The most frequent question raised in Steemit maybe "Where does the money come from?" In this post, I will provide a simple explanation about this topic with comparison to Bitcoin's reward mechanism.
Highlights
- Steem's rewards majorly come from STEEM holders by diluting their shares
- In some conditions, Steem Power holders also pay for the rewards via dilution, but the magnitude is much smaller than STEEM's
- Bitcoin also has the similar mechanism but all rewards go to miners, while Steem's rewards go to diverse agents, such as content providers, curators, validators, miners, and liquidity providers.
Introduction
Do you think that Steemit is a ponzi? If you answer yes, you also have to admit that Bitcoin is a ponzi because they have the same reward mechanism fundamentally. Here I will explain why.
Bitcoin Rewards Miners Only
Let's look at Bitcoin first. The current supply of BTC is about 15.8 millions. Everyday, 12.5*6*24 Bitcoins are created as a mining reward, and about 70 BTC is paid as fees.
Then, what will happen after a year?
- Current supply: apprx. 15,820,000 BTC
- Mining reward (estimate, 1 year): 12.5*6*24*365 = apprx 657,000 BTC
- Fees (estimate, 1 year): 70*365 = 25,500 BTC
- New supply after a year: 16,502,550
The total supply of BTC is increased by 4.3%. Given an assumption that Bitcoin's total market cap is fixed for a year, this increased supply means that BTC price will drop by about 4.3%. An important fact is that this 4.3% goes to miners.
Steem Rewards Contents Creators Too
Steem has similar mechanism with Bitcoin. Steem creates 400 STEEM per block (3 sec) currently and 90% of them goes to Steem Power pool. The details can be found in Steem Whitepaper page 35. Here I assume that there is no Steem power-up and down for avoiding a complexity. Also, I picked an approximate ratio between Steem Power and Steem (96% vs. 4%).
- Current supply: apprx. 134,000,000 STEEM (Steem Power pool: 128,640,000 STEEM / 5,360,000 liquid STEEM)
- Witness/Miner rewards (estimate, 1 year): 1.0476*20*60*24*365 = 11,012,371 STEEM
- Contents creation/Curation rewards (estimate, 1 year): 2*20*60*24*365 = 21,024,000 STEEM
- Liquidity reward (estimate, 1 year): 10,512,000 STEEM
- New supply after a year: 559,483,710 (Steem Power pool: 511,575,339 STEEM / 5,360,000 liquid STEEM)
We can discover a hyper-inflation, say 317% increase a year, from 134M to 559M. But this is not the point. If the inflation makes no changes in terms of a share (percentage owned), it can be considered as just a splitting your shares. Regarding percentages, we can find STEEM holders have dramatic decrease, from 4.0% to 1.0%. This means that a unit price will dropped down by 1/4 if the market cap is stable. Meanwhile, Steem Power holders have slight decrease from 96.0% to 91.4%, about 4.8% decrease. That is, when price become 1/4, you have about 3.98 times more STEEM because you are holding Steem Power.
Interestingly, we can find 3.8% of new shares go to contents creators and curators. Where does the money come from? Obviously from STEEM and Steem Power holders. This is a kind of redistribution as like Bitcoin, but while Bitcoin only rewards miners, Steem has diverse types of rewards and different dilution rate between STEEM and Steem Power holders.
Conclusion
Steem is not a ponzi scheme but a novel platform that rewards content creators and curators through redistribution.
To truly understand finance realize EVERYTHING is a Ponzi scheme. Social Security is a Ponzi scheme. Benefits are currently being paid by issuing debt and selling it to other countries. The payouts currently available to retirees won't be available to future ones. They'll be too busy paying back the debt.
The dollar is a Ponzi having lost 98% of its value in the past 100 years while effectively stealing the value of saver's deposits by inflation along the way.
Everything is a Ponzi it's just that some Ponzi's are 'official' and universally accepted and some are not. Not to say that's a bad thing just that it needs to be recognized to be profitably utilized.
If the dollar is a Ponzi and Steem is pegged to the dollar there's no way Steem couldn't be a Ponzi as well. Again, not saying that's good or bad, just pointing out that's the way things work. One could even say the crashing of the housing market or something similar is a generational Ponzi collapsing. Our economic system runs and reloads Ponzi schemes continuously by its very design.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
I see your point, but I would avoid extrapolating the term ponzi to include all of finance.
A true ponzi isn't sustainable from the get-go. And you need to ante up cash to get in.
EVERYBODY I KNOW said BTC was a ponzi. I'd ask them, can you explain what a ponzi is?
THEY COULD NOT. It was just the easy common thing to say to appear knowledgeable.
Cryptos are all making money from thin air. Some create value better than others.
Like the Fed, dollars from nothing.
Doesn't mean either is a ponzi. Social Security? DIFFERENT STORY!! Definitely a ponzi.
I remember a 'debate' I was having with Tone Vays about steem in the YT comments section of the World Crypto Network. I said cryptos all create money from thin air, from nothing. He said that was ridiculous! BTC is given value from the electricity used to produce it.
My response was, so with no exchanges in operation BTC would be worth almost $600 today... because.... electricity? Not expanding the user base? As demand for BTC increases, price increases. Duh.
If demand collapsed tomorrow, the BTC price would plummet down to under $20. Eventually $0.05.
And the exchanges play AN ENORMOUS ROLE is giving value.
His reply was "ok".
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
What gives the US dollar value? Wood pulp? The ability to print more? What gives the USD value is the same thing that gives anything else financial value, perception. The government being able to print more dollars at will is a negative, a debasement of the currency. Cryptocurrencies with limits on how much can be produced don't have this problem. Ironically you've done a good job of describing some of the problems inherent to fiat currencies which some have turned to cryptos to avoid.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Well said!
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
All stocks are Ponzi schemes. Yes sure you are calling a company valuable thus raising it's stock price but, until the next sucker comes along who's willing to pay that price.. it means nothing. So ultimately all stocks are a Ponzi scheme.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Nope a stock is not a ponzu scheme and steem is not either.
I am sick of people that cannot understand how things calling them Ponzi schemes, so they can sound smarter than they are.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Ponzi scheme: middle man takes person B's money and gives it to person A and calls it "earnings." Stock market: middle man takes person B's money and gives it to person A and calls it "earnings." Please explain the difference to me. No hatred here...I wanna learn.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
I think you are right in a way. If we are not strict with the definition of a Ponzi scheme, a lot of things can be classified as Ponzi.
People who call Steem a Ponzi are in fact implying that stocks and other crypto-currencies (including Bitcoin) are also Ponzi. Which obviously does not make sense.
When you buy a stock in company (or a Bitcoin token), you do it because you assume that in the future there will be someone else who will buy it from you at a higher price. So yes, the financial outcome of your current investment depends on someone else making a new investment in the future. If we treat this as a valid symptom of a Ponzi scheme (which is wrong!) then yes, most financial instruments (Steem included) are Ponzi schemes.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Agreed. Or if we were in a brokerage industry and didn't want to get into legal trouble we'd simply point out they are 'speculative investments'. Same difference.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
@gmalhotra " Where does the money come from? Obviously from STEEM and Steem Power holders"
please again give little more attention to the above sentence which @clayop written in his post and most easy sentence at the end in conclusion is that Steemit platform that rewards content creators and curators through redistribution.
So in Steemit you only get your earning through contents rewards,curation rewards in distribution and redistribution.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
I think @gmalhotra has a good point which I explain in my reply to him/her. No need to bash people for asking legitimate questions.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
In a Ponzi, person B still has a claim on the money, despite it having been fraudulently distributed to A.
When company earns profits from customers (B) and then gives those profits to shareholders (A), B no longer has any claim on the money.
That is the difference.
Now it is possible that some companies are indeed Ponzies, where earnings are nonexistent or overstated, and money from other investors is misrepresented as earnings, but that is not the general case.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Look no further then into your back pocket and pull out one of them crisp bills And ..Voila the great note of the Federal Reserve. The biggest Ponzi scheme ever. So big even Charls Ponzi him self would be in shock that they pull the wool over the publics eyes on this one. It makes me laugh when people say steemit is a scheme, yet they rely on the fiat currencies of central bankers.
I say if it's got trust it has purchasing power.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
absolutely @knircky say right, the people who think or comments that stock or cryptocurrency like bitcoin or Steem is ponzi actually jealous or the people of third party like ponzi,scam and hyip schemes.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Definitely am not jealous. I wrote this: https://steemit.com/ponzi/@gmalhotra/ponzi-vs-stocks-vs-bitcoin-vs-steem-my-opinions
Its a full explanation of my views... If you care to read it. Just trying to create a healthy dialogue... No jealousy :)
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
@knircky Thank you i'm tired of the nonsense too
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
A stock has real value due to the earnings of the company. As a stock holder you hold a real part of the company. You share in its profits through dividend or stock equity growth. In no way is this a ponzi scheme.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
I agree that when a stock pays dividends it's not a ponzi scheme because you are getting a cut from the companies profits. But for"non-dividend" in the so called "growth stocks" the money comes from other people. Yes there might be a product that company is making but ultimately the "growth stock" is growing because someone other than the company is willing to give you money for it because they expect someone else to come along and pay them more ie ponzi.
I have had this conversation with a lot of "financial people" who always seem to get annoyed and state..."but the stock is growing because the company is doing well." I would buy that idea only if the price of a stock was directly tied to its companies profits. Yes for the most part this happens but enough times in history (Enron?) this has not been the case.
This "money being handed down... In the hopes of ever increasing 'value'" is the same thing that happens with every cryptocurrency (bitcoin, litecoin, ethereum etc.) before steem. I think people musunderstood my point...I am in no way talking about steemit. Here the investors money is used to turn writers/curators/users into investors themselves. It's an amazing take on the entire situation. But one that without new "real money" (read fiat) will continue to lose value.
I guess my point was just create a dialog around ponzi vs "growth non-dividend stocks"/bitcoin vs steemit
In no way did I mean to offend anyone.
Full disclosure I own "positions" on bitcoin, ethereum, lisk, dash and a few others...So I have definitely bought into the scheme!
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
But there are some people who simply hate capital market and do not distinguish.
It is an attitude, nothing reasonable and it can not be changed.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
And, i just got a negative vote for my opinions... Ridiculous
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
And then you got an up vote.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Companies usually have a business model. They produce something that a target market will pay for.
Steem's only source of money flow is the investors themselves, and the invested money is distributed between content creators (and other rewrad earners) cashing out, the founders and early birds cashing out, and yet the investors expect to get at least as much money out of it as they invested (otherwise, what's the point of investing?).
So more money is flowing out of the system than into the system, unless they balance this by constantly increasing the number of new investors.
Unless of course, investors are not in it for the returns. They accept that their investment will be distributed and they will actually lose money. But in this case, steem is either an over-complicated tipping platform (assuming investors are generous like that), or a glorified advertising platform (assuming investors are not just tipping out of generosity).
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Steem has a business model. Just like Bitcoin.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
What business model? Bitcoin does not produce anything. It is free, so it does not have earnings. It is a currency, or a open source bookkeeping platform. Steem can be a currency, too, but I suspect the high built-in inflation rate will hobble it as such.
That said, I think Steem works just fine for content curation. The model is quite ingenious, and could eat reddit's and hopefully even facebook's lunch. Just don't expect them to convert into hard cash forever.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Bitcoin is not free. Don't forget the fee.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
That's the economic innovation that crypto-currencies have introduced: you don't need to have a profitable (in accounting terms) business model to be able to survive. You stay sustainable by expanding contentiously.
This very feature makes people think it's a Ponzi, but it's not. The key difference preventing crypto-currencies from being a Ponzi is the fact that the outcome of their existence is perceived as valuable - you can't say this regarding a regular Ponzi.
The point is, Bitcoin (or Ethereum or any other major crypto-platform) faces exactly the same problem as Steem: they need to contentiously expand to remain sustainable. Having transaction fees solves nothing and it just a hindrance for the user.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
@orly has it nailed, I think. Steem can only have value if people buy it. It cannot have value from being handed out for posting, curating, mining, etc. In the long run (other than speculation), the only reason people would buy Steem is so they can distribute them amongst content creators. This amounts to paid speech, aka advertising.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Upvoted solely because I disagree with whoever flagged your post and wanted to balance that. I don't agree with it or think it adds much value.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
If anyone cares: https://steemit.com/ponzi/@gmalhotra/ponzi-vs-stocks-vs-bitcoin-vs-steem-my-opinions
I wrote that as a full explanation of my views.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Your article is completely ridiculous... The main problem with this platform is the inflation rate of SteemPower. There are 100M steempower today. In 10years at the current inflation rate there will be 100Billion SteemPower and in another 10years there will be over 100 Trillion SteemPower....
You do the math.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
You do the math, your numbers are wrong.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
You are right!
At 90% yearly inflation assuming 100M SteemPower using the formula to calculate annual growth
The total SteemPower in 10years is 32,268,769,777
And 10 years after that the correct number is: 19,784,196,556,603
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
If you double something every year how much will you have in 10years ?
https://en.wikipedia.org/wiki/Wheat_and_chessboard_problem
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
No point of saying that here man, they are not interested in giving you actual answers. There's no need to complicate things.
Any smart trader (the ones who are actually supporting Steem price, if you call that support...) knows Steem won't appreciate in price, quite the contrary, its inflation is crazy as you mentioned. The solution they give you is to power up. The problem is that with SP investors think they are gaining "interest" but SP is just diluting their initial investment slower. So what's the point of investing in Steem? There's no point, you will most likely lose a lot of money unless you are a very active participant or an early bird/founder.
That's the real dumb math many here still fail to understand.
If you get SP and SBD from the site that's fine and all. But as a long term investment is one of the most ridiculous thing I've ever seen in crypto and I've seen a lot. I do enjoy the platform for what it is and there are many great content creators though.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Exactly!!!
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Clearly you have forgotten what you've seen. Bitcoin after, 6 months of existence, was in a very similar position: people burning electricity like crazy and some "stupid" investors happily paying for this.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
How that worked out for them? I agree with you though...I wasn't involved with Bitcoin at that time (2011) but I know many were just having fun and trying mining for the first time, that's it. A bunch of nerds playing around if you will. We'll not get into technicalities or even fundamentals on why Bitcoin is what it is today.
Investing in Bitcoin at that time was crazy indeed, and definitely not something a "smart trader" will do either. There were a lot of doubts and questions to say the least and so far most of the mainstream population still don't know how it even works.
Steem on the other hand for me and many others is actually pretty clear. At least how it currently works. But they are hard forking weekly so maybe next month we have a different system and I could see the value of locking SP for 2 years. Or maybe not since they could change it back in the next month.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
All fine, but the question is about long-term sustainability.
I'm no economist, but I feel that the fixed rate of dilution/inflation and interest rates in the steem system is a mistake. They must float freely according to current market conditions.
Also the prominent "Buy Steem Power" button on the front page looks desperate, feeding the impression of depending on continuous outside investments to keep the "ponzi" going, and should be removed.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
While inflation rate of STEEM is fixed at 100%, the number for Steem Power varies.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
I agree
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Steem dollar rate varies too.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Eh no one needs your money or anyone else's money and you just sound very ignorant.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
I agree. Having the "Buy Steem Power" button is a very bad idea. It achieves nothing, yet gives the wrong impression.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Very cool just like our US dollar hyperinflate that sucker to pay debts... works well
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
both Bitcoin & Steem are neither PONZI nor Scam !!!
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
I have understand all you have described here very well but one question in my mind still exist i don't say Bitcoin or Steem or any other crypto currency is ponzi and who say that Steem is like ponzi are actually don't aware or jealous from Steem or Bitcoin, but in start or in beginning any crypto currency suppose like STEEM who are or who will be the STEEM holders ?
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Steemit is an elegant design.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
By logo, pagination, or concept?!
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Yes
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
I think this explanation is missing something because you don't analyze SBD in this. No one holds steem. People only hold SBD and SP. Where does SBD factor into your analysis?
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
True. The main reason is that SBD makes it complicated then hard to deliver my focal point-where does money come from. I will deal with it in the future.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Yes, SBD makes it complicated, but it is the core of the issue. The claim is SBD is pegged to the dollar because it is backed my Steem such that more Steem can be printed to back SBD as needed. This seems to me to provide a mechanism that enables huge inflationary pressure in a financial instrument that can be liquidated quickly, causing a problem if there isn't enough demand for SP.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
"No one holds steem"
Lots of liquid steem is being held, currently there's 5.31 million of them which are unvested.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
I was speaking in hyperbole. 5.31 million is a very small portion of total Steem.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
For any currency or money there is a universal truth. They only have value because people think it has value. Even government backed currencies eventually have to hold to this truism.
Bitcoin has its inflation scheme (aka block-reward) system set in such a way that early adopters are punished, causing the value of the coin to not grow exponentially. With the vast majority of the coins having been mined that will ever be mined, this no longer applies.
Steem doesn't stop charging holders, though. The inflation isn't there to "kickstart" the currency, it is a loop in and of itself. Not the same thing.
In Steep the holders see their value diluted so new content creators can get paid. And in exchange for them holding they get voting power.
I would agree that Ponzi isn't appropriate in the original sense for either.
What Steem does is it creates a platform where people with more holdings can decide what others read by up/down voting.
I'm still on the fence if that is a good thing.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
This system we are living in Period! is a Ponzi scheme. This world was false since the existence of humankind. What do you think, I mean it's ran by imperfection! Digital currencies is a blessing to have yes indeed!
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Thank you very much, this article help me to explain at 2 of my friends!!! And told them to up vote your article😉
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Very informative article.
All value comes from demand, bitcoin and steem would be worth nothing if people would not like it.
Steemit is growing rapidly, both in userbase and in the number of high profile people joining us. People will buy Steem in expectation of the rise of value of the network. And not just Steemit, we could have many other exciting things on the Steem blockchain.
For example a market:
https://steemmarket.sharetribe.com/
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
at least Bitcoin is limited to 21 million BTC.
where Steem is limitless.
so the value will be decreases in half per year because of 100% inflation.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
It's fundamentally a matter of the magnitude of dilution. When all Bitcoin is released, the dilution rate will be 0 for holders but Bitcoin users still pay to miners (= redistribution).
STEEM has much higher dilution rate than Bitcoin, but Steem Power has similar numbers to Bitcoin or sometimes Steem Power holders can additional gains (when Steem Power pool share is below 90%). That is, with halved value of a unit of STEEM, Steem Power holders will have around doubled amount of STEEM so that the inflation is offset.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Not to mention the demand for Steem will pretty much grow as the network effect is stronger here. We have high profile people constantly joining us, together with many youtube stars and bloggers.
The demand for Steem in my opinion will only rise, and with this pace we will become a rival to existing social media giants pretty soon.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
I don't think we should make up these false economic parallels it's not the same thing, and many factors are involved. People keep regarding the developers as if their politicians or something when they're just normal business people using a product.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Good explanation of steem and how it works! Thank you for sharing!
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Awesome. I hadn't yet heard anyone make a good argument that it wasn't.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Great explanation. Makes sense to me! Cheers!
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
This is the result of those great minds that created the platform.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
At the steem launch the founders mined the supply and prevented people from mining by not providing binarys that work. SCAM
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Thanks to good analysis and useful information for the steemit.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
All result wil be tell u from market but in few month , i wil buy after lunch of akasha.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Visuals help a lot in terms of what we should see in future. I think base of Steem Power holders will increase over time, because more people want to hold power and have ability to have weight on their votes.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
I agree! Good Job!
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
good calculations, but you don't mentioned steem dollars. How are they included in this scheme ?
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Since my purpose is to depict a big picture of Steem reward structure and to compare with Bitcoin's, I ignore SBD on purpose.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Thanks for your story. But are you sure you are correct about the following?
"Meanwhile, Steem Power holders have slight decrease from 96.0% to 91.4%, about 4.8% decrease. That is, when price become 1/4, you have about 3.98 times more STEEM because you are holding Steem Power."
I assume you mean with "when price become 1/4" it is due to inflation. That will happen after 2 years. If inflation is 100% per year.
If 10% all of new Steem Power goes to content creators and curators and price goes 1/4 (let's say 2 years) because of the inflation I calculate the following:
Let's begin with 10 SP for user X and a total supply of 100 STEEM.
Beginning, day 0: 10 SP
At day 0 of year 1: 19 SP
At day 0 of year 2: 36,1 SP
If the total supply was at the beginning 100 STEEM, after 4 years it will be 100 x 2 x 2 = 400 STEEM
In the beginning user X had 10% of all STEEM (10 out of 100), after 2 years 9,02% (36,1 out of 400). That is 3,6 times more Steem, but user X loses almost 10% of wealth in 2 years.
So basicly: if you buy Steem Power and only hold and the market cap is not rising you lose 5% of your wealth every year.
Or maybe I'm wrong, but please help me out in that case. :)
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Since this is the first year and we have a small amount of supply now.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
All fine, but you haven't really answered the question: Where does the money come from? The hard dollars? Who pays $$$ and what do they get in return?
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
You should read this post again carefully
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Perhaps you could point me to the place in the post where it says who buys Steem and why. That is what people mean by "where does the money come from". This post misses the mark on that, completely.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
You are off the track. Demands are not the essential point of rewards. They are related to an expansion of Steem. Dilution and redistribution are the keys of reward system.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
There has to be some demand or the price will instantly collapse to zero because some users will want to cash out their rewards or holdings and find no buyers.
You can't meaningfully redistribute something that has no value. Any analysis of such as system has to include the demand element.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
@smooth Disagree. Demands decide the magnitude of rewards. If there is nearly zero demand, very small amount of money will be redistribited, still.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
The money comes from people who have been (or are) buying/pumping Steem. But why should someone buy Steem? What is the incentive of a reader (upvoter) to buy Steem? If you open an account you get some free Steem Power, but there is no need to buy more Steem. If there is no need to buy more Steem, what will happen with the price? Is this system sustainable? I think this is a very interesting discussion and time will tell. Also Steemit is in beta and a lot things can change in the future. But I think you're right. The question: where does the money come from is not really answered in this post.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
I have. No mention of who provides actual money, or why. I know the Steem flows freely, and where it comes from. The question is about actual money, I think, and is not answered as far as I can tell.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
"Where does the money come from? Obviously from STEEM and Steem Power holders."
It's like taxes on STEEM and Steem Power holders as like Bitcoin taxes on BTC holders and service users.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
The value of Bitcoin is precisely that it is difficult to make more. Steem comes too easy to be much good as a currency.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
A lot of stuffs are wrong:
So let's see if I can hack this Pyramid for free :-p
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Check out how much time it took Reddit to reach its current status. Reddit, after 4 months of its existence, was in a much worse position than Steem is now.
Incorrect. The (big fat) whales can't be paid unless the the author gets paid. And the author gets paid significantly more (3 times more) than the whales.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
edit for incorrect styling
I don't think Reddit had a "working" example to copy. Steem has. So yeah I'm surprised they didn't push it further from the start. But you are right, let's wait and see.
My point was that you need votes to get paid, even a tiny amount. So people who want to get rich target the whales. Why not, but that a bad side-effect on the quality and diversity of the subject.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
I definitely know that Steemit is not a ponzi scheme. After reading the white papers I felt assured that I'd finally found a forum where I could write what I want to write, and find a great group of people that I could get to know and learn from. MENTORS EVERYWHERE!
And as I learn more, I get to mentor those who come after me! How satisfying is that?
It's the first place that I've seen for content creators where they have a sustainability plan. I'm just wondering when they're going to lose the BETA part of it.
As for your article @clayop - there is so much information here that I don't understand. But I'm learning. Thank you for putting in the time to teach and mentor us.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
nice explanation of how Steem works.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
This post has been linked to from another place on Steem.
Learn more about linkback bot v0.3
Upvote if you want the bot to continue posting linkbacks for your posts. Flag if otherwise. Built by @ontofractal
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit