Forgive me for my ignorance, but how do the economics behind Steem work? If we keep generating more Steam from posts, doesn't that just push the price down? I understand there's a lot more to it than that, but where exactly does Steem gain its value.
RE: Steem.supply short PA
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Steem.supply short PA
Very briefly put: the STEEM currency has a fixed inflation rate. Every day there are around 43.000 new STEEM printed, and this amount is called "the reward pool". Out of it, around 75% goes to authors (the rest goes to witnesses, those who are maintaining witness nodes, which are validating transactions).
The more Steem Power you have, the bigger the amount you "draw" from the reward pool when you vote. That's from where you get money when you get votes: the voter, based on his influence, "draws" from the reward pool.
As for which pushes the price up or down, the discussion is way more complex than that. It's not only the value of the website which is taken into account, but also the blockchain characteristics (no transaction fees, very small transaction times, fungibility, etc). So the economics behind Steem are quite complex.
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That was just the response I was looking for. Thank you!
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Very good question @dissuade . Thank you for a great explanation @dragosroua . I have considered this too @dissuade . But hopefully as the amount of steem is increased the popularity of steemit rises. Ultimately, the price is determined but what people are willing to pay. Consider how most Steem are locked up in Steempower. That keeps the value high. Just my opinion.
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