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You wrote "You can only lose reputation when someone higher reputation than you down votes you." so according to what I wrote above, that's not the fact.

Hmmm... I was pretty sure I could still impact people with more SP than me if my reputation was higher.

Though I haven't put it to the test, as I don't tend to down vote people.

As I see it, there is only one thing on steem that matters. And that's Money, the more you have the more power you have. The reputation is nothing - just to throw some bone to the authors. It may also take a little bit more power to downvote more posts to get him down to -0 as @dan did to @berniesanders

Reputation was as added as an after thought and only on STEEMIT. It was created purely to fight spam bots. Spam bots were able to up vote each other and out gun the bots that were trying to remove the spam. The reputation system was created to fix that problem and in that respect it worked.