Where does the money come from? A look into the economics of Steem.

5년 전

It seems this is a fairly popular topic on Steem, and I have seen a few misunderstandings regarding how the economics of Steem really work. So this is my attempt to explain the economics behind Steem, as I understand it, to hopefully make it a little clearer for everyone. To be clear: this is just my personal view of things and also it is certainly not investment advice.

Steem could be thought of as a decentralized blockchain-based business, but actually it might be more appropriate to use the analogy of a government. It has expenses and revenue. The expenses include paying block producers to run the infrastructure powering the Steem blockchain, liquidity rewards (although that will soon be temporarily disabled with the upcoming 0.12.0 hardfork until a better system can be designed), and of course the major cost of paying out content/creation rewards. Its revenue, much like a government, comes from taxes on its constituents. Specifically, Steem has two types of wealth taxes (hidden as an inflation tax). It taxes liquid STEEM at approximately 50% per year, and it taxes Steem Power at a variable rate of less than 5% per year (these calculations ignore the STEEM supply change effects caused by Steem Dollar conversions at different prices than that which they were issued at; they are also based off the long-term numbers that go into effect after the first year, since the supply inflation rate of STEEM is actually higher than 100% APR during the Steem platform's first year).

If we use the business analogy rather than the government analogy, it doesn't make too much sense to think of taxes as revenue. But one could still relate the tax on Steem Power to a sort of subscription fee charged by the platform which price discriminates users based on the stake the user has in the system (although a larger stake in the platform does provide greater benefits in using the platform's services, such as larger weight in one's votes, a greater curation reward earning potential, and a larger bandwidth quota, so technically it may not be fair to call it price discrimination).

If someone wants to maintain some dollar value of their Steem Power holdings (assuming the market capitalization of STEEM in terms of dollars does not change), they would have to earn or buy more STEEM over time. Some may earn the necessary amount of STEEM to cover the deficit (either in the form of Steem Power directly and/or in Steem Dollars which are then converted into Steem Power) through upvotes on their content or through curation rewards. But many may need to make up for the deficit by purchasing more STEEM from an external exchange using external currency (typically via bitcoin but hopefully later using US dollars directly). They may of course also earn Steem Dollars by trading goods and services they provide and then converting those Steem Dollars earned to Steem Power via Steem's internal exchange.

Now if the market cap rises by at least 5% per year, the users do not need to earn or buy more STEEM in order to maintain at least the same dollar value of their Steem Power holdings (and of course if the market cap rises much more than 5% per year, which in these early stages of the platform does not seem at all unreasonable especially given the recent price performance of STEEM, then users could potentially be earning a decent dollar return on their Steem Power without even needing to earn more through curation or upvoted content). Regardless of the change in market cap, the user still will have a decrease in their fractional ownership of Steem Power (assuming more than 90% of STEEM remains locked up as Steem Power, which is a very safe bet) unless they earn or buy more to offset that decrease. A decrease in fractional ownership of Steem Power for a user means that if everyone else were to maintain at least the same fractional ownership of Steem Power then, assuming all other voting behavior remaining equal, the user would see a reduction in their voting influence relative to others and a corresponding decrease in curation rewards relative to others. It also means that they would get less priority in bandwidth usage compared to others, but it is likely the user would never see this effect in practice if the market cap is rising, because a larger market cap means more funds available to block producers to upgrade their backend infrastructure so that the pie of total available bandwidth grows faster than the shrinking rate of the slice of that growing pie that the user can claim.

If the user does not earn or buy enough Steem Power, then their Steem Power will gradually decrease (as a fraction of all the Steem Power existing within the system) and eventually (even if it takes waiting until market saturation of the platform) they will no longer be able to use the platform (as in post, comment, vote, transfer money, or anything other than only read the content on the platform). So to continue using the platform, they must maintain a sufficient fraction of their Steem Power holdings. Fortunately using the platform at its most basic level without terribly restrictive bandwidth quota limits does not require the user to hold a very large amount of Steem Power in dollar terms. Nevertheless, they do need to continue to maintain at least that minimum amount of Steem Power to be able to reasonably use the system, which means that if the user cannot earn (e.g. through content and curation rewards) that minimum amount to counteract the less than 5% per year effective tax on their Steem Power and thus maintain economic status quo, they will need to buy more STEEM (and power up) every year. This effectively amounts to a subscription fee to use the platform. And that is the reason why the platform could theoretically continue to operate indefinitely even after reaching market saturation. Now whether it actually does so or not depends on many factors, but I think the most critical of those factors is whether people would be willing to pay that effective subscription fee (in the form of a less than 5% wealth tax on their Steem Power) to continue using the platform.

Now I do think there are good reasons why people would be more willing to pay that "effective subscription fee" to use Steem's social media platform even when it is so hard to get users to pay money to use any other social media or social networking platform. First, Steem doesn't nickel-and-dime users. I think the cognitive burden added to users if every post, comment, and vote cost them a small micro-transaction fee would be enough to dissuade them from using the platform. Users would likely find it more palatable to pay even a larger total amount of money through a monthly subscription fee than being charged for every tiny interaction with the platform. Second, even though an inflation tax is basically just a hidden wealth tax (of course a tax only on the specific asset being inflated), the former is psychologically more acceptable because users do not like to see the numbers on their screen decrease. And third, and most importantly, I think the content/curation reward incentives really change the game as far as enticing a user to pay a subscription fee to access the platform. Psychologically, I think it can work for the same reason people still play the lottery or casino games, despite the wide availability of knowledge on the mathematics behind those games and how on average the user is expected to lose money. And it isn't necessarily the case that people are just being stupid and don't understand the math (although I am sure there is a lot of that as well). I think for many people, deep down they understand the fact that on average they will likely lose some money (unless it is a casino game of both skill and chance, and they actually are much better skilled at the game than their opponents), but as long as they limit the amount they put up for potential loss to something they can tolerate, it is worth it to them for the fun and excitement that they experience.

I believe the same psychological dynamics could take place with Steem's social media platform. The comparison is better made to games requiring some skill, since it is clear that writing ability, deliberate timing of when one posts, and the content one writes about are all very important factors influencing the amount of payout one's post will receive. But there is some element of randomness that is involved as well. Some posts that many people would expect to get a high payout do not get all that much. And some posts many people wouldn't expect to get much money end up getting tens of thousands of dollars worth of payout. These are similar dynamics to playing many casino games which are clearly appealing to many people. And whether one wins big or doesn't win at all, similar to the casino games providing them joy and excitement from simply playing the game, Steem still provides value even with no payouts because it allows people to communicate with others and find interesting content on a decentralized censorship-resistant social media platform. But it is due to the psychological dynamics similar to the casino games that I believe the Steem social media platform has some chance of doing what is incredibly hard to do for social media platforms: getting users to pay to use it (other than through advertising of course).

If Steem just had a flat pay subscription model to use the social media platform (which with the exception of being decentralized and maybe allowing optional tipping would be no different than existing social media or social network platforms), I don't think people (other than a very tiny niche community who really strongly values decentralization) would be willing to pay the costs to use it when they could instead use Reddit or Twitter for free (free meaning ad-supported of course). But because of the gamification and the very real possibility of earning large payouts that can actually be used (perhaps after a few steps of conversion) to buy real goods and services, I think it changes the psychology of being willing to pay to use the platform entirely. And if it does succeed in doing so, then there can be a continual source of revenue (buy demand for STEEM to power up to just maintain the same economic value of Steem Power and thus maintain the expected bandwidth quota status quo) to keep the platform operating even when it reaches saturation. But of course no one really knows what the future will hold. It is important for people to remember that this is all a brand new experiment and thus of course a large financial risk. I think the advice "don't invest more than you can afford to lose" is generally good advice and I think it certainly applies in the case of Steem as well.

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For me, Steem is like a startup that raises funds from investors to pay their expenses.

There are people around that interpret this as a ponzi scheme which, of course, isn't even true if that startup only paid for the good of their boss. A startup that only pays their employees and doesn't work on its growth will simply disappear from the market leaving the investors at a loss.

In the case of Steem, the investor does not just pay for development and earns a share of the startup, he also earns more power to benefit from the platform directly. If he only was an investor, he'd make a profit from the growth of the startup, but in the case of Steem, he can even benefit by means of posting, curation or by providing liquidity.

That said, an investor of Steem has inherently more possibilities to profit from his investment besides the potential growth of the ecosystem.

One more thing regarding the STEEM token:
For me, the STEEM token is merely an on-/off-ramp token for SteemPower and SteemDollar (the latter having its own ramps into USD directly soonish). Technically, it should be the cheapest to buy SteemPower by using the internal markets from STEEM while you can only exit SteemPower via STEEM. The SteemDollar is kind of uncoupled from all of this except that it is backed by actual STEEM (which one could obtain at any volume by using 'settlement'/'convertion').

That all said, we have three tokens on Steem:

  • a liquid, crypto token with free floating price and high dilution (STEEM)
  • a less-liquid crypt token with free floating price and low/no dilution (STEEMPower)
  • a liquid token with variable supply but stable value that pays interest (STEEMDollar)

An investment in knowledge always pays the best interest
Image of steemish


I think the most valueable purpose of cryptocurrency is store of value, in order to avoid steal from the goverment, we need to stick together, and STEEM is the best sticker for us. I heard of STEEM a few days ago , the big difference of STEEM and other cryptocurrency is STEEM can reach ordinary people, i saw the potential of it, and bought a lot, and introduced it to lots of my Chinese friends, but the problem is , it's impossible for them to sign up now:


@arhag I enjoyed reading this, I think what you've written is quite a very interesting and useful to users of other steemit


"Where does the money come from?", or, "Who's paying?"

The condensed answer to the above is

a) "Investors"
b) "A self-issued currency by the network itself"

...which then triggers the next question on what gives that currency value
...aaaaand which leads back to ...Investors (giving that currency value through their demand)


also remember that time has value. In America, we often say time is money. Well curating content and value takes time. So therefore people who are blogging are the ones who are paying by their time.


I think you hit the nail on the head here. It is the elephant in the room that most people ignore. Creating content, whether it is journalistic, artistic, comedic, etc., is time consuming. In "economics", it is explained as "opportunity cost" and unfortunately most people don't behave rationally when it comes to the allocation of their time. Therefore, many people don't understand the value of others' time.


This is What I'm Counting On

I'm posting hard won information about #cannabis #cultivation. Should the platform survive a great deal of time, I'll get paid. Not much at first, but as more and more growers learn what I do, the word will spread.

Here's to Success of Steem/Steemit!

An example of plump trichomes on dry cannabis. ;)

Keep it Clean!

TheCleanGame Blog, Neatly Categorized




Yes. And maybe they should be rewarded for doing so, unlike FB.


Sounds like a good entry for the #bitcoinpizza discussion. :)


for me what gives the currency value is the network effect, i.e the cummunity, the aspect of liquidity, and also the proof of work effect on the network that give it value


My question exactly :)

And still no definite answer, I am afraid.


You don't really need to invest into Steem to use the platform, though. You can read, post and comment with just the free STEEM you get for signing up. Moreover, the main source of potential profit is posting/commenting rewards, and those rewards do not scale with the amount of Power you own, but with the amount owned by your upvoters. As a consequence, there is no profit to be made from investing into STEEM yourself (except for curation rewards, but those are really negligible).

That's why investing into STEEM is not like investing into a startup. The value of a startup increases because of the promise of future rewards, even if it is in the far future. However, with STEEM, there will never ever be any reward for owning STEEM, so the price should not increase.

Therefore, I believe the only reason the value of STEEM is increasing is an unfounded speculative bubble that will collapse sooner or later. Of course, large Power holders will say otherwise, because they need to keep the value of STEEM up for as long as possible to cash out, because powering down can only be done at a 1%/week rate.


I agree with your first paragraph, but in your second paragraph, you assume that investors invest into Steem by holding STEEM tokens, which they most certainly should not do. Investors for me are those that hold STEEM POWER. The only reasons to hold STEEM for longer time is to provide market liquidity (for which you get paid even).

There is certainly some speculative bubble surrounding STEEM, and if you were around Bitcoin for the last .. well since it's genesis block, you should know that there are ups, downs, pumps, corrections and dumps. None of them give a precise impression of what the value will be longer-term. When the first Bitcoin bubble popped, it did so at $0.007. Guess what, Bitcoin is highly inflationary and still, the price when up as high as $1200, with no real user base, with no real functionality, with no chance for mass adoption .. at all.

I don't mind if the price of STEEM collapses. I not only read the whitepaper, but can read between the lines. Cheers.

BTW, Steem launched on April 1st, with no one actually using it what it was made for for weeks. Today, STEEM has 33,648 accounts registered of which probably >70% are individuals with just a single account. The registration process was halted for some days because of the heavy load. People were begging to get an account on Steem(it).

I'd say, if there was a crypto ecosystem that can go viral, that has plenty of incentives aligned, that allows anyone to participate for free, that has all the advantages of features of recent development in blockchain technology, ... well then I'd think, that's a winner.


In the second paragraph, I should have written Steem instead of STEEM, that was a confusion from my part. But even if you hold your investment as Steem Power, you will still never profit passively from it, and that's by design. Dan mentioned he wanted to discourage rent-seeking behavior. That's understandable, but there's no reason for anybody to invest - capital gains aside. But without any fundamental reason to invest, there can be no sustained capital gains.

Bitcoin is a different beast, because it can be used as a currency and as a store of value. To use it as such, you need to own Bitcoin yourself (i.e.: invest). As mentioned in my previous comment, you don't need to invest in Steem to use Steem. Moreover, Steem is poor at both of Bitcoin's applications, because you have to choose between a liquid asset (STEEM) that is subjected to a very high inflation, or a totally illiquid asset (Steem Power) with a moderate inflation rate.

Steem is currently growing fast because people are attracted by hopes of profit. I can see two sources of profit:

  • Capital gains, which are unsustainable because of the lack of incentives to invest.
  • Profit from content generation, which will only work as long as people are willing to buy STEEM from content producers.
    If people realize - or even just start thinking - there is no reason to buy STEEM/Steem Power any more (e.g.: the growth of Steem stalls), everything will collapse and content producers will leave

EDIT: Since we've reached max comment depth, I'll reply to the child comment here. The problem of SteemPower is not dilution, it's illiquidity. If you decide to sell your stake tomorrow, half of your investment will still be locked away a year from now. The Steem Dollar is a joke. If you offer a guaranteed 10% interest rate, the peg with the real USD will never work. By construction, it would mean that a SteemDollar is worth more than a Dollar.


I see your point. Steem Power's only source of profit is captical gains, if you don't want to be active.

However, people that want passive income can still 'invest' in SteemDollar which even pay some interest over time. The SteemDollar is as good as bitcoin except for its speculative nature which is an advantage if you want to use it as an actual currency. For store of value, you may actually want to buy something that is less speculative in nature as bitcoin, but that's a decision for everyone to make on their own and derails the discussion.

Even if everything "collapsed", the network would still go on and pay content creators more than they would have received on any other platform. The only case when the system fails is when the price hits 0 which is as probable as bitcoin being worthless.

Oh .. by the way, the dilution of Bitcoin is still higher than the dilution of SteemPower.


i do agree with you, that steemit is a winner or your might call a slam donk!


I disagree about the "no real user base for bitcoin part". A huge part of the rise in price for BTC has been demand in china, russia, and other countries with both repressive governments and a growing entrepreneurial class. In most of these countries, a successful business person's money being stolen directly out of a state run bank by government functionaries is the norm, not the exception.


I can't speak about China, but I have no idea where this idea that an "oppressive government" steals money from people's bank accounts in Russia comes from. While Russia has some serious "rule of law" and "fair application of law" issues, it is not a kleptocracy. There is a burgeoning middle class in Russia and a significant human capital investment in the Tech Industry. These people tend to meet 2 of the typical crypto currency enthusiast's characteristics: Libertarian Views and Forward Looking Decentralized/Blockchain Systems. Additionally, Russian retail investors are looking for a way to get returns on their investments in the same way as Americans and they see cryptocurrency as a potential vehicle especially when Westerners jump in and drive prices up for them.


Thanks for posting. I agree in general with your sentiments. How did you find out the total number of users? I've been looking all over for it.


The numbers are not displays publicly, but the blockchain knows them:

curl --data '{"jsonrpc":"2.0","method":"call", "params":[0, "get_account_count", [""]],"id":0}' https://this.piston.rocks


I largely agree with your reply but I would add that when Bitcoin was $1200 there was a non trivial user base and there was quite a lot of functionality. There were several markets some of them dark also buying gift cards was no problem. There were numerous exchanges. Even Coinbase was operating, linking wallets to bank accounts. As far as mass adoption is concerned, I'd liken it to an island state like Barbados. Sure it will never get mass adoption but for those that use it over time it becomes more valuable. Steem has a real chance of becoming its own island state as well as not everyone blogs or produces content but there are many that do.


Thanks for your response about using curl and piston to find the total number of steemit users. It works for me!

I could not reply directly since the reply button was missing. This may be a bug where if part of a post is in a code box then the reply option disappears.


I see STEEMIT in the future, in addition to the above as one of the biggest platforms to raise funds for charity. In the world there are hundreds of large charitable organizations : Feed the Children, Music For Relief, Partners In Health, American Cancer Society, Stichting INGKA Foundation. As well as thousands of small. Animal shelters, groups social assistance, targeted assistance, aid to the homeless, private fees. In charity a part of hundreds of millions of people in the world.

And other Crowdfunding.

But there are all these sites one big drawback, microtransactions between the participants of these sites is ill-conceived, it's uncomfortable.

Microtransactions between users in STEEMIT are part of the whole system. Therefore, it can really compete with Kickstarter with their 140 million dollars a year.

To attract charity tried and Facebook, but again, micro-transactions between participants of these sites is ill-conceived, it's uncomfortable. STEEMIT will leave behind him.

The parish charities in STEEMIT will bring millions of people.
Also, the device STEEM POWER will cause the funds not to withdraw funds and leave them in the account. And it is possible to support users to directly UPVOTE their requests for help via hashtags.


Unfortunately my initiative to attract charities and philanthropy development at STEEMIT are not supported. People do not understand that the parish charity/crowdfunding organizations on STEEMIT. If they declare it officially. Will force millions of people to come to STEEMIT


I think many are very interested in supporting charitable projects through Steemit. It's not that your idea isn't well-received, or hasn't been considered before, it's that we are early in the game. I think we'll see focused charitable groups pop up to support various causes. We need to move beyond the growing pains of only voting for 'steemit content' and start creating a community.

As an example, see my new initiative for the fiction author community:#descriptionsonthespot.

I think these types of focused communities take time to grow, but this is a natural outlet of how to utilize the Steem blockchain.


you're jumping to conclusions too quick, getting discouraged at a first attempt.

there are others who are attempting to use the platform for the same purposes of charitable fundraising - and who were doing so even before you showed up.

while your initial proposals may have not gathered an immediate huge support, this is no reason to say they aren't supported. if it's an idea you're firmly committed to, it may take several attempts with various strategies to find one that really catches.

there's also MUCH development to be done beyond just the concept, in regards to how such an idea could be executed technically through integrated blockchain apps - as I'd proposed in this.

also, it's likely your message is not fully getting translated due to the language difference. i.e. "People do not understand that the parish charity/crowdfunding organizations on STEEMIT" is incorrect English - just as the "will force millions of people..." is not the correct language to inspire support. LITTLE distinctions - but such go a long ways in garnering cooperation and effectively communicating an idea.

keep experimenting. your ideas - which aren't really "yours," but a shared vision, which you are but one participant in helping bring to light - will occur in due time. we're still very early on in the game...


The funds also may decide to transfer part of their funds in STEEM POWER, to support the users directly when they apply through hashtags.


So not sure if these are cool on here yet, but here's a post about my first salvia trip :D


All cryptocurrences money comes from the people, we give value, to this virtual money, with out the people there is no Bitcoin or steem coin.


Nice whriting. I think this is good for newbies to read.
Alot of users dont actualy dont know how it works. They only know you can earn monney on writing and voting.
This is wery usefull, so i would recomand everybody to read this threat.
Tanks for posting this.


yes is a very useful tool for newbies in the cumminity


Definitely interesting reading for us newbies.


"Steem is like a startup that raises funds from investors to pay their expenses." - since other startups dont do that??

Its a brilliant system which encourages investors to contribute content and to invest their time talent. Its current power structure causes a feedback loop to some degree as users are forced to cater to the taste of Whales like yourself, and its ok for now, but it hurts diversity in the long run. Its a fine line between being just another crypto message boad and being a platform which encourages the exchange of diverse intellectual media across a wide range of subjects. For example, I am currently boycotting all whale posts until I see a shift in power and more diverse content. I would like to see more minnews rise up. You cant be a well-fed whale if the plankton are dying off. Its just science.


Bless you, @xeroc and @arhag, for busting your butts to spell it out for us plebes, but damn if I ain't still confused.


Wow, that is a good valuable article and post! Thanks!

We need to have a steem Symbol!



Well said @xeroc, I like your analogy on how Steem is doing what the DAO planned to do in terms of investors getting into Steem power and promoting quality content.


agree ''For me, Steem is like a startup that raises funds from investors to pay their expenses.''


is this some ponzi scheme?


Those people who say Steemit is like a Ponzi scheme don't even know what a Ponzi scheme is.
But haters gonna hate.

Excellent post. Thank you for diving into details, even those many of us may like to psychologically ignore such as the behind the scenes taxation via inflation. Many have incorrectly talked about "interest" (myself included, as I posted two articles on the topic), when it more accurately should be considered a stock dilution which, as you pointed out here, creates inflation which is a form of hidden tax.

The part that many (myself included) get confused on is the USD conversion price of STEEM and SBD. The market shot up to around $3-$4 pretty early on in this experiment and, for some reason, is remaining somewhat stable. Even as that inflation is happening every day, the market price is holding. Could it be the liquidity rewards propping up the price? Could it be speculators just pumping/dumping an altcoin with no clue how it works under the hood? I guess time will tell.

As to that USD value, I'm also reminded constantly about the 10,000 bitcoin pizza. What mechanism enables 10,000 essentially worthless tokens to skyrocket in value to over $6.5M in just a few short years? The more we can understand that mechanism, the more we can understand another important aspect of the STEEM economics. Taxes on a hyperinflated currency are essentially worthless. The perception of value in STEEM is what powers this economic system. My biggest question is, how much of that future value is being priced in right now? With Steem's potentially superior technical advantages over Bitcoin, it's not inconceivable to imagine (even if only by a small probability) it becoming more valuable than bitcoin. Maybe the market things that's a 0.5% chance at the moment, which would explain the prices we see now: $650 * 0.005 = $3.25.

Personally, I think there's a higher chance than 0.5%, but we also have to think about the time-value of money. If Steem does threaten bitcoin, will it happen in 5 years? 10? Interesting stuff indeed. I for one am enjoying this experiment far more than I enjoyed watching bitcoin develop since 2013.


Cryptocurrency is the future - and it has already come...
Federal Reserve System tries to take it under its control ..... or destroy the.
But I see great potential in the STEEMIT.com

Wait and see
Image of steemish


Since I first started on Steemit, I've been thinking about the impact of the $ here. I went 24 hours with them hidden via CSS, and today I just started a 3-day challenge/contest/discussion asking people to write their own post in response to "Where does the money come from?" You can find it here. I'd really love to see a lot of responses because I think each and every Steemit user who gets asked this question after posting something successful will need to have their own well thought out answer. The more accurately we can answer this question instead of spreading FUD or irrational excitement, the stronger the foundation for this community will be.

Very good analysis. I do prefer the business analogy to the government one, but whatever helps people understand is fine and an inflation tax may be something easier for people to understand. (I just prefer not to associate governments or taxes with a blockchain. I'm fond of blockchains, not government.) It may be hard for most people to see the connection of Steem with a business because there is no revenue, however an alternative way to think of it is that we're building an information/knowledge asset on the blockchain. It's a resource that grows in value over time. Secondly revenue is a metric that validates the value of a company, but a company or organization without revenue can have value. For example any business/org that saves costs or expenses and that does not charge a fee is still valuable. The amount of cost savings is a proxy for potential revenue. For Steemit the revenue potential is people's time and attention that is usually monetized through ads. Currently the ad-free value of quality content (information/knowledge/happiness) is a proxy for revenue potential. In the future, instead of buying ads directly advertisers will buy Steem to gain influence, mindshare & product placement etc.

Also here is my perspective on Steem: Where DOES the money come from?

My question is unrelated, but is it you who likes the Flying Spaghetti Monster?

Now if the market cap rises by at least 5% per year, the users do not need to earn or buy more STEEM in order to maintain at least the same dollar value of their Steem Power holdings.

Can you confirm it's 5%, not 10%?
I have a feeling @dan has always mentioned the required growth of 10% to maintain equilibrium.


There is 100% APR inflation of STEEM. 10% goes towards expenses and the other 90% goes to the vest pool (that is what causes an increase in your Steem Power amount over time). So to understand what the effective tax rate is for both liquid STEEM and Steem Power we need to do a little bit of math. For liquid STEEM, the tax rate is easy to calculate: if the STEEM supply doubles in a year and you just hold onto a fixed amount of liquid STEEM over this time, then clearly (on a relative basis) you were effectively taxed at 50% per year.

For calculating the tax rate on Steem Power, it gets much trickier. To simplify we assume that the percentage of STEEM held as Steem Power remains constant over the year. We also assume that all Steem Dollars received are converted back into STEEM as soon as possible, and the conversion price happens at the same price at which they were issued to simplify the analysis.

Now if that percentage was exactly 90%, then no net powering up/down would need to be done to maintain the percentage of STEEM held as Steem Power over the year. In that case, the fractional ownership of Steem Power for someone who earns no rewards and doesn't power up/down would remain the same, or a 0% change over the year.

Then we can look at the other extreme case. What if virtually all of the STEEM was held in Steem Power throughout the year? Well, if the total supply of STEEM was initially T, the supply of STEEM after the year would be approximately 2 T STEEM. 0.9 T STEEM would have been issued and added to the vest pool directly, while 0.1 T STEEM would have been issued and distributed to users as the various rewards but eventually all powered up (in order to maintain the 100% STEEM held in Steem Power condition). A user that just held onto their Steem Power (which originally was a fraction f of the original Steem Power), would have had a claim to an additional 0.9 T f STEEM from the amount of STEEM added to the vest pool directly. So, at the end of the year, that user would had a claim to1.9 T f STEEM from the total 2 T STEEM existing in the system at that time (which would all be in the vest pool). So their new fractional ownership would be f' = (1.9 T f) / (2 T) = 0.95 f. The percentage decrease in their fractional ownership of Steem Power would be 100% * (f - 0.95 f) / f = 5%. So, the fractional ownership of Steem Power for someone who earns no rewards and doesn't power up/down would decrease by 5% over the year in this scenario where virtually all STEEM is held as Steem Power.

The reality is somewhere in between those two extremes (actually, in reality, you would need to bring in the effect of Steem Dollar conversions which complicates things considerably and requires you to use models that make some prediction about the future price of STEEM and the how many Steem Dollars are converted to STEEM and when). One expects a large percentage of STEEM to be held in Steem Power, but it obviously won't be 100%. So that is why I say that the effective tax rate on Steem Power (on a relative basis) is some variable amount that is less than 5% per year.


The 5% calculation appears to me incorrect. I calculate 15 - 21%. You are not factoring for example the 50% payout in STEEM POWER.


No, I am factoring in the payouts in Steem Power. A far more sophisticated analysis of the math is necessary to get more accurate numbers in more realistic scenarios, but I am pretty sure the numbers you have calculated are incorrect. However, by being slightly more careful in my analysis (rather than the first approximation I did for the OP), I find that my original number of 5% was also too low of an estimate in the worst case scenario. It is really more like 6.7%.

First, as I mention before, I am not factoring in the effect of price changes and Steem Dollar conversions on STEEM supply (or the virtual supply used in the code). Trying to factor that in makes things too complicated and requires assuming models for how the price of STEEM will change and how people will convert Steem Dollars. To greatly simplify the analysis I assume that people convert Steem Dollars into STEEM as soon as possible and at the same price at which it was issued (actually I really go further and assume the blockchain skips a step and just gives the bloggers the reward as STEEM rather than Steem Dollars so that they can then convert to Steem Power as soon as possible).

Second, I am looking at the worst case (in terms of maximum inflation of Steem Power) by assuming nearly all of the STEEM is kept in Steem Power at all times. Meaning if people receive rewards in any other form, they convert it into Steem Power as soon as possible.

Converting STEEM into Steem Power (i.e. VESTs) does not change the ratio of STEEM in the vest pool to the total amount of VESTs, whether done by the user or done by the blockchain directly. The only thing that changes (specifically increases) that ratio is when the blockchain directly adds STEEM it issued into the vest pool without creating a corresponding amount of VESTs.

If we define S to be the current virtual supply of STEEM (which with the assumptions above is also exactly the amount of STEEM in the vest pool), then we can approximately say that the blockchain creates 7.894E-5 * S STEEM each hour (90% of which is added directly into the vest pool and the other 10% is given out as rewards which are ultimately all, since this is the worst case scenario we are looking at, converted into Steem Power).

Let S_0 be the virtual supply of STEEM at the start of the year period that we will be analyzing. Let S_n be the virtual supply of STEEM n hours after that start time. Then we can write that S_n = S_0 * (1 + 7.894E-5)^n.

The recurrence relation for updating the total outstanding amount of VEST tokens V_{n+1}(at the time n+1 hours after the start time) is given by

V_{n+1} = V_n (1 + \frac{\Delta s_n}{S_n})

where \Delta s_n is total net amount of STEEM converted into Steem Power (VESTs) within the corresponding hour (because I am lumping these conversions into hour intervals it is actually just an approximation of the real update rule, but good enough for our purposes). The quantity \Delta s_n is given by 7.894E-6 * S_n, since in this worst case scenario I assume all STEEM created for distribution as rewards (the 10% of the total amount created) will all be converted back into Steem Power. I can use the recurrence relation above to write an expression for V_n:

V_n = V_0 ( 1 + 7.894E-6)^n

If a user initially holds v VESTs, which is a fraction f of the total VESTs at that time (so v = f * V_0), then after a year (n = 8766) the total virtual supply of STEEM will be S_{8766} = 2 * S_0 and the total outstanding amount of VEST tokens will be V_{8766} = (1.07165 )* V_0. And so the new fraction of total VESTs the user will hold (assuming they received no more VESTs through rewards or powering up) is f' = v / V_{8766} = 0.93314 * f, which corresponds to a 6.7% decrease over the year in the user's fractional ownership of VEST (and therefore their fractional ownership of the marketcap of STEEM in this worst case scenario). So, if the market cap of STEEM were to stay constant (in USD), the user would need to buy up approximately 6.7% of their holding value each year to maintain the same USD value they started with, thus we can say it amounts to a 6.7% wealth tax (via a hidden inflation tax) on their Steem Power holdings. But this is the worst case scenario where all STEEM is held in Steem Power. In reality, not all of it will be held as Steem Power, and so the actual wealth tax rate for Steem Power holders should be less than 6.7% (again assuming we ignore other complicated effects left out of the above analysis like the Steem Dollar conversion effect).

Unfortunately, since the OP has already paid out, I cannot edit it to correct the 5% number to 6.7%.


At every block, SP holders receive 9 SP for every 1 STEEM created. So their debasement is already 1 ÷ 9 = 11.1% on that aspect alone. But slowing down to look at it again, I realize that is only looking at the delta of the debasement not the dilution of the existing. To correct your original computation to my assumption of a steady 9-to-1 ratio between SP and STEEM, then SP holders would have 1.80 out of 2.0 yearly, so that is a 0% debasement as they start and end with 90% of the supply.

But that computation above does not factor the debasement of SP holders by the fact that 50% of the 7.75% annual rewards are distributed as SP. Thus that is a debasement of existing SP holders because the 9 tokens that are distributed proportionally so these new SP holders take some of the 1.80 in the calculation above. The precise calculation requires a compounded function. It is going to be some where in the realm of your 1.7% factor in your most recent calculation. It is 3.875% yearly, but it accrues throughout the year. So I'll just round off (because I am lacking time to write down the precise math for that small difference) and say debasement is 0.85% (instead of my 15%) in this case of 9-to-1 ratio. But I'd need to check your compounding calculations to be sure it is that low. Obviously that considerably alters my analysis of the value of powering up to SP.

In my second calculation (21%) which had the same assumptions as you did that all STEEM is powered up immediately, then I had the same error of considering only the delta, wherein the correct is 1.90 of 2.0 so 5%. And I did add the a factor for 7.75% being powered up, and again this needs a compounding calculation to be accurate. You seem to have computed 1.7% which seems low to me, so a total of 6.7%, but I guess that is the power of compounding and I'll assume your math is correct.

With a ratio lower than 9-to-1, the compounding debasement is changed to a compounding gain.

I will correct my post which linked to this one. Thanks.


I don't exactly see how your formula relates to the formula I arrived at, although our numbers end up very close. Perhaps you can explain and relate your computation to mine?

excellent article. It's a new and complex system that many of us have not stopped to think about. I'm still learning every day about the intricate details, and there are many

Thanks for your time and effort to put this post together! I think a very bright light has just gotten allot brighter for all of us!

i agree invest a little and reinvest


Before steemit I was writing at reddit and some boards without getting something for it. So it's cool for me, to power up all my Steem to SteemPower. This helps to stabilize steemit in the long run. And this gives me more power by upvoting and downvoting. So I can help to raise the quality of the content on steemit. It's a clever system, that Ned and his crew had created here.


yes, clever indeed. If you want to dive further in and learn about Dan, the one who designed the backbone of Steemit, read his blog. Not many even know about it:


Dan Laimer, is the Nikola Tesla of the Crypto industry. One of the smartest most forward looking visionary leaders in the space. So far above and beyond most that he is quite under appreciated.


Sweet, thank you! Going through the recommended reading list, and I recognized quite a few. No wonder I like this guy/place so much! :)


non-violence is the coolest thing in existence right now.

Great post as always by arhag.
While this is an honest and truthful take on steem mechanics it leaves the question of buying steem (power) as an investment even more hard to defend as a sound choice. Turning it into prepaying the subscription fees early apparently expecting such fees to increase (possible increase several times over)


Why would you not expect the subscription fee to increase? The more popular Steem becomes the more access to the network is worth. Think of it like Paypal. Initially they paid people $10 to open an account, then transactions were entirely free for everyone. Then slowly various exceptions to free transactions were added to the point now where a huge portion of transactions now pay fees. Likewise Google. For years there were no ads at all. Then just a one line of text. Then a sidebar. Now there are sponsored search results that take significant effort to read through and ignore if you want to find the organic search results. The price went up. A lot.

Steem is much the same. Right now the network is almost worthless, except as a promise. If all you were buying is a subscription to the current network with its current users and no prospects for growth, a fair price of that would be approximately zero. Now imagine a future where almost everyone is on Steem and that is one of the primary vehicles that people use to share information, communicate, and exchange payments; what will it be worth to not be excluded?

Buying Steem Power now means you are buying access to the future network at something closer to the current network value.


Yep...and each each Google/PayPal there IT 10K or 100K start ups that failed, right. So chances are I will be losing money on average if I 'invest' like that.


Not necessarily. It is absolutely true that most of your investments will lose money. Not the same thing.

Also there are not anywhere near 100K startups that ever reach 20K+ users. There are certainly quite a few that do and then fail, but the actual number is much lower than 100K.


True but usually businesses with 20K customers at least have a monetization plan by then.

Anyway, I prefer to follow the actions and not the words of smart man like yourself... Early mining seem to have a much better odds than buying steem to power up at current prices.


@james-show Did you read arhag's post? There is a monetization plan. The plan is selling access to the network. That will cost significant money in the future, assuming the network is successful and desirable to access, and many people want to access it.

That doesn't make SP a good investment at current prices, but if you really wanted to know you would have to work out models of number of future users, how much their implied payments would be, and then discount back to the present. That's a valid way of doing analysis, not "No Monetization Plan! Stay Away!"


exactly how i conceived of it.

There we go @arhag - quite possibly the first link back to this post (under the Homework section):


Thank you so very much for the education and the well needed spreading of this knowledge, namaste :)

Sorry to say that, but your explanation lack of Structure, maybe too "technical" for the common user and i had an hard time understanding the very interesting mecanism of Steemit's money creation. You might get lots of upvote, but i'm not sure people will upvote because your article is great and understandable. It's the point of view of someone who has no SteemPower...

@arhag it really helped me to know steemit further and how it works, thanks

  ·  5년 전

Great interesting article, as you all may know everything changes so fast in the crypto world.
We Steemit users, devs, and investors have to make sure this is a long lasting project that will evolve to benefit all in the long term.
I think that Steemit's Steem Power / SBD and Steem system is already very solid right now, but we are just getting started, happy to be a part of the project.

Great article, plus this must be a novelty in that you managed to get to the top without the use of any photos or article thumbnail (something which I prefer - but usually penalizes the article as readers are apparently not able to maintain attention without photo-interruptions). Congrats for that too.

I found this post highly informative. Thanks for taking the time to write it out. One thing I noticed when I was poking around my very new account: there doesn't seem to be a way to withdraw or transfer anything out of the platform. For example, no withdraw button for Steem that would allow me to send funds to an external wallet, and no pathway to be able to send out Dollars that are gained from trading out Steem. Not that I just want to dump or anything, but I always like to know where the exit points are. Are they any in this platform? How can I find them?


Exit points are through STEEM or STEEM DOLLARS. Note- you will need to set up an account at one of the Crypo Currency Exchanges (Bittrex or Poloniex).
Once you have your exchange account, you can transfer your STEEM.

You can find the feature under your profile menu: WALLET /. Once in WALLET, use the down arrows beside the balances, and select "Transfer". On the following page you will provide your account address at the crypto exchange (provided by the exchange). Enter amount to send and click "Transfer". You will received your STEEM or STEEM DOLLARS in your exchange account in a few minutes. Once received in your account at the exchange, you can then trade for bitcoin which then can be further transferred/traded for USD (or foreign equivalent). The process is bit convoluted right now, but I understand it will be much more streamlined soon.
The process is a bit convoluted currently, but I understand that soon it will be much more streamlined.


Thanks so much for that reply. It helps a lot. I think I understand now :)

A well written and very thorough article, comments included. Congratulations.

But I have to confess that I am still very much confused with all this Steem this and that, powering up and down, liquid, semi-liquid, solid?

What future will bring us yet another big question. Perceived value vs real value - is there such a thing as a real value? :)

Two questions that bug me right now are:

  1. Where is the money (value or whatever you call it) coming from?
  2. How can one withdraw whatever out from his/her Steemit wallet and into some other world, be it crypto or real?

Thanks a lot for the answers, I would really appreciate them!

I know where it comes from ... It comes from thin air :D

Good perspectives here @arhag. Currently Steemit is 'paying' users to start by giving them $10 SP to start. Asking new users to pay $10 SP to join may effectively attract users who truly believe that this platform is better that existing social media alternatives. I believe the strategy of 'pay people to validate the platform by giving $10 SP to get them started ' is what the community needs now.

I learned a lot from your article. Thank you very much for the information provided.

in my opinion if new sttemit users dont buy steems at market we can have a problem, because it will be thousands of guys looking a free lunch

Simple Question:

Who is buying Steem Dollar?

Simple Answer: The founders, they sell their STEEM for Bitcoin and buy for a part of the Bitcoins the Steem Dollar back, in order to run this show. As soon as they stop buying the Steem Dollar, everyone will see:

The King is naked.

The more we all get to better understand the mechanics of Steemit , not only consumers will benefit ,but more importantly the investors confidence will grow quickly. Thanks for your post

@arhag -- Thank you for this post, and @xeroc as well for his follow up. I have been talking to my wife and friends over the last week about STEEM it and the amazing platform steemit provides to those looking to get their not for profit messages out. My biggest hurdle with trying to explain how STEEM works of course was explaining where the money actually comes from.

I am bookmarking and sharing this article with each of them. Hopefully your detailed analysis can help them understand how the economy of STEEM works enough for them to sign up and spread their messages.

Thanks again!

Don't forget to factor that you will have companies like Nike and Pepsi that will be willing to buy hundreds of thousands or millions of dollars in steam power in order to push their posts to the top of the rankings

I have faced this question too. Countless times in fact. Every time I invite someone to join Steemit and explain to them the earnings model, they ask "But where does the money come from". I guess I don't have to answer that anymore as I can simply point them to this article! :D

The best answer ... It's magic

Summary, steemit is revolutionizing the world of cryptocurrency, she started something so strong and solid, that soon many will follow her.

Great Post! I'm so proud of you! Kappa Kappa

good aspects @arhag
I agree with you in the last advice, always is important dude!

Thanks so much. The steemit economy is quite unique. I made a similar point about steemit being a nation into itself into but perhaps not so eloquently:


I know you brought up the loss of liquidity rewards in the upcoming hard fork. Does anybody know of a post or place where there is a Readers Digest list of the changes coming in the hard fork? It would be nice to look at all the changes.


But sometimes you dont have enough money for invest:( You must start with something, and it is really hard if you are not pretty women haha :)

First I was also compelled to ask this . But the thing with steem is it incentivizes contents and stories being written . I for one love writing articles and want to have rewards for it. But being classified as decentralized social media make steem more appealing to the people where they can really interact or say their things . By contributing such articles and getting involved make the Steem network run is a proof of work that needs more and more participants as time goes by.

This is a very timely post. Every single person I have preached the Steem Gospel to has had the first question: "but where does the money come from?" What they are really asking is "why do these fake digital tokens have value?" You make a lot of great points here, and I especially think you are right on the mark that many people would possibly be willing to pay minimal use fees to maintain sufficient SP to participate, although my feeling is that through casual typical use, most users will probably be able to maintain sufficient SP to still use the network. Great post!

Fantastic way to look at steemit...We are still in the beta stages and I already see a huge potential for the world to use steemit as an economic platform! Even more so than just a Social Network Application...Great job!

Very cool idea steam. social network where you earn money for what used to do for free))). the developers are just great.

Thanks alot arhag, there is so much usefull information you got in this thread.

Steemit Quotes Of The Day –
Sometimes life is tough. 諦めない

Brilliant information... i need to use this for referring my friends.

Thank you very much for this post! It made a lot of questions vanish

For me this is a new facebook , @arhag

This is a very important post but I think the summary of Steemit business to me is how one can breakeven after paying for Steem power.

My vote is " No more Banks No more Banks!!!!

really a very good analysis @arhag

Very Interesting!

  ·  5년 전

A very informative and well-written post, thank you!

  ·  5년 전

The value comes only from people who are "investing" into Steem and didn't mined or wrote anything. Without them, Steem is worth nothing. It is the same in Bitcoin, the value comes not from the miners, but from people who want to be a part of the network and can afford to mine. In Steem there is one more component - writing, commmenting etc.

As long people want and need to buy Steem there will be value, without this force it will stop.

Not many people will benefit from this system; we can already see on the statistics that the distribution is not really changing.

Thank youuuuuu!! i literally had no clue where the money came from. i thought i knew but i was horribly wrong haha.

Very interesting article - Do you help the newbie?
( อิอิ )

Steem is a very interesting Monetary System, this article opened my eyes to some of the dynamics of the market that I have yet to fully understand. I am very interested in creating Prosperity Based Monetary Systems, because I spent 8 years on the buy side and when I realized how our monetary system actually worked I at first was surprised, then angry, and now I just do what I can to help promote new ideas with regard to money systems! https://steemit.com/money/@kierrereeg/prosperity-based-monetary-systems-by-kierre-reeg

In the end it's as simple as steem has value because us as a community decides it has value. Just like all money in existence today.

Just like every other currency. Ultimately it is controlled by traders.

wow! awe!

The Steem platform, I believe, will be the stepping stone for all future social media platforms to follow. It's a breakthrough in social media technology, which rewards its content creators with money. I love the idea, and I'm glad to be apart of this revolution!

May we all continue to contribute to such a beautifully structured social media platform!

This was such an amazing read. I'm a newbie and your post has really explained a lot of questions I had. Initially, without much thought, one may presume steem and other crypto's are got from thin air. I just wrote about my hopes of steemit and I wish I had read this post first. Here it is, https://steemit.com/steemit/@abeekuharmony/steemit-makes-me-feel-like-mohammed-ali

Very nice, i think that steem will explode!

Another post by a whale that made it to the top. WOW!

This is a first post about intro me.
https://steemit.com/introduceyourself/@bestmalik/please-advice-me-im-a-newbie ... Would you please Upvote !!! Thanks in advance ...

Good stuff @arhag, adding it to my list of favorite posts!

Will be sure to refer other steemers to it in the future.

@arhag Long-term, surely the required investment you are talking about to maintain the platform will not come from (effective) user subscription, but from advertising: companies buying influence in the form of Steem Power and using it to curate posts in their favour.

This could be directly (ie. the posts they're upvoting are adverts for the company) or indirectly (ie. a travel company might continue to pump money - and impressions - into the already proliferate travel blogs on steemit).

Steem just the begin of something BIG and futurelike!

I would like to thank you for this well crafted post. So many people misunderstand and wonder why and how you can make money here. Thank you, as I will show it to my brother in law so he can understand better than my explanation. If I could like this twice I would. So helpful to explain to the naysayers.

The guys from World Crypto Network should read this article... They call Steem a SCAM! :) https://steemit.com/steemit/@mexbit/world-crypto-network-most-clueless-people-regarding-steemit

thanks for this ellaborate explaination of how stemm works

Hi Arhag,

Thank you for the post and giving more insight into the back end of Steem.

This has been very helpful for newbies like myself to better understand this setup.

I'm still quite fuzzy on certain matters even on basic stuff like differentiating and converting between Steem, SteemPower and SteemDollar but thats what we are all here for - to learn more from the collective.

Legend! Keep it up!

i have found out that voting powers can be boosted thousandfold. i think this is interresting for anybody

Very good post.I think Steam will always support large investors.

Nice Post.
Helpful and informative.
thank you for the post. :)

I've heard this explained at least 3 different ways on this site, and each time I get a deeper and more nuanced understanding of how the platform got here and where it could potentially go from here.

good job

Hey guys!
I finally introduced myself steemit. Check it out and upvote.


I am new to Steemit and don't know much about technology. After reading your post I am beginning to understand.

too much philosofy for me, too complicated. some conclusion ?

Why do you say less than 5 % inflation? 100 % inflation and 90 % interest is exactly 5 % inflation. Not less than. What have I missed?

I disagree with the notion liquid steem is taxed. With steem power, there is certainly a dilution effect when more is produced. But saying that the creation of new liquid steem is an inflation tax is just the same as saying that the creation of new bitcoins through mining is a tax on bitcoin. It just aint so. They talk a bit in the white paper about how an increase in the "money" supply does not necessarily cause devaluation, and dan also a post on it at some point... point it just aint so.

  ·  5년 전

Very well written post. As I've said before. The more we read about this topic, the better understanding we will all have in the coming weeks and for the future of Steemit.com
I do understand this is still in an infant stage of development and seen as an experiment. Fun times ahead!

I totally agree with you on the last part about having subscription model.
If steemit started charging a privilege of using the steemit platform,
I would be among the first ones to close my account and never return.
And the amount of those who would keep their account (and new users) would be very small comparing to current amount of users

Good job!

The price is equal to the investors' expectations, full stop.

Just see this video and you will realize its nothing but the ponzi scheme.

The key feature of crypto currency is : "limitness of currency"
And steem grow by 100% inflation/year.

The seemingly unfair rewards someone earns for the same thoughts many others have will kill this platform - that is what I hope. Or at leasr reduce the prices significantly. Initally I was a big fun but every time I come to steemet I just face with no so origonal contents and 1000s usd given for it. So going back to reddit or facebook where i dont have this unsatisfactory unjust feeling.

Once Steemit come to a leading position in social media, advertisers provide massive demand for tokens STEEM.

I think that we all need to agree,that @arhag just make a great job over here.
It is a long post,a shitton of effort was made here,and it was not wasted-it is a very helpful article for me.

"If the user does not earn or buy enough Steem Power, then their Steem Power will gradually decrease (as a fraction of all the Steem Power existing within the system) and eventually (even if it takes waiting until market saturation of the platform) they will no longer be able to use the platform (as in post, comment, vote, transfer money, or anything other than only read the content on the platform)."

So - the longer I HODL, the less I have? This is news to me. Suddenly everything seems so different...

yup where does all the money come from?

Very good info.

This post, and the resulting conversation is like University Steemenomics!
Thank you all for such a thoughtful and fine grained discussion. There are so many ways to look at and describe this platform, and we are all so much richer for your highly articulate metaphors! I'm learning, and distilling the essence of your teachings. :) bless! b

Great post. Very usefull..thanks

Great post! I am very new to this platform, but i do agree with you its addictive and like a casino, writing a good article and hoping to make a difference! Thank you for your time! :) Alla

nice. Excellent post! very good your information, thanks for sharing.

I hope someone can rewrite this in simpler terms. I stopped half way in middle. Tax might not be a good term to use. Let's use layman terms instead

This below is a summary of what I've come to think is the socioeconomic factor behind Steem's overall vision. Someday people will want to pay to have influence and others will glad to receive pay for being respected, a good writer, or popular. Some will earn their respect/influence, others will pay for it.

If someone wants to maintain some dollar value of their Steem Power holdings, they would have to earn or buy more STEEM over time. Some may earn the necessary amount of STEEM to cover the deficit through upvotes on their content or through curation rewards. But many may need to make up for the deficit by purchasing more STEEM from an external exchange using external currency.

just got woozy...I better get a LARGE white board to map this out!

.you possess global management theory?

Nice post, but I think you are missing a part of the whole thing: Steem produces value, in at least 2 ways:

a) the value that comes from the interaction between people, that in other social network would be sold at a very high price

b) the value that a currency not based on debt generates by itself in the population that uses this currency, especially if linked with quality contents that explain why we can trust Steem much more than dollars.

For this reasons we can imagine a future in which Steem doesn't need any taxes.
Moreover, an increase of the monetary base is not necessarily linked with inflaction.
Calling inflaction the increase of circulating money is, in some way, a consequence of our culture that is conditioned by living in an economic system founded on debt.

exciting and informative - makes me feel i've found good place to be in

What are the possible effects of HF19? From what I read, if users are encourage to power up then the platform may be the biggest winner here. What do you think?

Money comes from a little help from my friends. Trying to raise some "VC" Steem Power so I invite you to:

  1. See my Introduceyourself post and then
  2. Invest in @Cyberspace by delegating any amount of Steem Power you see fit.

Thanks in advance for your support in any form be that SP, STEEM, SBD or some good pointers/links!


Thanks for the info : )

@arhag Solid post, you know about it, explain it really good even when sometimes i got lost and had to read again :-)

Thanks. This really cleared up a few questions I had. I a photographer and hope to move my base from Instagram/500px over to Steemit but the complexity of the system is proving an uptake hurdle for my followers. Thanks again.

thanks for the great article. Is there ever a way for Steem to actually create its own crypto currency, to not have to defer to bitcoin or other services and streamline the process?

Very helpful. I have been trying to understand this myself.