there is not much to combat the inflation by generating more demand (like through advertisements) other than speculative investing
If there was actual speculative investing right now the price would be a few $ maybe possibly higher. Speculation is what prevent cryptos from dying, even the useless ones.
On 7/6, 1M VESTS = 197.368 STEEM = $45.987
On 7/20, 1 MV = 1M VESTS = 229.192 STEEM = $804.005
On 10/29, 1 MV = 1M VESTS = 410.581 STEEM = $65.412
Not sure how you get those $ amount , what calculation have you done? to get like $65.412 from 1MV and 410.581 STEEM, I don't get it.
I don't know the exact math behind the calculation, but it is a steemd.com calculated number viewable here:
https://steemd.com/distribution
The basic idea is that even though the price of STEEM is going down due to the inflation, more STEEM is being added to each vest to combat the inflation. If you look back at historic data, on 7/6, 1 MV would have been about 197 STEEM. If you multiply 197 times the price of STEEM on 7/6, that vest was worth about $46. When a user has SP, they do not lose their vests over time (unless they power down). So if a user had 1 MV on 7/6, they would have received about 213 STEEM for holding the vest. On 10/29, they would have had 410 STEEM, which at that day's price would have been worth about $65.
This doesn't make sense man, you don't combat the inflation by creating even more.
That's false. When you are powered up you lose about 10% of your vests every year.
VESTs are not worth a certain price they cost a certain price, you make it sound like certain VESTs are more valuable than other as if you could sell them on the market or something.
Let me explain to you
This means that to get 1M VESTS on 7/6 you would need to buy 197.368 STEEM which were worth $45 at the time
This means that to get 1M VESTS on 7/20 you would need 229.192 STEEM which were worth $804 at the time.
As time goes by you will always need more steem to get the same amount of VESTs. Basically if the supply of steem doubles you would need twice more steem to get the same amount of vests. And the price is just what these steem are worth at the time, that's it, basically the price of VESTs depends on the price of steem and current total supply. The price of VESTs don't really change it's the price of steem and the supply at the time that will give you the cost of VESTs.
Their SP would not be worth more, they would pay a higher price because between this period the supply has doubled, so they had to buy twice more steem power to get the same amount of VESTs.
65$ is not the value of their VESTs its just the cost that the paid at the time.
I'm going to do a bit of research and get back to you. One of us is wrong :)
@snowflake - I did some digging into it, and your understanding is actually not correct. That might be why you see the inflation as such a worse thing than I do. This may finally answer the question you had as to how an investment in SP is possible to grow in value despite the inflation.
If a user buys 1 MV worth of STEEM and powers it up to have 1 MV, they will always have 1 MV unless they do something to change that such as power down (which will lower their vests), or curate (which will increase their vests). A vest is essentially a share of Steem Power, and the actual number of shares that you own is not diluted by the inflation.
What does change is the amount of STEEM that one vest represents. One MV of vests purchased for 197 worth of STEEM on 7/6 would have turned in to 410 STEEM by 10/29.
The whole network of steem has inflation. Some of the inflation goes towards author rewards, miners, etc. But a large portion of it is paid back to the shareholders, to cushion the effects the overall inflation is having on the price of STEEM.
In the example if the same user had just bought 197 worth of STEEM on 7/6 and held onto it as a liquid currency, they would have lost quite a bit between then and now. But because they converted it to SP - the amount of STEEM they owned went up along with the price of STEEM going down.
I am not 100% sure on this last part, but I believe that in a theoretically mature network the difference between the amount of STEEM being added to a vest and the rate that the price of STEEM should fall as a result of inflation should be reflected as a 10% loss to the value of 1 vest over the period of 1 year.
As a speculative investor though, one is gambling that the price of STEEM actually goes down at a slower rate than the inflationary effects, or that it even possibly goes up. As long as the number of STEEM added to a vest outpaces the rate of the downward falling price of STEEM though, then the value of a share/vest is actually going up.
No problem man! Yeah I am glad they have made the proposal, to me it really made no sense to purposely create high inflation for no reason.
:)
I don't really said that that your SP investment can not grow, people are mostly compensated for the inflation when powered up so their balance might not necessarily lose value. What I said is that if you have inflation the price is going to push lower and lower which means the rewards on the platform will go down which means your SP investment is probably not a good investment since there is no room for the platform to grow( less and less rewards)
There is about 10% inflation used to pay for rewards and witnesses which you are not compensated for so your VESTs will be diluted by 10% every year.
steem are not added to anything, it's the supply that is increasing and the price of steem at the time that makes the price of VESTs go up or down.
Imagine you own 1 % of a cake. Now someone brings another cake. That means that you own 0.5% of both cake. Now if you want to own 1% of both cakes you will have to buy another 1% of the second cake. ( this means you will have to buy 2 times more steem to own the same percentage because the supply goes up)
This is very unlikely because when the price goes down the rewards on the platform goes down and so people are not going to buy more steem if they see that rewards are shrinking
Adding steem to a vest make no sense man, just think about this. Imagine the current supply of steem represents a company. Say this number is 100 steem and is equivalent to 1000vests. You own 1 steem which is 10 vests .Now the company decide to issue another 100 share, so this means that now the company is 200 steem.
This means that 1000 vests is now 200 steem so if you own 1 steem you only own 5 vests instead of 10, you have effectively been debased by 100%.
I am 100% positive that my first statement was correct.
As I have said in my other conversations with you, I really don't have any interest in getting in a 'debate' with you. I have done a lot of research on this, and I am happy to try and explain things to you so that you can better understand the platform, but I am not really interested in "proving that I am right" to you. I can tell that you actually have some misunderstandings in the way you think this works, which I have tried to explain to you, but you seem convinced that you understand it better than I do. You are welcome to continue believing whatever you want. Sorry, but to avoid this turning into an argument I am going to end it here.
Ok I know what you mean , number of steem rewarded are also increasing. The problem is that when you print even more steem to compensated for the price it is very likely to decline even faster, which is what happens the last few months.
So you are the one who always want to end the discussion and I am wrong ookkaayy
Also worth mentionning that everytime you have to do some research prior to answering. And you twice said I really don't have any interest in getting in a 'debate' with you yet you are still here debating...but I am the one with misunderstandings... Ill let everyone be the judge
Btw you can't sell VESTs on the market lol
Hey. I know this discussion is a little old, but I wanted to correct a mistake that I made when we were discussing.
You had said:
Then I replied:
I was wrong. (Sorry.) I now found out that the rewards pool is just a static amount of STEEM, that does not depend on the price.
Back when payments were made in SBD, the SBD that you got paid in did factor in the price (since it needed to take the current reward pool and figure out how much SBD it was 'worth'), but with the current algorithm where it just pays in STEEM, you are 100% correct.
I did say when we first started that it was never really about which way was 'better' than the other. I saw value in reducing the inflation as you were proposing, and even agreed that yours might be better than what we had.. My main argument was that the cost of changing was very high too, so just a side-by-side comparison of which was 'better' could not be used as an argument - because it also needed to factor in that additional cost.
I will say that I'm kind of surprised, but it looks like the "higher ups" agreed that making a change like this was worth the risk. So congratulations - it looks like you won :)
I have always been interested in answering your questions and trying to help you better understand the current system, as well as challenging my own understanding and looking for things that I might have overlooked or have wrong.
I would think that the fact I want to double check my facts and understanding before I respond would be considered a good thing :) I care that I am not providing you with misinformation, and when you say something that directly contradicts what I am saying, ar leads me to doubt that my understanding is correct - I want to try and understand what I am talking about as much as possible before I give you a response.
When you start saying that what I am telling you is wrong after I have done my research and am confident that I am right, then it starts to cross the line between trying to both help each other understand and better figure out how things work, into more of an argument.
Anyway, I'm not mad or anything like that. I'm just saying that I don't want to keep going back and forth to try and win an argument. I'm sure we will continue to chat again. Take care.
I will add one thing though, which you are welcome to continue to 'discuss' with me if you disagree, but the rewards pool is based off the market-cap which is the price times the amount of STEEM (not just the price). The price can still go down while the rewards continue to go up, if the price declines at a slower pace than the rate of increasing amount of STEEM.