Quote from: smooth on August 09, 2016, 10:20:38 AM

That looks correct. In addition to being a programming issue, VESTS may be more comfortable for traditional accounting since the number of units held doesn't change except in response to specific events (power up, power down, receiving rewards).

Quote from: iamnotback on August 09, 2016, 10:07:24 AM

Anyone (especially @smooth) feel free to inform or correct me:

Quote from: https://steemit.com/steem/@anonymint/who-pays-for-the-blogging-and-curation-rewards-part-1-steem-power#@anonymint/re-sigmajin-re-anonymint-who-pays-for-the-blogging-and-curation-rewards-part-1-steem-power-20160809t100336233z

Quote from: sigmajin

Just as a side note, i think my explanation is a bit easier to understand... and more accurate, as its not rooted in money supply theory, which is basically silly anyway.

https://steemit.com/interest/@sigmajin/understanding-the-steem-economic-system-vests-sbd-steem-dilution-interest-and-all-those-crazy-things

https://steemit.com/economics/@chiefjay/where-does-the-money-come-from-part-2-of-my-steem-economic-model

The second one is actually the better of the two, IMO, but ive been told the first one is easier

In my opinion, frankly the second blog is so convoluted and inundated with a overly verbose explanation of the unnecessary complexity of vests, that I just gave up reading it about halfway through. Sorry but IMO it is really bad. That is not the way to simplify explanations. I don't intend to offend you, and I just want to be honest with my reply. I am not downvoting you. No animosity is intended. We are trying to help each other and the community understand.

In my opinion, the first blog is better organized and has more concision making it easier to follow, yet still you introduce this afaics mathematically unnecessary complication of vests. Afaics, the understanding of vests is a programming issue on the backend and it is mathematically irrelevant w.r.t. to understanding the economic structure of Steem, which is why I never mention it as it will only make the explanation of the economic structure of the Steem system more obtuse.

Afaics, there appears to be a mathematical equivalence between my way of conceptualizing (and the UI's way of presenting) SP as units of restricted STEEM coupled with the STEEM being separate units of the money supply where the supply of STEEM is increased ~100% yearly, versus your explanation of SP as vests converted to STEEM units by a ratio which changes as supply of vests increases. Frankly I've never found yet a complete explanation of the way vests are accounted and programmed on the backend, which is another reason I don't discuss them. And I haven't studied the code to figure it out. And I didn't find your explanation of them to be complete and unambiguous. If you'd like to cite a more canonical resource on vests, I'd appreciate that.

Another question?

Quote from: https://steemit.com/steem/@anonymint/who-pays-for-the-blogging-and-curation-rewards-part-1-steem-power#@anonymint/re-sigmajin-re-bacchist-re-sigmajin-re-smooth-re-anonymint-who-pays-for-the-blogging-and-curation-rewards-part-1-steem-power-20160809t123101085z

Quote from: theoretical

When SBD is created, its initial backing is supplied by the post's reward STEEM. Any fall in the price of STEEM will result in a rise of the virtual supply (and conversely, any rise in the price of STEEM will result in a fall of the virtual supply).

Ah so the supply of vests is adjusted when the SD (aka SBD) are converted to STEEM.

But I don't understand, then why do I have to sell my SBD on an exchange? Who gets the backing vests then?

And thus the trusted oracles for the exchange rate control the creation of new money supply.

Quote from: sigmajin

In response to those rewards, steem are created and placed in the vesting fund. Those created steem are what backs SBD

So then why create initial supply of vests before the SBD are converted to STEEM? What purpose does that premature estimate serve? Surely coinmarketcap.com needs to account for the market cap in SP+STEEM+SBD any way, if they want accuracy.

Quote from: bacchist

The vesting fund is SP balances.

The vesting fund apparently also includes the backing for SBD.

Are liquid STEEM also backed by specially tagged vests, or are they accounted for separately? I realize it is just irrelevant backend semantics though, i.e. doesn't reflect on the math whether STEEM are named "STEEM" or "vests with a special tag".