STEEM: No Banks/Governments Means No Fiat-based Inflation/Debt/Taxes

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Where Was I? Oh, Yes...

Yesterday, I published this post: STEEM: From Social Media and Investment Platform to Global Digital Currency. I'd meant to get into more depth with it about how I think STEEM can become that global digital currency, even with the value of STEEM at its current value and SBD trailing under $1 USD.

As it turned out, the post became more of an introduction to furthering this idea, and so I'll continue with that now.

I left off saying that I felt STEEM could start becoming a global digital currency now, especially in countries where the value of fiat is considerably less against the dollar or euro. It would depend largely on what resources are available in these countries, but in some cases, transacting in STEEM might be a step up.

However, I wanted to address a couple of factors and a few subfactors that I believe make it possible for businesses if not industries to get up and running on STEEM, even in the United States, Europe, and other first world areas.

exotic-cars-ferrari-291060_1280.jpg
Could supercars be manufactured for considerably less than they are now if inflation, debt and taxes imposed by banks and governments were eliminated?

No Banking Authority

One of the essential reasons cryptocurrency was created in the first place was to cut out the middleman, in this case, banks. Cryptocurrency is not subject to the same economic manipulation that the dollar or other currencies are based on whatever central bank might be involved. In other words, Bitcoin, Ethereum, etc., including STEEM, are not subject to the whims of money making policy.

This is very helpful for a business who wishes to transact in STEEM, or crypto as a whole. They have access to their liquid STEEM anytime they want it, and on this particular blockchain, it transpires in three seconds, and it's without a fee.

No Major Inflation

Currently, STEEM has a stated inflation of less than 9%. Effective inflation, due to other factors, is said to be higher, perhaps into the upper teens. There has been talk about making STEEM more attractive to investors by lowering or getting rid of the inflation. That would mean no reward pool as we currently know it, or for that matter a reduction in funding for the SPS (STEEM Proposal System) and for Witnesses.

However, STEEM does have built in inflationary safeguards, where the amount of inflation decreases overtime. Even if nothing is done, inflation will continue down along a twenty year or so period. What the effective STEEM inflation rate may look like by then if nothing changes, I don't know, but the point is, there's not a central bank creating artificial STEEM out of thin air in mass quantities in hopes of controlling or containing whatever global financial crisis might be occurring.

That's a good thing. That means STEEM holds value at a greater rate relative to itself.

Consider the dollar. It's been around as a monetary unit since 1785, with the Coinage Act of 1792 basically organizing it. If we look at inflation since 1792, the dollar has declined by over 2,500%! In other words, a dollar in 1792 would buy you over $26 worth of stuff today.

At that value, I could pay my monthly mortgage with 13 1792 dollars.

Unfortunately, it doesn't work that way.

STEEM, and crypto in general, doesn't have the same inflationary issues. Which means goods, services, and payments are not subject to the inflationary rates of fiat. That in and of itself should make STEEM very attractive for doing business.

No Government

The other major factor in cryptocurrency and STEEM's favor is that there is no government, central or otherwise, issuing the currency. Aside from the Witnesses, whose purpose is to ensure the integrity of each block they verify, validating each transaction in the process, there isn't an official governing authority. We could argue over who controls what on STEEM, but it's not a giant sprawling federal bureaucracy.

That's good. That means that STEEM is not subject to two other subfactors that along with inflation cause prices on everyday goods and services to rise.

Debt

The next subfactor is debt. Most, if not all nations on Earth, have some amount of debt. In many cases, this national debt is beyond the ability of all of its citizens to pay back, if the loans were ever suddenly called due. The United States is constantly running in the red to the tune of trillions of dollars each year. So, too, the nations of the European Union, and other so-called first world countries.

Like the inflationary rates of fiat, STEEM is not subject to these national debts. It sits outside of it, since it is not a government created currency, accepted within that nation, or in case of the dollar, accepted throughout the world. Debt in and of itself might not be entirely bad, but it does have bearing on the costs of products and services, and is compounded by the next subfactor.

Taxes

STEEM, along with the rest of crypto, is not subject to taxation by any governing authority. The taxing problem occurs where fiat is involved, be it with capital gains on earnings, or earnings withdrawal. If everything were earned in STEEM, and it stayed as such, STEEM would not be taxable.

To be clear, what I mean by this is, everything that an individual, entity, organization, business, etc., does, would have to be done in STEEM, or some other cryptocurrency. It would have to be earned and spent in STEEM for it not to be subject to any type of tax.

This is because STEEM wasn't created by any government and is therefore not subject to its laws of taxation. Countries only have jurisdiction when their fiat is involved somehow.

This is good for businesses, indeed entire industries, who could wish to create products and services using STEEM as their monetary unit. Taxes permeate every last thing we buy multiple times, because at each point along the way, taxes, along with inflation and debt, are being added to the cost.

With STEEM, such is not the case. There is not a governing authority setting tax rates.

Cost Of Doing Business Would Be Lower

That means the costs that businesses incur would be less, which in turn, would make it possible to manufacture products for less.

How much so?

Well, I don't have real world numbers to work with, but if you consider how many companies are involved in making the products we buy, we can start to get an idea.

Companies in the United States by and large will have employee payroll taxes to pay, along with property taxes (if they own their own buildings and the land it sits on), or it will be factored into their lease payments, taxes on the energy they use (electricity, natural gas, gasoline, etc.), taxes excised with telecommunication services (telephone, internet), taxes associated with any air transportation, taxes on imported goods used in manufacturing products, taxes involved in shipping and receiving those products—and the list goes on.

In many cases, there are federal taxes, state taxes, county taxes, and local or city taxes, and sales taxes which might come to bear. By the time all is said and done, one small component can have taxes factored in many times over depending on how many different entities touch it. All of that, along with the actual cost of production, gets factored into price.

With STEEM, no taxing authority means that redundancy in taxation, and therefore cost, does not need to be passed on from manufacturer, to wholesaler, to retailer to consumer.

Can You See It?

Since STEEM sits outside of the clutches of central banks and governing bodies, it is not affected by the artificial inflation, enormous debt or burdensome taxation they impose on the fiat they create or regulate. That makes STEEM much more viable a currency to operate in. No, it's not going to happen overnight (it hasn't happened in three years and counting), but if we were to start to frame the conversation where these excesses are addressed, I think we could get folks thinking more about what they're doing and the many advantages STEEM has.

Yes, Caveats

Look. Governments of any kind and size, have over the course of history, taken whatever they've wanted. They've oppressed, killed, smeared, imprisoned and taxed anyone and anything that they don't like. In reality, there's very little stopping them from doing so with crypto, if they so chose.

And if it meant continuing on with the power and control they have over resources and the masses that they have now, they wouldn't hesitate to band together to put an end to crypto as we know it. Creating centralized crypto they direct will probably be the way they do it, but regardless, decentralized, transparent, trustless cryptocurrency systems could end up in the dustbin of history if governments decided to act in unison.

For now, they're still trying to decide what they want to do, which is good. How long that will last is anyone's guess, as moves are already being made in one direction or another.

Personally, I feel serious consideration needs to be given to promoting STEEM as a global digital currency, not just a social media or investment platform. The sooner STEEM can start to be something we can all use to get the products and services we all need and want, the more likely it is to really take place. The longer it takes, the more likely governments or other centralized/controlling entities will make moves to thwart it.

Image source—Pixabay

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I honestly think the speed of transactions and the extremely low cost for a transaction (mana) makes Steem a perfect tool for transactions. I'd love to see an app that allows for simple transfers via the phone, one which allows a vendor to create a invoice and send it via wallet memo to a customer on the spot and them approve payment. Who thing would take 3 seconds to send the invoice and then 3 seconds for funds to transfer. This is as fast as any point of sale credit card system without the risk that credit cards carry for vendors.


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Great post!

Steem is an interesting experience but I have serious doubts it will survive. It has too many problems that the Witnesses are ignoring and since they lead by example, so do all of us.

The main problem I see is convincing people to join this small, sometimes toxic, environment.

The second is convincing them to stay after 6 months of earning zero...

The third is convincing those who start winning some money not to cash out as soon as they get the tiniest rewards.

And there are a lot more issues.

Only time will tell if we'll survive or if Steem will be used as a basis for a new project, where all the issues are addresses and contemplated since day one.

Here's a !DERANGED coin for you.

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Hey, @trincowski.

Wouldn't that be something. :)

Actually, though, in reading the different earlier documents and posts, it seems like things were at least conceptually there for the most part. Then, I guess, since I wasn't there to know for certain, the waters got muddied. Too much success too fast, trying to do too much, too many voices listened to, not everyone with STEEM's best interests at heart...take your pick from that and maybe more.

The fundamentals of STEEM are still there. We seem to be stuck trying to figure out what STEEM is, (or some are trying to force it to be one thing or another) when it could be a lot of things to a lot of people. I'm not so naive to believe that things will somehow work out on their own—it's going to take a probably painful, concerted effort, something that's not really happened here yet—to get where STEEM needs to go, but I'd rather work with what there is, then see it all go for naught.

That said, my loyalties do not lie with STEEM itself, or those who would make it their own little cash cow. Rather, I'm in for the world changing concepts. If that means STEEM goes down because of greed and selfishness, so be it. I can only hope that someone else will somehow get it right. I just know that history has a funny way of repeating itself over and over, and real change comes once in a millennia or two. Meaning, there's not a whole lot of chances in this deal.

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Hi again! I'm just popping in to say I've featured your post in My entry to the Pay It Forward Curation Contest - Week 83

Links: 1Ramp / Busy / eSteem / SteemPeak / Steeve / SteemIt
Tribes: CreativeCoin / Neoxian / PalNet

Let's try the !DERANGED thingy again...

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Well, cool. Thank you, @trincowski. :)

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You need more DERANGED (5 DERANGED is needed to send 1 DERANGED a day)

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Hmmm... 😐

You need more DERANGED (5 DERANGED is needed to send 1 DERANGED a day)

Steem started out as a currency with an attached social media, but that all got lost in the kneecappening and walkabout.

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Hey, @freebornangel.

Yeah. You've seen a lot of wanton destruction and aimless wandering, haven't you, in your STEEM tenure?

I'm afraid I've seen more than I want to myself.

Which is why I'm bringing this all back up. Nothing new really. Supposedly, there's a different mindset a brewing here, and if so, maybe there's a ghost of a chance things can progress the way they should, where there hasn't been even a ghost of a chance for a long time.

If newsteem isn't what it's all cracked up to be, well, then we look for brighter days elsewhere. Not too many opportunities to get it right, though. We eventually run out of those. :)

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Aw, we are doing ok.
The eip has the math more equitable, but the voting patterns are still not distributed enough.
That is on the voters, though.

If we keep voting rewards to dumpers, we will see the price in the dump.

We won't avalanche our way to change, but we can still get this snowball rolling down the hill, again.

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