockchain burns them), or transforming them in some way (as with SBD -> Steem conversions or minting stablecoins with TRX) is good.