To clarify a bit for those that are new to STEEM I will add this detail.
When STEEM pays out 1$ worth of rewards (whether from posting, commenting or upvoting) it simply creates the new units "out of thin air". This has the effect of diluting everyone's STEEM holdings since the supply has increased but your personal wallet's balance has not.
The way to protect yourself from this dilution is to Power Up.
What does this do you might be axkin'?
Well, for every 1$ worth of STEEM created to pay for content & curation there are 9$ worth of STEEM created to send to those that have powered up.
So you should only hold STEEM if you are planning on selling it, or sending it to someone. Don't hold it for a long time since it is being diluted little by little by everyday's payouts.
Power it up and you will lock in your value.
Hope this helps complement the main post!
But this means that SP also gets diluted. So at constant price, if you're inactive, you'll be down after a year. (correct?)
Incorrect
https://steem.io/SteemWhitePaper.pdf
Steem power goes inflationary up with steem as vests
If you hold onto 1 STEEM you will have 1 STEEM forever.
If you power up your 1 STEEM into STEEM POWER your 1 STEEM/vest will go with the #inflation https://steemd.com
(steem_per_mvests 236.342 - this number goes up - you get more steem in time pased from the initial STEEM to STEEMPOWER-vests conversion)
and be in time powered down into more #steem while they are being inflationary created....
.
One would say its not being fairly distributed for time being but with more users the distribution will also get better.
Like $
If you hold 1$ paper bank note it will always be 1$ paper bank note. Unless you put it in digital form of 1 bankpower $ and get mouse size interests on it..
.
But if you only hold your 1$ paper bank note you might gain or lose on purchasing power over time.
And banks/federal reserve + other money creating plants makes profit by lending those newly created dollars/yuan.. to banks, people.... bla bla bla
So be the bank of your own
and by powering up your steem to steem power you act like the bank and "lend/distribute" those newly created STEEMs according to how much #power of #steem you actually have.
I might also undestand it all wrong
Ta ta
http://www.investopedia.com/terms/p/purchasingpower.asp
http://www.investopedia.com/terms/p/purchasing-power-loss-gain.asp
https://steem.io/SteemWhitePaper.pdf
P.S. you can upvote your post/blog and distribute a bit of that inflationary #steem to your self sofort :) ithink, or?
... of course 1 Steem stays 1 Steem, but it gets devalued against any stable currency. That's what I meant in my original comment.
Ahaa,mhm,aha :)
We can say 1STEEM wil get 50% devalued from 1STEEM - from being 100mil STEEMs to 200mil STEEMs.
But it doesnt necessarily mean this devalued 0.5 STEEM will get devalued in worth/value term against "stable" currencies...
Thank you
You are half right I guess.
Cant say it will get devalued for sure.. In year from now there might be 220.000.000 steems each steem worth 7.04$. 1B+ market cap and it would still not devalue against "stable" currencies.
Because if you hold 1 steem it is always 1 steem.
And because of inflation there would be more steems and you predict that the price of 1 steem will fall/get devalued againt "stable" currencies because there will be more Steems created...
But must consider factor of steem going viral and 1.000.000 people register. that costs man. costs much :)
And which of your choice stable curency would that be, that Steem is going to get devalued against.
Til now it gained value against "stable" currencies..
1 Steem=£ 2.68
And looks like it will gain some more :) 1STEEM=3.52$ looks like 1 $ got a bit devalued against 1 STEEM and gets more devalued by minutes being converted to Steem power or SBD ;) dont forget about steem based dollars...
there is 90+ % in steem power so that STEEM doesnt volatile much... Whale might ocasionaly dive a bit :)
"Stable" currency can get also unstable against steem: natural disaster, domino efekt, Brexit... and other unpredictable & predictable economic complications :)
http://www.investopedia.com/articles/investing/090215/3-reasons-why-countries-devalue-their-currency.asp
https://en.wikipedia.org/wiki/Devaluation
https://en.wikipedia.org/wiki/Currency_appreciation_and_depreciation
https://en.wikipedia.org/wiki/Currency_appreciation_and_depreciation
https://en.wikipedia.org/wiki/Currency_appreciation_and_depreciation
STEEM is just a short-term, highly liquid part of the puzzle. I hope people realise it's not designed to be held. In the short term, we may see the exchange market value STEEM highly against the Dollar. But long term, once the 100% inflation kicks in, I expect STEEM to start devaluing.
Steem Power is the best long term investment - but of course not everyone will be OK with waiting 2 years for powering down. It only works if you are invested and believe in the long term success of Steemit. If that comes to pass, powering up now will pay off massively later - no crazy compound interest required.