You do realize that for most all crypto the money comes out of thin air, right? What is mining? It is a random process to allocate new coins. So the fact that steemit treats blogging as mining does not mean it lives or dies based on price any more than any other coin. Clearly if the price went to 0, then steemit becomes a reddit with a smaller userbase.
But have you analyzed the demand for powering up? Especially from new users? Have you realized that mining generates steem power? So 90%+ of the supply is very slow moving and even if people wanted to sell all of it, it would take 2 years. So we have a systemic restriction of supply, a strong motivation to shift funds to this restricted supply as it compounds in value as the liquid STEEM inflates.
So, yes, it is possible that STEEM drops in price by 90%, but even then people with STEEM POWER will have their value protected. Only if STEEM drops in price faster than the inflation and they are not curating or authoring will they lose value.
Also, your answer is incomplete. New STEEM comes from blogging, curating, mining and usually liquidity providing. A one dimensional answer usually wont fit when applied to steem
90%-10 is a theoretical number, the ideal ratio of free to captive steem (at least as the white paper authors reckoned it). its actually, if im reading the numbers correctly, somewhere around 97-3.
total vesting steem
114,502,296.013 STEEM
Total steem supply
118,370,886.624
That said, a 90% drop in the $ value of steem could break the system, or at least be the first step to it happening. Becasue the same steem that fuels vest value is also used to fund the redemption on SBD.
So if steem value decreased by 90%, and there was a run to convert SBD that were bought high, that would get your SP balance running the wrong way... Especially if there was a teddyKGB type figure involved buying up the debt and then attempting to sell it all at once.
It wouldnt break it for sure... but it would make it vulnerable, at least for a time.
It's a simple answer because it's a simple idea, the money comes from people buying Steem. I don't think the demand to get Steem to power up is enough to keep the system afloat but that's just my opinion. I think eventually the site should be monetized with ads or deals that require buying Steem constantly to power up or to display ads. Why a regular user would need to keep buying steem to power up? Most creators aren't even into cryptocurrencies or Bitcoin.
No, it doesn't. You should go find the argument I had with complexring in the federal reserve math thread. Long story short, JL is right. Money comes from nowhere.
If you think anything is simple about the process of creating and distributing money, its because youve never had to do so.
TO be fair though, the creation of money is something that many people have trouble getting their heads around. Crypto types didnt help when they decided to call the creation proccess mining
no. steemit users don't need to buy more steem. but i will grant you that yeah, thats the current vehicle that brings fiat money in and out of the system but it not ultimately how its going to work.
Steem is a way to get fiat money in and out of the system at the beginning for early investors and adopters. But if this works the way I think they designed it to work, i don't think youll even need it at all except to fund a reserve.
I get that money comes from nowhere, these are just basic common knowledge, what are you trying to say? This is the same, except with fiat you have a complete system based on that debt generated. My opinion is that the demand to buy Steem will continue to decline as you are seeing now unless there's a constant influx from outside. Real fiat money enters and leaves the platform via Steem, that's it.
If you think Steemit users will continue to buy Steem so they can earn more in a infinite circle, well you are giving the Ponzi trollers some nice meat to chew on. That's why I'm mentioning that Steem needs constant outside influx besides speculators or casual investors. If you are a good content creator you don't really to buy Steem, you are already earning it. So who really needs Steem? Only speculators and long term investors but as inflation keeps growing and growing this can only go on for so long. There's no coin or project with more than 1 billion tokens worth above $1.