Steem, inflation and holding for retirement.

I was just having a quick look at the price feed which is sitting at 31 cents internally with a market cap of 104 million for total supply. People like to compare it all to the high where Steem was at 8 dollars and the market cap was 2 billion but, comparing to all time highs is pretty ridiculous considering there is no way everyone could sell at that price. However, people tend to be ridiculous, that is fine.

https://steemd.com/

https://coinmarketcap.com/currencies/steem/

The price reminded me of when price first went up though while I was on the platform. When I joined I was not a crypto enthusiast in fact, knew nothing and had no idea about the price of Steem. I didn't even know where to check it. It was 16 cents though. I started trading a couple months after joining to learn how it worked and was selling and buying between 10 and 18 cents back and forth. One morning, I woke to find it go to 25 and sold all of the Steem I was trading with.

Instead of dropping back, it climbed and climbed and It never returned to that point until 22 months later, 2 months ago in mid December 2018. All of that time, people lamented not buying 7 cent Steem, 25 cent Steem, 50 cent Steem , 1 dollar Steem, 3 dollar Steem... You get the idea. It is easy in hindsight.

What is interesting though is when I sold the Steem at around the price is now, the market cap was 73 million dollars but today, the market cap is 88 million. This is because of the inflation of Steem that has been added in because since that time in 2017, almost 50 million additional Steem have been added into the supply + the conversions from overpriced SBD converted to Steem. The inflation rate of Steem is something that concerns many because it keeps diluting the Steem pool meaning each coin is worth less each day as there is greater supply coming in. The price of Steem isn't as bad as people think if inflation is taken into account, for as while the price of Steem is the same, there is more Steem in the supply.

However, what this also means is in the almost two years since that time, Steem has added 15 million dollars worth of Steem more into people's accounts. That is a fair amount to be spread by a startup company that hasn't completed its third year of operation and most people haven't bought in, isn't it? I actually find this quite incredible.

Some one asked the other day what could drive Steem price and I forgot to mention something about inflation. Sure, there is a long way to go but if the applications do their job and people start to onboard, new applications come into the space and attract new users with sticky use cases and a number of other things like Resource Credits and the like, Steem will see steady growth.

But, after the 6th year of operation, the inflation rate will mean less Steem is in the pool each year. The inflation rate was at 10% (0.10) but is dropping by 0.005 each year. This means that by that 6th year the new Steem in the pool will start shrinking. And, it will continue to shrink until the inflation rate steadies at 1% (0.01) in year 20.

What this means is that while currently there is about 2 million new Steem entering into the supply each month, by year 20 that number will be 500,000 per month, 75% less. Sure, seventeen years seems like a long way away but, it isn't that far if you consider that Google was founded in 1998, 21 years ago. Remember getting your invite to use Gmail? I do and, I still use that email.

What this all means to me is that for Steem to survive, it has to grow and of course bring in new users and the like which I think will see large moves in the next three years. But, just as people start to come in, the new steem supply starts to taper away and Steem becomes scarcer and scarcer. Yes, there is still inflation which allows new users to get steem and for mobility but after 20 years, that inflation rate is set at 1% per annum. With a lot of users and a shrinking pool, what happens to price?

I was just thinking about that next month I will turn 40 (I am not having a midlife crisis, I am not the type) which means that from the current point and conditions, I have 25 years of professional life left to pay for my retirement. That means in 2044 I will be likely forced out of the employment market, if not earlier. 8 years after the Steem inflation settles at 1%. Will Steem mean early retirement? Who knows but if it lasts, it could definitely be a decent income stream and, it could be that for literally hundreds of thousands, if not millions of people globally. People worry about not being an early adopter but the blockchain itself is looking long as an investment option - are you?

The risk is in whether we can get our shit together and build applications that are attractive and useful for the long term and make the blockchain scale to be able to cater for enough users that can absorb and demand 630,788,292.75 steem. That will be the total (depending on a few other factors like SBD conversion) of all Steem at year 20 which is only 300 million more than there is now because remember, the supply started with 250 million Steem already in it. The pre-mine.

After it reaches that 630 million Steem, there will only be 6.3 million added a year to it which isn't a great deal of inflation and since it is known, can be factored in accurately to investment calculations. While the Federal reserve keeps printing trillions to cover debts that will never be paid...

Now, this is far from my area but the reminder from the price feed did make me think a little more. Let's say that over the next year the price remains steady at 30 cents, 25 million more Steem will be printed meaning that the Steem blockchain will have added around 7.5 million more to the wealth of Steemians. Not bad. If it goes to 60 cents, that is 15 million more in the next 12 months. In my opinion, all of this is something that people should be thinking about when they are complaining about price or this that and the other thing.

The other thing to consider is this.

Where do you see yourself in 20 years? How is your career going at the moment? Are you worried about your retirement? Should you be?

In my opinion, it is always a good time to earn some Steem to hold. Just in case.

Taraz
[ a Steem original ]