RE: Reasons why STEEM won't make you rich

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Reasons why STEEM won't make you rich

in steem •  8 years ago 

Ignoring the impact of Steem Dollars for a minute, Steem inflation is fixed at 100% per year. However, 90 percent of that inflation goes to holders of Steem Power. So, real inflation is only 10%.

That inflation is only experienced by Steem Power holders if/when Steem token value grows by less than 10 percent per year. If it grows by more than 10% per year, then they experience no economic loss from inflation (when measured in absolute dollar terms).

Regarding paying future users, this should not be a problem. Either future users never come, in which case the current Steem value (or perhaps some lower value) gets distributed among a limited number of posters, in which case there is plenty of value to go around to incentive continued posting.

Or, the new users do come, in which case each one will want to be as "influential" as possible. They have no influence without Steem Power. They have no Steem Power without Steem. So, more users equal more demand for Steem Power and Steem, which means a higher price, which means there's still plenty of economic value (in dollar terms) to incentive continued posting and curating.

In short, the system self-adjusts. Fewer users equal smaller dollar value distributed among them. More users equals more dollar value distributed among them.

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100% inflation is 100% inflation where the money goes is irrelevant.

This is not true. For instance, if a stock does a 2 for 1 stock split, there has been 100 percent inflation, but all that inflated value inured to the benefit of the original stockholders. So, those stockholders were not harmed. In fact, they actually benefit from the split (which is why they approved it). So, it entirely matters "where the money goes" when it is inflated.

The only way it would not be inflation is if the value of the market cap also doubled meaning each individual unit maintained its purchasing power.

Perhaps this is technically true, but it's practically false. Yes, each unit can purchase less, but each Steem Power holder now has nearly twice as many units. So, unlike with fiat inflation (which steals from savers), Steem inflation actually insulates savers (Steem holders) mostly.

Its not about how much wealth someone owns but what can be bought with a single unit. You may not suffer under the inflation but it is still inflation.

real inflation will not be 10% when people decide to cash out. It would be way more than that. And even worse, there is no guarantee that anyone will be buying steem because they will not have reasons to do so. Especially when most people here are for earning steem by posting.