STEEM Power is your ticket to everlasting (at least theoretically) revenue stream.
Everlasting Gobstopper
Did you catch Willy Wonka talking about the Everlasting Gobstopper? They last forever.
For the past week I have been watching my STEEM Power account. Without doing anything my STEEM Power grew minute by minute. I decided to track it during the times I was not earning any rewards or adding to my STEEM Power. What I found is fascinating.
Compounding Interest
You may remember the days when banks actually paid a decent interest rate and you could see the compounding interest each month on your bank statement. If you did nothing (no withdraws and no deposits), your balance accumulated and the interest paid to you each month also increased because it was compounding.
The equation for compounding interest is:
Compounding Steem Power
A while back I went to my STEEMit wallet to view my STEEM Power. I just happened to hit refresh about five minutes later and noticed my STEEM Power balance increased. There were no new rewards and I had not transferred or purchased any additional STEEM Power. Being curious I decided to track my STEEM Power balance over time.
When my account had 259 STEEM Power (SP) units it earned about 0.060 SP units per hour.
Then through rewards and direct purchase of Steem Power my balanced increased.
When my account had 338 SP units it earned about 0.088 SP units per hour.
See the benefit of compounding SP units, I purchased a bit more SP units.
When my account had 427 SP units it earned about 0.111 SP units per hour.
In my observations it appears that the STEEM Power is increasing every minute.
Using the compound interest equation with a cycle time of every minute, I extrapolated out how much could be earned every day, 30 days (about a month), and year.
My observed interest rate per minute is roughly 0.00043%. That seems incredibly tiny but remember it is compounding every minute.
Let's assume this minute by minute interest rate stays the same over a year. What is the estimated potential?
| SP Power | Hourly Gain | Daily Gain | Weekly Gain | Weekly Interest | Monthly Gain | Yearly Gain |
|---|---|---|---|---|---|---|
| 259 | 0.060 | 1.500 | 11.006 | 4.24% | 50.584 | 2,030.034 |
| 338 | 0.088 | 2.135 | 15.234 | 4.50% | 70.284 | 3,023.956 |
| 427 | 0.111 | 2.662 | 18.984 | 4.50% | 88.965 | 3,840.826 |
All gains are in STEEM Power (SP) units
More on why the Weekly Interest is included in the above table a bit later.
How is this Possible
This is best explained by the STEEM White Paper:
Because Steem wants to encourage long-term growth, it is hardwired to allocate 9 STEEM to Steem Power (SP) stakeholders for every 1 STEEM it creates to fund growth through contribution incentives. Over time this drives the ratio of the total STEEM value of Steem Power balances to the total of STEEM balances toward 9:1 . (It seems likely that the ratio will be somewhat greater than 9:1 due to continued net Powering Up of the newly printed STEEM.) It also means that long-term holders are almost completely protected from the dilution used to fund growth.
Benefits of Accumulating STEEM Power
As you increase your STEEM Power the minute by minute compounding makes your Steem Power grow even faster. You gotta love the power of compounding!
The STEEM White Paper states that individuals are guaranteed to have more STEEM in the future than they have when they first convert from STEEM to STEEM Power.
The other benefit of increasing your STEEM Power is that it gives your votes more weight.
It is said that STEEM Power is the heart of the STEEM system. The benefits of accumulating Steem Power are truly powerful.
Ever Lasting STEEM Power
One day you may find yourself needing to power down. Powering down is accomplished in weekly payments over two years (104 equal payments). You can stop the power down at any time.
Here is a post about powering down, The Power of Powering Down-What I learned after Powering Down for Two Weeks.
Powering down is accomplished at the weekly rate of 0.9615% (100% divided by 104 payments). Note that this is much less than the weekly rate of gain (4.24% to 4.50%). If you do nothing and assuming the weekly rate remains the same, you will have an everlasting revenue stream from your STEEM Power.
We are at the early adopter phase of STEEMit. In my opinion the weekly rate of gain should be steady for a while (not sure how long), but I will be monitoring it.
My advice to anyone on STEEMit is to remain active in the STEEMit community and accumulate STEEM Power.
Sources:
Image sources found using Google.
The Power of Powering Down-What I learned after Powering Down for Two Weeks
This was a great explanation of how Steem and Steem power work. Thanks man :)
Please keep in mind that the STEEM inflation rate is much lower now, but it is still there. The STEEM inflation rate is about the same as what you get in a bank.
However, with the price of STEEM increasing lately, this should give you a whole new reason to Power Up.
The big advantage to powering up is that you upvote counts more. This in turn also increases your potential curation reward.
While I may power down from time to time to balance my crypto-portfolio, I am HODL'ing STEEM Power right now.
Have a fantastic weekend!
Steem on,
Mike
I’m starting to get the hang of Steem now. Thanks for the extra info.
Except it seems out of date: the whitepaper from August 2017 to which the article links does not seem to have the passage quoted here anymore. The vesting schedule changed from 104 weeks to only 13 weeks ...
It would be cool to have an update ...
I just put some steem and sbd into sp👍
It’s a fantastic time to buy some more.
Good points in this post. I was about to post a similair thread. Cryptos are currently high risk. But the market will find it's way and blockchain is here to stay. I was wondering if anyone of you uses: https://www.coincheckup.com Supposingly they researched every crypto coin in the scene based on: the team, the product, advisors, community, the business and the business model. They even score the coins stengths. Check: https://www.coincheckup.com/coins/Steem#analysis To see the: Steem Investment and research analysis.
Yeah, the morale is: keep your SP
that's what i'm going to start doing now
Just found out about Bitconnect as well which is based on compound interests. That platform is a bit so so and i would not recommend it 100%. You don't even know who is behind the project and there is very little known about it. I did invest a small amount for fun myself.
Steem however have lots and lots of potential. Its a ambitious project and the more people joining this the more power we take back from other social media platforms. I hate the censorship happening everywhere now days. Hopefully this is a more open platform as data is always kept into the chain.
And as a bonus we get this compound interest, that's just an extra incentive for me.
The STEEM Power compounding is based on the STEEM inflation rate. Since this post was written (back in the early days of SteemIt) there has been a hard fork to reduce the STEEM inflation rate and set an upper limit to the amount of STEEM much like the BTC (except the STEEM limit is much higher).
With the inflation rate of STEEM reduced the compounding of STEEM Power is also reduced.
I agree with about the future of SteemIt and STEEM.
Have a great weekend!
Steem on,
Mike
What happens next? To Steem on, I guess I will do my best to make time to blog more so that I might get more SP.
Since writing "Everlasting STEEM Power" the inflation rate of STEEM has drastically changed. It is now around 9%. The power down period has also changed from 52 weeks to 13 weeks. This has drastically changed the parameters of the "Everlasting STEEM Power" post.
I will am working on a new strategy. Stay tuned.
Increasing your STEEM Power is always a good idea.
Have a great week!
Steem on,
Mike
Thank you for sharing this info @etcmike I have lots to learn...I think my steem power is 1!
Yes, your current STEEM Power is just over 1.
The parameters have changed quite a bit since that post was written. The inflation rate of STEEM is now 9.5% and the Power Down period is now 13 weeks.
I wrote an update to that post in Retirement: Active Income from SteemIt.
You are well on your way to building your STEEM Power. When you get to a level of STEEM Power you are comfortable with, then you can use SteemIt to supplement your income.
I wrote of post about my up voting strategy that may help you. Upvoting For the Mutual Benefit of Patrons, Commentors, and Others While Promoting More Engagement
I try to help out my supporters as well as support people making an important contribution to the quality content and growth of the SteemIt community.
Have a great weekend!
Steem on,
Mike
Thank you for the updates as well. I finally feel like I'm understanding how SteemIt works. You have a new follower s I'm off to read some of your other articles. Thanks again!
Thanks for the info! I have read a lot lately of Steem Power & powering Up is the best thing so I will be at 100 soon...on my way to 500 is my short term goal! Have a great weekend!
Thank you!
I must say that the parameters have changed quite a bit since that post was written. The inflation rate of STEEM is now 9.5% and the Power Down period is now over 13 weeks.
I wrote an update to that post in Retirement: Active Income from SteemIt.
You are well on your way to building your STEEM Power. When you get to a level of STEEM Power you are comfortable with, then you can use SteemIt to supplement your income.
I wrote of post about my up voting strategy that may help you. Upvoting For the Mutual Benefit of Patrons, Commentors, and Others While Promoting More Engagement
I try to help out my supporters as well as support people making an important contribution to the quality content and growth of the SteemIt community.
Have a great weekend!
Steem on,
Mike
Yes, I did know it was old and can't remember how I got to that older post but it was very informative! I think I searched Power Up or something, lol!
Thank you for the encouraging words! I am also on Instagram doing daily posts trying to recruit new Steemit members as well. I love the whole Crypto world and I am excited in general about it all!
Thanks again! Enjoy your weekend as well!
Chris
great post very informative-Thank you.
Wonderful post. How come I can't Re Steem this post?
The reason you may not be able to re-steem this post is because it is too old.
I also must warn you that the parameters used to generate this post are out-dated. The STEEM block chain has had several hard forks since this post was written. One of those hard fork greatly reduced the inflation rate of the STEEM block chain. The current inflation rate of STEEM is vastly lower now. Like Bitcoin the inflation rate of STEEM is currently being adjusted as it reaches an upper limit to the total supply of STEEM.
If you start a power-down of your STEEM Power now, it will be paid out over 13 weeks. I have tested this and know it to be true.
Have a fantastic weekend!
Steem on,
Mike
Noob alert Mike! Sorry to ask but what does it mean? Should I start powering up? Should I start powering down?
Powering up is always a good idea for increasing your voting weight.
I have experimented with Powering Down to derive an income from SteemIt, skimming off the author and curation rewards earned each week. As well as Powering Down to diversify into other crypto-currencies.
SteemIt has been a gateway for me to learn and invest in other crypto-currencies.
Right now, I have stopped my Power Down and begun accumulating STEEM Power again. I am using the 50/50 payout to earn some STEEM Backed-Dollars to convert to STEEM Power via Blocktrades.
Last thought, increasing your STEEM Power has the effect of increasing your curation rewards. This is semi-passive income because all you have to do is up vote.
Have a great week!
Steem on,
Mike
Thank You Mike for this elaborate comment. Even I observed, after transferring whatever little I had in SBD into Steem after going through your post and all of a sudden my post visibility has increased considerably. Thanks for your time and upvote.
I don't know why, but deep inside I have a feeling: = to good to be true=
Hope I'm wrong.
it's worth gambling on as we put down no $
Maybe you. I invested $50000 of real money from my paychecks until now.
wow! that's cool i hope it takes off for you
Me too.
How is it doing now, Sir?
People should be careful about this calculation. It's an interesting psychological trick, because your SP number increases doesn't mean that you have a greater value. The 9:1 rule doesn't mean that you earn 90% interest rate on SP, you should see it more like ~10% inflation on it. Regularly 1 Steem is generated out of thin air to reward contributors. The same time this effect is counter-measured by distributing 9 Steem to existing SP holders, weighted by their SP amounts. I.e. if you own 0,0001% of all SP, you get 0,0001% of the newly generated 9 Steem.
white paper page 38:
This isn't necessary bad if more people buy-in and this could happen because Steem seems to be the first easy-to-use blockchain-based project with a viral component. If you compare it to Reddit and Facebook there is lot of potential to grow.
That is why I made the projections with an assumption of the rate staying the same over time.
I think while STEEMit is in the expansion phase that the rate can be sustained. Of course it could change with the next hard fork in the blockchain. You also have to remember that the price of STEEM fluctuates. If STEEM inflates faster than the market for STEEM, then the price will go down. Time will tell.
I will continue to monitor the rate and report back any changes or updates.
Thanks for reading my post!
Steem on,
Mike
Steemit has a big future ahead see it like the first days off facebook. Now everyone uses it.
Completely agree that the future is steaming bright for SteemIt!
Steem on,
Mike
i hope so it's a lot more fun than facebook and there's no drama lol
THank YOu... i confusion until the comunity give me this link..
The everlasting STEEM Power post was only good for when the inflation rate of STEEM was very high.
Several hard forks ago, the inflation rate of STEEM was drastically reduced. And the power down period changed from 104 weeks to 13 weeks. This has change the whole premise of this post. Everlasting STEEM Power may only be for high earners now.
Let me know if you have any questions.
Steem on,
Mike
Thanks. now im need to learn more on STEEM..
Thanks for this!
Keeping SP = Profit
This was a excellent details of how Steem power and Steem can used
The current STEEM inflation rate (~2% annually) is much lower than when this blog post was written.
Holding SP is still a great way to earn on SteemIt.
Have a great week!
Steem on,
Mike
The most important post on steemit today! Steem power is kinda the best savings account. Sure the market price of steem affects it, but who knows where the price could go in the future, probably up.
Thanks!
Steem on,
Mike
cool buddy, Thanks for sharing @etcmike
I am glad you liked the post!
Steem on,
Mike
Informative article.
Thank you!
Steem on,
Mike
Great article it really makes it hit home.
Thank you! I glad you liked it.
Steem on,
Mike
You advice for long term investment to change steem into steem power?
If you are looking to invest long-term, changing Steem into Steem Power is the way to go. As @etcmike did a good job explaining in this article, you will get more Steem if you are holding Steem Power. If you just held on to the liquid Steem (without powering up to SP), you would not get the additional Steem added.
Also, one other thing to add. I've found that converting my SBD into Steem on the Steemit exchange ("Buy or Sell" in the wallet), then powering up right away gives me a better value than waiting the 1 week for it to convert. It could play out either way, but with the way the price has been behaving recently, the quick conversion has been paying off more.
Thanks for that information, I did not know about that method of powering up.
Steem on,
Mike
As I understand it, STEEM Dollars are pegged to the U.S. Dollar (even though an exchange may trade them for more or less than a U.S. dollar) and STEEM is the floating crypto currency you can trade through exchanges. STEEM Dollars held in your account earn 10% yearly interest. However, as shown in my article above, STEEM Power has even greater rewards.
Here is an article talking about the 10% yearly interest on STEEM Dollars: [Remember, Steem Dollars provide 10% annual interest tell your investor friends
I typically change my STEEM Dollars into STEEM. A one week process. Then STEEM into STEEM Power for the greatest rewards. STEEM Power also gives you VESTS which translate into voting power.
If you are powering down or need ready cash then you should hold STEEM Dollars.
Steem on,
Mike
from now on it's steem power only for me
It all depends on your situation. But you cannot go wrong on SteemIt when you set your mind to increasing your STEEM Power.
Have a great weekend!
Steem on,
Mike
Excellent post!!!
Thank you!
I will continue to monitor the weekly rate and report back any changes or updates.
Steem on,
Mike
Fantastic post etcmike!
Have you done a follow up to this piece? It was one of the most informative articles I have read for a long while! - Following you now for more.
Thanks!!
No I have not done an update to that blog post. The assumptions for "everlasting STEEM power" have changed.
If I were to write a follow-up it would be titled something like "Creating an income stream from Steem Power". This is something I am only now beginning to explore.
Have a great week!
Steem on,
Mike
It might be strange to you...
but I still have no idea what "Powering Up" even means.
Is it commenting? Posting? Upvoting? Is it buying STEEM?
What are "Curation Rewards"?
I have zero. How do you get them? Do you want/need them?
I have 0.000 Steem,
3.333 Steem Power,
$0.122 Steem Dollars,
and $5.06 Estimated Account Value.
... What does that mean?
Do the dollars relate to the Steem?
Was one converted to the other?
Does one go down when I upvote?
How is account value determined?
When would I be able to cashout?
I'm not even going to ask about HOW I would cashout yet...
I've seen some posts where people do it, and it's confusing as hell to me.
I know people use Bitcoin, but I haven't been able to get my head around it.
I just know that Bitcoin is fundamental and important, philosophically speaking. I've never been able to use it like I use Paypal.
I just came across a new post you may be interested in:
STEEM education program - ideas welcome