This is another topic that is really confusing at first, but it’s not too bad once you take a closer look. Let’s dive right in. 🙂
Where’s The Money Come From?
This might sound weird at first, but when you upvote someone on Steemit, DTube, or any other Steem app, you’re not giving them any of your STEEM. Everything in your wallet stays in your possession, so where does the STEEM come from?
Every day, new STEEM are created and distributed to three groups: 10% to witnesses, 15% to Steem Power holders, and the rest makes up the rewards pool. This rewards pool is what’s distributed to people who publish content. About 75% of it goes to the author of the post, and the rest goes to curators, which is a topic I’ll cover in a later video.
You’re probably wondering how Steem can just print money every day like this, but this actually reduces the overall value of the currency and can be seen in its rate of inflation. Starting at the end of 2016 it was 9.5%, and it decreases by about 0.5% each year. You can counteract some of this inflation by keeping your STEEM as Steem Power because it receives some of the new STEEM created each day as interest.
What Happens When You Upvote?
When you upvote a post or comment, you’re telling the blockchain to send some fraction of the rewards pool to the author. The more Steem Power you have, the more influence you have, and the more you can route to someone with your vote.
So not too bad right? 🙂 I hope this video was helpful and please let me know in the comments if you have any questions!
[IMAGE: https://steemitimages.com/DQmXGhxrjSU8mJHaRFmq5rKc67YDutbCHLTGHHRRTN4hwwi/follow_jeffbernst.gif]
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Yeah, this is still something I'm trying to learn more about. From my understanding, Bitcoin doesn't only get its value from people spending money on mining rigs, a lot of it is decided in the markets from the balance of supply and demand. Here's one explanation I've seen from this article:
>Bitcoin's value depends on "transactional" and "reservation" demand.
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>It is important to note that the total market value of a currency, its "monetary base", is driven by two things, transactional demand and reservation demand. We can think of Bitcoin's average daily "float" as the analog of our economy's M1 money supply - the currency needed to satisfy transactional demand for goods and services. Similarly, we can think of the Bitcoins which are "hoarded" by speculative investors as the currency needed to satisfy reservation demand for secure long-term savings. Combined, Bitcoin's float and reserves comprise its total monetary base, which is similar to our economy's M2 money supply (M1+money in savings deposits, money markets, etc).
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>So the monetary base relies on both consumers and investors who believe that the Bitcoin technology will power a certain volume of economic exchange today and in the future. Speculative investors in particular have shown an extraordinary willingness to buy BTC, leading to a much larger monetary base than would otherwise be expected for a currency with bitcoin's transactional volume.
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>And that's ok! As long as the transactional demand for Bitcoin continues to grow exponentially in the coming years, the balance between Bitcoin's float and its total monetary base will likely reflect that of other global currencies. (To learn how Bitcoin enters into circulation, read, "What is Bitcoin Mining?")
So it's true that with a lot of cryptocurrencies, the price comes mostly from speculation in the market, but over time as the currency is used in exchange for actual goods and services, the price won't be solely based on this speculation. It's similar to something like the US dollar -- nowadays it isn't backed by anything like gold, so it has value because we all agree that it does and willingly use it as a means of exchange.
Hopefully that makes sense, but I'm still trying to learn too!
Thanks for watching! :D
