You are viewing a single comment's thread from:
RE: Why would anyone invest into STEEM if it is so inflationary?
What's missing from your understanding is that Steem Power is protected from inflation. If you Power Up, your Steem is "mostly" unaffected by inflation, in exchange for reduced liquidity and increased voting power. I say "mostly" because it's not 100% protected, but the math is a little confusing so maybe someone else can explain that in a better way.
Why do you think that huge amounts of Steem will have been powered down 2 years from now? If Steem is a success I'd think it would be the opposite, that huge amounts of Steem will remain locked in Steem Power form in order to provide voting power to users.
I recommend reading the white paper as well as this post and its discussion: https://steemit.com/steemhelp/@aem/steem-for-noobs.
Assuming 100% of steem were locked in steem power, the maximum real inflation rate is 10% per year, less than Bitcoin. Currently 99% is locked in steem power. If less than 90% is held as power, then power will pay a positive inflation adjusted rate of return.
Hi @dantheman I don't get why the inflation rate would be 10% if 100% of steem would be locked in steempower. Is this because the 'interest' per year is 90%?
Thanks for your reply.
This answers the part regarding inflation. However, there is still something I do not get.
Can the market cap be expected to increase? And if so, why? Is there any intrinsic benefit to owning STEEM, except earning more STEEM?
The intrinsic benefit to holding as Steem in the form of Steem Power is that it earns interest like you said. You also gain more influence as a curator. For example if you have a lot of Steem Power, your upvotes and downvotes will carry more weight than a new user who has very little.
Market cap may increase if publishers and content creators with money realize that they can buy influential power on the network. Also, people tend to be greedy and like to speculate on price so sky's the limit on that one. That's the only reason why I'd purchase- if you think this site will get popular and market cap based on speculation goes up. If you're a conservative investor, I would just earn as much Steem by becoming a early adopter and use the site as much as you can.
Bitcoin's total supply is capped.
Thanks, I had read that already, but it didn't really explain why people would want to buy more STEEM imho...
Well I would guess that people who made a profit would try to lock in some of it at least. And since it takes 2 years to power down, a careful strategy would be to power down some STEEM regularly.
But I was mostly of assuming people would sell if there was no reason to buy. Granted, STEEM provided voting power, but why would people pay for more voting power?
steemit.com will gain in popularity and once there are many users there will be double the eyeballs.
Advertisers Promoters etc. love eyeballs and will buy up Steem to increase visibility for their content
A few years ago, there was talk of a social website that doesn’t charge its users or even sells anything intangible; yet earns $100+ annum per user.
Now imagine if that site allowed for its content posters to earn some type of revenue, or a sort of profit-sharing for contributing to the site’s success? That’s how I see Steemit setting itself apart from all other social contributing sites.
For those still wondering, the aforementioned social site is non other than Mr. Zuckerberg’s Facebook. Go figure...
I believe advertisers are the endgame as well. But...
That makes sense, I did not think of that. Thanks!
What's to stop mainstream media from throwing their huge amounts of cash into Steem to override any wholesome intellectual discussion on here?
You are right, I am seeing this right now.