Worried About Steem Price Dropping? - Don't Be, Its A Great Thing!
The Price Is Tanking, When Will It Stop?
When people see the price of anything drop, a certain percentage of them start to get worried. This is a natural phenomenon and quite common in all financial markets.
Steem and Steem dollars appear to be in a free-fall (exhibit A and exhibit B)
Exhibit A: 3-Month Chart of Steem
Exhibit B: 3-Month Chart of Steem Dollars
Down 75% and 80% In Less Than 3 Months... Ohhh No!
The drop in price is rather stunning... Steem has dropped from $8 down to $2 (that's a 75% butt-kicking). But the price of SBD's have dropped even more from $12.50 to below $2.50 (that's a cool 80% haircut in less that 3 months).
Is it time to panic???
(source)
No Panic Necessary, This Is A Great Thing!
This is a great thing (unless you are a whale) and I will tell you why. The answer lies in how the system works, and how the Steem Power (SP) gets paid. As you know, or should by now, SP is the way to keep track of how your "power". Simply put, the more SP you have, the greater your influence and financial rewards.
So how does steem price crashing help us to get more power???
Lower Price = More SP, Who Doesn't Want That?
Here's 3 simple calculations to show how the system works:
With steem at $8 (The HIGH)
On a $1.00 upvote
Your SBD payout would be $1.00 x 75% x 50% or $0.375 sbd
Your SP payout would be $1.00 x 75% x 50% = $0.375/(steem price of $8) or $0.047 SP
With steem at $2 (NOW)
On a $1.00 upvote
Your SBD payout would be $1.00 x 75% x 50% or $0.375 sbd
Your SP payout would be $1.00 x 75% x 50% = $0.375/(steem price of $2) or $0.188 SP
With steem at $0.50 (The GOAL)
On a $1.00 upvote
Your SBD payout would be $1.00 x 75% x 50% or $0.375 sbd
Your SP payout would be $1.00 x 75% x 50% = $0.375/(steem price of $0.50) or $0.75 SP
So what do you want from each $1 of upvote?
Do you want the $0.047 SP on the highs, the current $0.188 SP now, or the future $0.75 SP if steem dropped to $0.50? I personally would rather have 15x more SP for every post, so I'm rather happy to see the price go down ;)
15x More SP For Every Upvote, That's Not Only Good Its Great!
Next time you hear someone complaining about the price of steem dropping, just ask them this one question:
Are You A Whale?
Only whales want the price of steem to go higher because they already own enough. Do you really own enough? If not, then quit your bitching and get excited because the reset is going to be good for the people that understand this!
I'm excited to see it come down, and you should be too! ;)
Worried About Steem Price Dropping? - Don't Be, Its A Great Thing!
I would have thought it balanced out. For example (hope this makes sense), when Steem is up the value of votes is also up, so a vote that would be worth $1 now, might have been worth $2. Effectively that means although the conversion rate works out higher per dollar at the low end, you would have been getting it on $2 not one at the higher end, which would still have yielded exactly the same value. However, higher voting value gives more on the SBD conversion side, which can be changed to SP at a higher rate giving a bigger boost to your SP if you choose to take that route.
I actually worry about 2 other things 😂
The first one is very simple, my very low rewards 😜
The second one is about the math in your post. I thought the vote values in USD are much lower now then they were back then with the higher Steem and SBD prices.
I would say the following example easily shows that it doesn't work as you show in your post. You actually say that if all of us gets higher rewards in Steem, the total Steem reward pool had increased. But the Steem reward pool is not bad on the Steem price, but on the amount of Steem already in the system.
@crypto-econom1st you're "very low rewards" has nothing to do with the amount of SP you get per dollar of upvote. That is another issue entirely and not relevant to this point. Whatever your rewards are, the simple fact is you would get more SP with steem price lower. Its how the math works.
On your second point that is true... I'm comparing a $1 upvote to a $1 upvote... I'm not trying to get into the mechanics of how that upvote is achieved. The simple fact is that you get more SP the lower the price of steem is... And you are correct that it is harder to get an upvote if the value of steem drops. 2 different things though.
About my own rewards that was indeed a joke. Tried to make that clear with the 😜
I still think your post is a bit misleading. Because it now looks like if I receive an upvote from person xyz, I will get rewarded a higher amount of SP compared to before the Steem price dropped. But if poison Xyz still has the same amount of SP, I will also receive the same reward in SP. In $ value the current reward shows with a lower amount.
I'm sorry, I usually catch sarcasm! My stupidness! :)
And I understand your second point, I think it will be harder to get the same dollar upvote, but in my mind its two different things... Remember that people put money in and take money out all the time and if the price goes lower then they buy more sp but keep the vote the same too. That's why it gets confusing to try to dissect it to the average user. My main point is to realize that your earnings will translate into more SP as the price of steem drops.
No problem for missing my stupid joke. Maybe I should make a bit less of them. Cause sometimes I seem to be the only one laughing.
In general Steemit is quite difficult to understand and do all the math calculations correctly.
Thanks for the very nice conversation so far!
haha.. you're funny @crypto-econom1st... My jokes are super stupid sometimes, so I I get the point! :P
I agree it is a nice conversation and btw, we went even lower today! ;)
Agree completely. I have been curating and blogging daily to ensure that my steempower builds up. Steempower is more important in the short and medium term, the actual value only matters of you are selling. Followed!
Great @crypticat! That is exactly the way to think about it... just do your thing and let the value build up over the longer run! :) Followed back ;)
little guys like me may buy more SP while it is low. That is a very good thing.
I agree with you completely! Its a very very good thing! the lower the better, you watch! ;)
Lol. Love the post Dave. Especially the end. As always you've got my vote. :)
i'm glad you liked @mudcat36, somehow I knew you would be on the same page ;)
ps.. you might even decide to buy a little if we get cheap enough! ;)
Really, I like your analysis of the steem currency and split the voting rate.
I think the low price is our chance to get more Steem Power.
Do you think that the SBD currency will fall further?
good luck my dear friend @davemccoy
all the best for you
I do, but not as much as steem... in fact I think it will fluctuate between $1.5 and $4 for awhile... The good think is I think this will lead to a great conversion ratio of sbd into steem. That will get fun
I guess unless one is cashing out, or one is needing the money now, one shouldn't worry too much about the price fluctuation. It is natural for markets to go up and down. As long as the 'company' is sound, prices will go up again when the market is positive. At the moment, as you pointed out, it is a good time to accumulate SP, or load up / buy more Steem - if you are so inclined.
very good points @quotes-haven! you are exactly right! :) We are on the same page!
Yeah leave the FUD out as this is the best time for you to start buying Steem and SBD.
If you don't need the money then keep that SBD or power it up.
The time is now for us to become minnows and the next dolphins.
As always, we are on the same page Mav! ;)
That's what I'm hoping for!
I was quite sad that prices are dropping. But you opened me to a different and a very interesting way of thinking. Getting more SP is way useful than getting liquid SBD. But there is another thing to consider. With high SBD price one upvote is worth more than one upvote now.
I'm glad I gave you something to think about @reazuliqbal... It is something for you to realize, especially if we get sub $1... that will be awesome...
As to you last point, I'm not sure I understand.. can you rephrase it?
My last point was - high SBD price translates to higher rewards. So, if a upvote gives you $1 now (at low SBD price) that same user's upvote will give you more $1 when SBD price is higher.
Because of 50/50 split of reward, you get more SBD, if STEEM price is lower more SP, and you can also buy more STEEM with the newly earned SBD. This was the case in last part of last year and early part of January 2018.
gotcha... agreed! thanks for clarifying and I agree completely!
You lost me at math, but up until then I was right with you.
hahaha... that's kinda the gist...
do you want me to explain it further? I would be happy to show you how to do that calculation!
No, thank you though. I failed grade nine math twice. It would have been thrice, had I not been expelled in what should have been grade eleven. I trust your judgment, even though the price of Steem doesn't really matter to me. If I was going to sell it, I suppose it would be different, but luckily I'm not in the position to need my $9 right away. haha
Thanks for all the work you do here.
hahaha... very funny :) ... I love this comment! very very funny!