RE: STEEM: Compounding Your Way To Big Results: Warren Buffet Would Be In Awe If He Understood!!!

[taskmaster4450]

The inflation rate is presently 9.25%...it decreases roughly each year .25% meaning that next year it will be 9%. This isnt totally accurate in time because the rate is determined by number of blocks, not time, but that is the estimate since block time is fairly consistent.

In theory, the value of STEEM, all things being equal, would decrease the same 9.25% this year since there is more STEEM available. Hence, those who power up are protected against this since they will be given the amount to offset that inflation.

Of course, we also see the price increase as more users join the blockchain and more people get interested in STEEM. That is why I said "in theory". Ultimately, price action does what it wants...the market has a mind of its own.

Nevertheless, this is another reason to power up....protection against the inflation rate, which although that is decreasing from year to year, there is still more steem being produced.

Comments

[petrajordan]

OK, I see your point. As an investor though, investing (powering up) into an inflationary model with a deflation of - .25% every 300k blocks of generated STEEM built into it is SUPER CONFUSING! I'm ok with math but trying to wrap my ahead around this one is a lot :)

I wonder

1. Why was the financial model built on inflation?
2. Why was the $1 = 1SBD peg broken? Which makes the whole spiel even more confusing!
3. Why did they create STEEM, STEEM POWER and SBD instead of 1 currency.

I don't expect you to answer these questions, of course, I'm just putting it out there.

I believe that things that are built on essentially simple models work well. Not sure about complicated ones... The thing is, I like to understand the things I invest into but this is producing a lot of steam in my brain :)))

Other than that, I'm simply enjoying the ride for now, and if I can get back my initial investment and produce some profit, I'll be happy! However, I'll be even happier if this can become an income stream for me as an artist!

Thanks for your time and dedication, @taskmaster4450

[taskmaster4450]

1. Inflation is an expansion of the money supply...the only way to have a reward pool is to add more STEEM to the equation. At present, there will be 9.25% steem added to pay out the witnesses, authors, and curators.
2. The market decided to break the peg. People decided to pay more than a dollar for it...the market spoke....personally I will take advantage of it until the market decides to come to its senses.
3. STEEM is the cryptocurrency tied to the blockchain. SBD is debt (like the USD) that was pegged to provide a way for commerce to price things that, in theory, wasnt as volatile. SP was designed to add stability to the currency by having the user base "invest" in the system. Remember SP is really STEEM...they are the same...it is just the SP is STEEM in a different place. Plus those who put STEEM in SP are protected against the inflation; STEEM is not.

[petrajordan]

Thank you! I need to digest all of this :)

[taskmaster4450]

It takes time @petrajordan but you will get it.

Do not worry about getting it all...none of us do.

Just be consistent with your action and all will work out. The system is designed for success to those who follow it.