Yes, there is no mining - it just requires 20 people (witnesses) to have a server running! Actually, I'm really wanting to try run one myself....not sure they have them here, but with the crypto 'Lisk' I believe there are witnesses that offer 'cash back' to those that vote for them. I'd to see this here, because if the price of steem is high then witness pay is a lot more than is actually needed to run a server! im curious to look into doing that here, and seeing how well or not well the idea might be received :)
It is true that steem has around 10% inflation which is scheduled to reduce by around 1% per year until it will remain fixed at 1%. Whereas bitcoin inflation is around 4% and is halved every 4 years. But the inflation comparison is not the key factor I think because in bitcoin just about all the inflation has to go towards paying for energy costs - which is essentially just burning all the money! With steem, there isn't this intrinsic costs - it's only about people's choices, I.e., either saving with SP, or spending their STEEM.
You should totally run! I'll vote for you. We need people who are really knowledgable running the system. Thanks for taking the time to write all of that.
Another question I have had, which you probably can answer best is... I have always wondered where all the steem money comes from. Everyday, we all get a certain amount of Steem we can give away by our upvote. But if we keep upvoting and money is just being made, won't that eventually cause massive inflation? Wouldn't the value of Steem go down if there is too much of the currency at once? So as more users sign on... what happens? Sorry might sound like a silly question... but I have no idea how it works!
Thanks very much for your potential vote! ;)
About the inflation, it is a very good question.
In fact the STEEM as it was last year was probably the poster-child of just how terrible high inflation can be on the price of an asset.
The implementation then was that inflation in STEEM was set to around 100% per year!!
The theory was that if you held STEEM POWER you would be compensated with very high interest rates which was supposed to counteract this.
However, in practice, because the inflation in STEEM was so high, any traders e.g., on poloniex, would never want to hold steem except for the shortest possible times when there were small spikes up in price; they would always want to sell again straight after. So in order to address this, they changed the model completely (to the one I just described), early this year I think.
Just have a look at the graph of steem before that time: https://coinmarketcap.com/currencies/steem/#charts !
But now, 10%, and falling each year, is not unreasonable I think...and in line with what other cryptos have had. Ethereum for example currently has higher inflation than this, and it was still able to rise to a market cap of around $40 billion recently.
In answer to your question about whether more upvotes will cause more inflation, this is not the case. Instead, the inflation rate is fixed, which means that every day some small fixed percentage of steem is created and awarded out. When upvotes occur they just get totalled up and then the amount of steem to be awarded each day is divided out proportionally by each vote's weight. So, less votes per day mean each vote pays out more, and more votes per day means each vote pays out less (relatively).
Have a read of https://steemit.com/faq.html, which explains a lot of this pretty well.
Ohh, okay wow. Thank you for this. Makes me feel better to know that it is regulated. Is that part of the witness job does? Or is it automatic?
I guess like all things in life, you must experience it in order to grow! That's awesome that Steemit was able to survive the inflation that occurred last year. I wonder why people didn't abandon ship at that point... or did it hurt Steemit? Well... the graph you gave me looks like all currency went through this high and then drop from July to September 2016.
I'll also have to take a look at the FAQ, very helpful tool.
Most of the rules are regulated by the code that each node runs and all these nodes have to be in consensus for the block chain to work! This means that a witnesses can't change the fundamental rules, just by themselves. I'm not really that knowledgable about the steemit blockchain (yet), so I'm basing this a lot on my understanding of how bitshares works.
But there are a few things that they are responsible for and one of these is providing a 'price feed' for the price of steem, derived from prices on external exchanges. This is required for the automatic sell feature for SBD in the wallet.
However, from time to time, the powers that be - developers, steemit, witnesses, im not sure entirely - decide that it would be a good thing to change some of the rules. This occurs with something called a 'hard fork'. You may have heard about the recent hard fork (HF19), which changed way voting worked so that it was linear instead of quadratic, among other things :)
ahhh yes. I was a part of Steemit when HF19 occured, and suddenly we were all swimming in dough... :P The more I chat with you, the more I feel you should run! It would be awesome! You are able to explain it in simple terms.... for peeps like me :) Are you a big fan of Bitcoin? My best friend in college loved Bitcoins, and he would always chat with me about Bitcoin. (this was before it got popular). He always tells me to hold on to my bitcoins, because they will be worth millions one day. The future currency!
Hey thanks! Yes, I remember when we just switched over to HF19, and suddenly I was able throw around $100 upvotes like confetti! Haha... maybe it was because something like the reward pool got reset when they did the HF which meant it was giving more than it should have done until the algorithm eventually equalised properly (or something). And, of course I'm into bitcoin, although actually not holding any at all right now :). if it hadn't been into bitcoin I wouldnt have been able to make the money I did this year through trading, or buy up all that steem that I did ;)
hahah I just imagined you sitting in a pool of dollar bills and making it rain! :P Silly silly.
Ahh so you traded all of your bitcoin for Steem? Do you think Steem will out perform Bitcoin? The new currency? My friend I mentioned earlier is a diehard bitcoin fan... he use to work for a bitcoin company. So I've continue to be a bitcoin loyalist via his advice. :)