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RE: Understanding Dilution - Thoughts on Steem Inflation
Thanks for your very interesting post.
There's one thing I'd really like to know though.
Why was inflation built into Steem?
Would it not be better if it were neutral or even slightly to moderately deflationary like most cryptos?
I'm assuming there's some good logical reasoning behind the idea of using a currency that's inflationary by design.
I would be very grateful for any information you could give me in this regard.
the answer is somewhat complicated yet simple. Inflation is needed to create the necessity for work, without an inflationary system, people would just buy and hold, they would not be interacting and posting to outpace inflation.
Thanks for replying
So it's essentially the same as most fiat currencies which is essentially a ponzi scheme, or a leaking boat to create work of bailing it out. similar to the broken window fallacy.
As we know (in short)all such schemes by their very nature concentrate most of the wealth in the hands of a few and eventually collapse. Just like the US economy without the gold standard.
Please see my article: https://steemit.com/steemit/@amd64/is-steemit-dying
and the included link: https://steemit.com/bitcoin/@amd64/bitcoin-and-deflation
I feel it's unfortunate that they choose this model since there's no necessity to Incentivize interacting and posting. Just look at FB, Twitter and Youtube. Where's the incentive for interacting and posting there?
While some posters are financially incentivized, but even when those incentives are removed it doesn't discourage them from posting, and the commentors, up/down voters and retweeters and viewers get no financial rewards.
Still this doesn’t stop them from getting hundreds of millions of users.
On the other hand if Steemit had chosen a somewhat deflationary currency and didn't pay dividends on SP or restrict it's withdrawal, the investors would be happy since the value of their investments would still grow naturally.
But just as importantly the value of all the other activities i.e. posting, voting etc. in fact the value of the platform as a whole would tend to increase over time, making it far more attractive to all concerned.
Oh thanks, i'll go read those...