Post
Topic
Board Altcoin Discussion
Re: There is a flaw in steemit but everyone is silent about it.
by
snowflake43
on 16/09/2016, 15:18:11 UTC


Anyway for my on topic question. Could there be a chance that the founders of Steemit have miscalculated how much inflation they should give their system? Because it is obvious that they did not expect this fall to happen in a very short time. I speculate their real aim for this experiment is to have a smooth and slow trend up for Steem.


The inflation is not really the problem, the problem is that there is no incentives to stay in the system. Inflation could be increased to 1000% if the incentives were right most people would still not cash out. People don't rush to cash out if they are guaranteed to be able to do it in the future at a good price. Bitcoin is a good example, so many people just holding for years because they know the price is solid.

The reason the price is going down is not inflation, it's because most people have realized that their steem power balance is unlimited, it will always be higher regardless of how many times you cash out and so the price of steem will always go down which means steemit can't grow which is why people have no confidence in its future.

The founders could reverse this negative feedback loop by cutting interest of power down balance but they don't , go figure...

They don't need to, the 90% deflation event (every 3 years) takes care of that.  Accounting correctly for this blockchain protected fact, you are complaining about 10% annual inflation... Yawnnn.

The event every 3 years is not a deflation event it's a reverse stock split, this changes nothing on how the system works or inflation rate, people would still be incentivized to sell and the price will still go down.  

I never complained about 10% annual inflation. I actually said that inflation is not even the issue. Maybe read my post next time?

The important metric is not inflation as those coins are locked anyway, it is the rate of SP going out. This rate is constantly increasing.