From all I have read in the white paper, Steem has one fundamental flaw when placed against bitcoin in a true currency value.
Bitcoin has a set value, only 21 million bitcoin will ever be mined and in circulation. Intrinsically, Bitcoin is a deflationary currency. In contrast, Steem is inflationary, creating money as fast as the U.S. federal government can print bills.
With bitcoin, having a static value makes each and every bitcoin worth more, as no more can ever be created. We are running with a market rate of near $600/bitcoin, and holding steady it seems.
How do we value a currency that is constantly expanding, generating value out of thin air?
I'm loving this idea, and am no putting it down, but the pragmatist in me says their is no way to make this model work without a capped value.
Information is valuable, but how can steem work in a capped system?
Can the ones with steem give it to those who provide valuable content and fair curating?
This is actually a common, but mistaken, view of how STEEM works. Yes, it does inflate about 100% a year, but it all goes in to STEEM Power. And that STEEM Power can only be redeemed over a 2 year period and is not always being redeemed. So with 100% increase per year, and withdraws taking 2 years, you never actually get your original amount out, you are taking about 50% of the interest when you Power Down.
So any funds used to Power Up are locked in basically for eternity, and you have the option to be paid 50% of the interest for 2 years.
And since there is an incentive to invest in STEEM Power, to give other people higher rewards and get higher curation rewards yourself. That means that STEEM and BTC and other Currencies will always be moving in to STEEM Power.
And once everyone realizes this, that will be a big change in the way people talk about STEEM.
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Thank you for clarifying. I will have to revisit and look over it again.
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