The problem is that if the price of steem keeps decreasing so do the rewards. Steemit will need to find ways to reward users other than traders and speculators .
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The problem is that if the price of steem keeps decreasing so do the rewards. Steemit will need to find ways to reward users other than traders and speculators .
Not exactly. The rewards are based on the market-cap and because there are constantly new Steem created each day, the market-cap can remain the same while the price is falling.
If the price goes down the market cap goes down too, the 2 are inextricably linked, the fact that there are new steem doesn't change that, it would if the number of steem was actually decreasing but that's not the case for any currency.
The pool where rewards are being sent from is a constant number of steem, this number stay the same regardless of price so if price goes down people will be rewarded less $ but the same umber of steem hence the demand for steem will have to increase to sustain the payouts.
Here's an example:
supply_of_steem x price_per_steem = market_cap
1st year: 100,000 x 1.0 = 100,000
2nd year: 200,000 x 0.5 = 100,000
In both cases 10% of new steem are payed as rewards. the $$ market-cap is the same, the $$ rewards are the same, and yet the price is 50% lower, because the supply has doubled. The amount of steem paid out in rewards is always increasing.
Quotes: White Paper
Like we've seen in the last couple weeks, the market-cap goes down, and so too the $$ rewards.
What if the price drops much more rapidly than the creation of new steem?
Think of it as a "steem (steam) Train". The more fuel you shovel in, the more power you get out.
The quality of the fuel (coal) was a direct result in the power or pressure of the steam. Now put that in relation to
Steem post.
If you choose a produce a low quality post (coal). Who will buy into it it? Will it create enough steem (steam)
for you to get moving. The answer is no.
What you need to do is keep your post (coal) to a high quality and the more people that see the quality of your steam will keep coming back.
As for the price that's the same as any commodity. If you are clever there are a few bargains looking you in the face and ways of getting them.
Minnows eat too
They're not just for eating..