I agree with this analysis in general, though there is a bigger issue at play that I don't see people talking about, which is the ability to exchange SMD for USD. If there are not enough people seeing a reason to purchase SP, then there will not be enough liquidity to exchange SMD to USD. The problem is that the later people come onto the platform, the more expensive it will be to purchase enough SP to be useful. This isn't due to inflation, but just the total accumulated real dollar value of SP across all whales.
What do you think?
Also, thanks for your recent up vote on my introduceyourself post. It helped almost triple my earnings in the matter of a few minutes.
Steem Dollars(SBD) have there own markets that currently trade against BTC and hopefully at some point directly with USD. So the liquidity of Steem should not have much bearing on the liquidity of SBD. Steem liquidity would only be a factor for those who actually exercise the SBD contract to settle for $1 worth of Steem. The two markets are technically linked of course but there are additional dynamics at play. When liquidity and price in SBD markets drop too low, the tendency will be to execute the contract for STEEM which delays 7 days and tends to spread out any spikes in demand for liquidity.
I agree though, if there is no demand for SP, that is obviously a problem for STEEM and SBD liquidity. The whole system hinges on demand for SP.
As for the cost of acquiring meaningful SP; I believe the larger the platform gets, the more sub-groups and niche economies will form. Someone looking for influence wouldn't need to compete with the whole of Steem but only in their smaller categories of targeted audiences. In addition with a rising price and market-cap, smaller amounts of SP will be necessary to garner the same rewards.
Whale concentrations will likely diminish as the price moves up and the incentive to take profits gets heavy. Even whale accounts will eventually not be able to curate and influence across the entirety of steem at scale. There will simply be too much content and limited voting power.
Good questions. I hope this helps. This is my initial perception of things anyway. I will spend more time thinking about this. : )
Very helpful response! Unfortunately I somehow missed your reply in my reply list :-(
I just happened on your post again after you up voted my recent post and got lucky to see what you said. Is it true that SP fluctuates with the value of Steem, but SBD doesn't? If so, then I think I'm seeing how the SP getting liquidated to cash out isn't necessarily problematic for SBD in the way I thought it was.
Also, going back to the post you just up voted for me about Business.com promoting Steemit (here is the post again if you need it (https://steemit.com/steemit/@nathanbrown/business-com-promotes-steemit-com-encouraging-businesses-to-join-as-early-adopters-to-cash-in-on-the-new-blockchain-based-social), do you know any other whales or dolphins that would be interested in voting on it? Getting them to vote on it will certainly improve your curation rewards.
Also, I'm curious to know how you got all your SP if you are willing to share.
The amount of SP is not related to the price of Steem. The value of that SP is though, as SP is simply vested(non-tradeable) Steem.
SBD is always worth aprox. $1 worth of Steem regardless of the price of Steem.
For simplicity, let's assuming that steem isn't appreciating in value. Under these conditions steem inflates primarily through interest paid on SP, which means the real value for SP holders doens't change since they are all having their SP inflated at a similar rate. I get this part.
The part I don't understand is this...
Doesn't the steem that is used to back SBD need to be inflated at a similar rate to keep SBD from losing value?
The steem backing SBD doesn't exist yet. SBD is a contract that guarantees enough Steem to equal 1 dollars worth of steem. When\If the contract is executed the steem necessary to make this happen are freshly created. So with a rising price the steem obligation to SBD is deflating; with a falling price it's inflating. Check pages 12-13 of the whitepaper for more info on "Sustainable Debt to Ownership Ratios"