Why would anyone buy STEEM? You don't need more than your 10 starting STEEM to post, comment or read stuff on steemit.
The only reason to own STEEM that I can see is to get even more STEEM by posting and curating content. If the price of STEEM remained steady or increased, that would be good enough.
However, there is a 100% yearly inflation. Assuming the market cap remains constant, that means each STEEM will lose half of its value by next year. That is a tremendous downward pressure: why would anybody invest into something that loses half of its value every year? Unless the market cap increases, but that brings us back to the first point: why would anybody buy STEEM with USD or any other fiat?
There is also another risk: even if you buy STEEM and power them up, you might end up losing more money to inflation than you will make from contributing on steemit, if you are a less popular than average contributor.
I really cannot figure out the economic model of STEEM.
If nobody has a good reason to buy STEEM, then the currently rising price is a bubble resulting from pure speculation. What is going to happen 2 years from now, when huge volumes of STEEM have been powered down and nobody is there to buy it?
I hold steem and buy steem because the demand for steem surpasses the inflation rate. When I get paid steem dollars I always convert it to steem ASAP, and every day I convert some of my steem to steem power.
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The goal of Steem Power is to protect you from the inflation...
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This!
The creators were aware of your view already before you thought it :)
Its way less inflation then and for sure steem will grow enough to compensate it.
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Exactly. No way the Steem founders would have chosen an inflation rate that big without a thing to protect you from it.
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"I really cannot figure out the economic model of STEEM."
You are right about that, you are not right about creating a post with that title though when not knowing what you are talking about.
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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?
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Because A) " Assuming the market cap remains constant" is a very bold statement and B) Any Steem that's earned from inflation cannot be withdrawn as soon as earned.
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