The STEEM algorithm has a 100% inflation embedded in it per year... Sounds scary, doesn't it? The good news is, you can protect yourself and actually see appreciation.
These are the two things you should do right now to protect yourself and benefit from the ever increasing popularity of STEEM.
1. CONVERT STEEM TO STEEM POWER
Convert as much STEEM to Steem Power as you can. Do not keep money in STEEM. Every time new STEEM is issued, 90% of that STEEM gets distributed to people with existing Steem Power proportionately. Only 10% goes into actual STEEM tokens to fund growth. Thus, having Steem Power, gets you more Steem Power. And while the total money supply increases, the value of your steem power will go up if demand for steem goes up and if the platform attracts more demand than this newly minted supply for Steem (out of which 90% got distrubuted to holders of Steem Power as we discussed).
2. KEEP ALL YOUR STEEM DOLLARS
Do not convert your steem dollars to steem. You can convert steem dollars to steem but not the other way around. Steem dollars provide a stable value and pay interest. Steem, on the other hand, as we discussed, is highly inflationary with about 100% new steem tokens issued a year. Now, as we mentioned in (2), 90% of these tokens go to steem power holders (so they actually do not reach the market), but still there is this pressure. Steem dollars on the other hand are always worth one dollar in Steem tokens and on top of that pay interest.
I hope this was helpful. Would love to hear your thoughts on this topic? Converting as much Steem Power and Steem Dollars to Steem and then to another altcurrency could also be a potential solution, but Steem still seems better than fiat to many. What do you think?
As they said here for the moment inflation is 354%, and it is declining gradually down to 90% in april of 2017.
The point is, a lot of these tokens are going into steem power. So they are out of the market. It will be very interesting to know what the inflation in Steem tokens only is.
If you are right about the 400 percent and it applies to steem tokens (after people covert to power), then this is concerning. I read the white paper and it seemed to suggest 10 percent inflation long term in the steem tokens outside of steem power. Take a look.
Upvoted! Good content @izzy. I would change the part where STEEM cannot be converted to SD though. It can be converted using the buy/sell link to the #steemit internal exchange. This exchange is awesome! This is where we buy/sell SD and STEEM.
So, if you need to convert your SD into STEEM:
STEEM to SD is done the same way except the drop down changes to the STEEM dropdown.
Keep on #steemin
The white paper said you can only convert one way. Let me take another read here, but I'm pretty sure I read it right.
You probably meant Steem Power.
Here it is, directly from the white paper:
If people could freely convert in both directions then traders could take advantage of the
blockchains conversion rates by trading large volumes without changing the price. Traders
who see a massive run up in price would convert to SMD at the high price (when it is most
risky) and then convert back after the correction. The Steem protocol protects the
community from this kind of abuse by only allowing people to convert from SMD to STEEM
and not the other way around.
The blockchain decides how and when to create SMD and who should get it. This keeps the
rate of SMD creation stable and removes most avenues of abuse.
yes. I believe the key word in this is convert. You can buy between SD and Steem. We have an internal market to do that.
What is the difference between convert and "buy." Maybe they just evolved the rules since they wrote the paper...
what I can see is that if I want to convert it says something about 7 days. I had to do a sample, because I want to take my SD and buy STEEM. I bought some STEEM, the turned right back around and sold it for SD. I can send the STEEM to my exchange, and vice versa.
So, I really don't know...lol
Thank you for finally getting me to understand the whole STEEM POWER/STEEM DOLLAR dichotomy!
You are welcome! Thank you for reading. It is actually a "trichotomy". Steem, Steem Power, and Steem Dollar. I suggest you read the white paper. Gives more detail and it is not too obscure.
Steem is the best thing after sliced bread!
It will be the best crypto currency investment for 2017!
So it is all up to you...
Keep Steeming!
Btw, this is an interesting user name. I hope you will not "dump" after the "pump".
Interesting post, thanks for sharing!
Thank you for reading.