The one thing I can safely predict for 2019 is an increase in volatility and a rash of creativity - OK, that was two things. But how volatile is STEEM? A glance at its price chart shows the same deep bear market that has plagued almost all cryptocurrencies. But, how volatile is STEEM within its own economic system? How does STEEM behave within the Steem blockchain?
Below is an update of previous graphs showing the values of pure upvotes and author rewards in STEEM terms per SP, calculated as APRs.
The bump in the middle was due to HF20. Most people were unable to post, hence most people were also not voting, hence the reward pool rose sharply to a whisker above 1 million STEEM, hence the value of an upvote also rose sharply. It took about 3 weeks for the whole process to unwind, after which rewards returned to about the same level as pre-HF20.
What should be striking about this graph is how stable STEEM earnings have been. Your upvote per SP is worth about the same now as it did 6 months ago in STEEM terms.
Yes, of course STEEM is worth less in US$ terms, but that is an external transaction and of interest if you are either buying or selling on an exchange. If you are working within the Steem blockchain economy and looking at the STEEM in your wallet, you should be seeing a significant increase - so long as you haven't out-exchanged it.
This is somewhat like going on holiday and converting everything into your native currency. We all do this as a comparison of the relative prices of goods and services between the two countries. But if you move abroad, become an expat, work, earn and spend in the new local currency, it becomes pointless making the comparisons with your homeland currency all the time. It becomes more important to gauge the price of local things relative to your local earnings.
This is something that Steemians should learn to do. I have to admit that showing pending rewards in "$" (that are not actually dollars) has the psychological consequence of always thinking of rewards in terms of "dollars" rather than the native currency, STEEM.
The take-away here is that STEEM is actually fairly stable within the Steem blockchain economy, and that this should be promoted to merchants.
One thing not obvious from the above chart is that a large part of the last 6 months saw the SBD Print Rate at zero (or close to zero) and this has added to the stability. I do not have daily data to plot the whole of 2018 but I do have weekly data that shows that in the early part of the year the author rewards were higher than the upvote values. This was due to the price of SBD being much higher than US$1, this increased the supply of SBD pushing up the debt ratio. Once that ratio reached 5% the SBD printing presses stopped, thereby slowly returning the blockchain rewards to their current values.
We are in a similar situation at the moment, with SBD Print Rate at 1% and the blockchain STEEM price moving towards the market price, albeit very slowly. At the same time, the supply of STEEM has been increasing, as has the reward pool. However, despite all these financial complexities, the value of your upvote in STEEM terms has remained astonishingly stable.
One issue that I see being discussed across different channels within the SOS Discord server set up by @pennsif, is that of giving STEEM more value within its own ecosystem. This means setting up structures and online businesses that give STEEM more value than it would have by being converted to fiat. One concern has always been about how volatile the prices of STEEM and SBD have been, but what I hope to have shown is that if trades are conducted within the native currency then they are actually more stable than many fiat currencies. One irony is that this relative stability does not come from SBD but from STEEM itself.
So the second take-away is that any merchant willing to create added value for STEEM, within its own economic system, can estimate profits in the short to medium term with a fair degree of accuracy. Of course, changes happen, but if one looks daily at the Steem macroeconomic data even those can be predicted before they become fully-formed.
One thing that seriously needs to be changed is to show pending rewards in STEEM. But that argument is for the next post.
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@rycharde manages the AAKOM project and the MAP Trail.