With rewards being split 50-50, are there good reasons to immediately convert Steem Dollars to Steem Power?
After doing some calculations today, and assuming that you're not in a rush to liquidate - the answering is a resounding yes!
You should buy up Steem and power up as soon as possible. Well hold on, now I think I know what you're thinking about. Just like me, you're probably wondering if you should spend your hard-earned Steem Dollars now, or wait for a better price? Or keep trading Steem to build up more Steem?
So now the real question is - what's the opportunity cost of waiting to buy more Steem Power?
Let's start dissecting this question. Have a look at the chart below:-
Look at time A: This was the point in time when I had 1500 Steem Dollars. Buying at this time I would've bagged myself an extra 1500 / 4.6 = 326 Steem Power. If I wait for time B, which is 10 days after, I would've gained 1500 / 2.3 = 652 Steem Power.
Now, considering that the Steem network distributes more Steem Power to account holders propotionately over time, it's safe to say I would've gained some extra Steem Power at time B if I actually bought Steem Power at time A.
How much extra? Definitely not from 326 Steem Power to 652 Steem Power in just a matter of 10 days. In fact, if I had bought at time A, that 326 Steem Power would double up in a year (I think). So I would have gained an extra (326 / days in a year) x 10 days = 8.9 Steem Power from buying at time A at a more expensive price.
So clearly, in this case, waiting for 10 days to buy at time B would be a better choice as you would've gained double the Steem Power compared to a purchase at time A. Plus, buying at time B in this case would've given you far better returns as Steem Power increases over time.
But here's the catch, everything always looks better at hindsight. For all we know, the price probably wouldn't have even dropped to 2.30 USD / Steem at time B. But it happened. Steem's market cap at ~350 million USD is still a baby with its immense potential. The price could've skyrocketed again and you miss a relatively cheap buy at time A. Consider a benchmark like Angry Birds being valuated at 1.5 billion USD. I think Steem has no problem surpassing that figure. Buying now would mean about 4-5x increase in your Steem value.
Also consider the fact that it takes intense discipline to monitor and decide if you're trading and waiting for the price to drop so you can maximize your Steem Dollars. Being a minimalist myself, I'd consider that a huge timesink, and time is very valuable. Even more valuable than money. The optimist in me says buy Steem Power asap!
Especially now, if you look at the chart above, it clearly show that Steem is currently at the support & resistance line. It's a very good entry. If you are not in any rush to pay off bills or whatever, considering buying more Steem Power now. I've already gotten a fair share Poloniex :)
Note: Please do not take this as trading advice. Just being optimistic about Steem! And I also have some buys at the lower end.. it's the chinese trader blood in me..
Hopefully no whales playing dumping game , and hopefully that price didnt hit support line . let prays steem coin will bounce back .
That's the beauty of steemit, even a few major players power down, it'll take 2 years to completely liquidate. There's more than enough time for the community to come as a whole, do stuff, and regain market confidence
Agree . but if people keep selling steem there also a change steem will fall slowly . nobody buying no too many supply nl demand is no good thing .
ya i got it now, thanks
I keep powering up and keep on the work of curation and my daily readings with some upvoting here and there as well. Thank you for the information, thrive on and namaste :)
i just bought 5000 SP at 2.3 !
The disclaimer made the post :)
Haha.. it's intended as an overly hypish article.. :D Thanks dude!
Not exactly - STEEM has very high inflation vs SP. This is designed to devalue STEEM and stop it being a speculation vehicle.
Right now we are in the early stages - very little STEEM is available and there is a lot of hype around it. This has resulted in a very high STEEM price.
Once the inflation starts to kick in the price should start to fall so your Steem Dollars may actually buy you more SP if you wait.
Obviously there are no guarantees because this is crypto but you might be better off holding off until the supply catches up with the demand.
Powering up right now risks buying in near the top of the pump (the price has fallen a little but it is too early to be due to the inflation mechanism).
Anyway read the whitepaper if you need more information on how it works.
https://steem.io/SteemWhitePaper.pdf
@thecryptofiend Ahh the magic keywords, "there are no guarantees because this is crypto". If only more people kept this in mind. I have a feeling while some may be very familiar with crypto on Steemit, a majority of people are more familiar with blogging and social media.
Crypto incentivized social media is a brand new concept. This project really could go either way but as of yet there's really no precedent to compare it to.
Your statement about no guarantees and the depth of your above post would seem to imply you are quite familiar with Cryptocurrencies, exchanges, and the market as a whole. To the best of my knowledge most altcoins gain traction fast while they're easy to mine (in the case of POW's) , pump fast, and dump just as quickly. Very few if any have a life expectancy that even comes close to everyone's favorite crypto gold standard, the Bitcoin. BTC seems to be the metric by which most crypto currencies are compared but none have even come close in price or popularity to Bitcoin.
More often than not an Altcoin created this late in the game has a relatively short life expectancy compared to some of the early SHA256 and Scrypt coins from back in the days. Only time will tell if the social media aspect of Steem and it's lottery like comparisons will be enough to keep it afloat.
As of now the SBD which was supposed to be pegged as close as possible at a 1:1 ratio with the USD is already trading at 83 cents on the dollar and that's only 10 days after its initial appearance on Poloinex. Granted it's holding pretty stead over the past few days. The trade volume is so low it's hard to get a large enough sampling to make more than a mildly educated speculation on what it future holds for SBD.
In any case, this 7 day graph speaks volumes about the price trend post hype, and it's only been on the market for 10 days... As always with crypto my friends, Caveat Emptor. Most especially with a crypto that is still in it's infancy and self proclaimed beta stages. Only time will tell if the unique structuring, multi currency split social platform will be enough to mitigate the risks involved with such a bold project.
As I stated above, we have no other similar project to compare too, but as always do not put in what you can not afford to lose. Crypto can seem like a god send but there's just as many horror stories as there are ones of success.
The best way to protect yourself is do your homework, read the white paper, and stay informed of changes to the platform as they come about. The last hard fork made some major changes. At this point no one but you can decide your own personal risk/reward factors because everyone's situation is different. A good rule of thumb in investing is to diversify your holdings and hedge your bets because few stories of success have come from the "all eggs in one basket" method of investing.
Stay Safe! Stay Educated, and always remember @thecryptofiend 's golden words of wisdom, "there are no guarantees because this is crypto!"
Thanks @alifton for that outstanding post. Yes I'm not new to this - I've been in and out of crypto since late 2013 and I'm still learning and making mistakes. Mostly mistakes but I think that is how you learn best.
Any time you think something is a dead certainty in this field it has a habit of pulling the rug out from under you.
Your advice (diversification etc.) is very apt but I suspect people will only follow it after they lose enough to make them realise how important it is!
@thecryptofiend We've all made mistakes. What more important, is did we learn from them along the way. God knows I've had more than my fair share in my life.
Maybe we should start a thread or tag for intro to crypto so we can help others get caught up to speed if they're new. Hopefully in-turn we can all learn from each other and the collective years people have spent feeling out the world of crypto along the way.
From the early days of GPU mining SHA256 (when it was still possible) to game changing ASIC's and even further down the road into ASIC resistant algo's like Etherium and Cryptonote.
They all have pros and cons and Steemit being crypto based social media might not be a bad place to discuss it in an open forum format. ;-)
PS: I forgot to put that I added you to my followed users list after checking out some of you more interesting posts about the DOA hack, it's timing and in theory could it have been considered a well timed white hat attempt to stop a much larger problem from occurring down the road. The post was insightful and something I've actually debated elsewhere with people as to its implications and timing.
Was it Black, White, or Grey would be a matter of opinion because no one will ever know for sure the motive behind the breech. In any case no matter how you label it, the hard fork bailout would have been much harder to pull off had the DOA pressed on only to be hacked later down the road.
Thanks for the lengthy response @thecryptofiend! What do you mean once the inflation start to kick in? I'm under the assumption that Steem is constantly inflationary. I think Steemit went from 2-3k people to 40k people in less than a month. Network effects to behold.
Anyway.. it's just an article intending to be hypish. At first I thought powering up at 4.6 usd instead of waiting for 2.3 usd would result in greater long-term benefit. But it's clearly not the case lol.. Yeap I've gone through the whitepaper. Is it safe so say that an account of 20k Steem Power will become 40k Steem Power by end of 1 year?
Great post @kevinwong and also great responses @thecryptofiend I love the discussion going on here. Hmmmmm.... Makes it hard to know what to do. I have some Steem Dollars. and was waiting for it to go closer to $1 USD to cash out but right now on the internal market Steem is going for $2.32 compared to $2.19 on Polo. Hmmmmm. Tough one because Steem Dollars is going for $0.92 right now.
It was a poor choice of words - I just meant when the supply of STEEM is sufficiently large.
A big problem with purchasing Steem Power is that it is extremely difficult to liquidate once you power up. If you ever decide to Power down and sell your Steem Power you can only do it over the course of 104 weeks (2 years) in 104 equal installments. Steem Dollars and Steem can be sold at any time. Yes, there is a strong incentive to Power Up but only if you are totally convinced in the longevity of the Steem project. Whatever Steem Power you now have cannot be fully sold or liquidated for a full 2 years. 2 years is an eternity in the blockchain space, many things can happen.
Lets take all scenarios into consideration and not just blindly hope for the best. Many of the whales are cashing in their Steem Dollars on Exchanges rather than powering up.
That being said, if you firmly believe that Steem will be a great success (which I do) by all means Power up all your earnings and collect that high interest rate that the platform pays.
I think the slow power down is the system's strength, if market confidence ever plummet, there's still time for the community to come together and solve problems, regaining market confidence.
It certainly is a fundamental design pillar but perhaps 2 years is somewhat excessive.
As a trader I will say this is great man, yes it is a trading advice for long term , steem now is in the bottom , we can never see this prices again, as a steemit member all what i'm doing now is put every penny on steem power, Thank you for the great work on this post bro
Remember only put in what you can afford to lose brother. Crypto is still a fresh industry, lots of obstacles ahead :)
I have lost many times but only when I trade with emotions, trading is patient and it's not make it for every one, traders are not gambler they are usually smart and they know what they do
thanx the share @kevinwong
To buy SP is a way to earn on STEEM price dropping. When there is clear upward trend it's time to buy Steem. Is it correct?
Hey Kevin,
Thank you for your insight I just bou 7 steem from a mining payout :)
I have been doing that every time I get paid out.
Can one transfer Steem from poloniex to Steem in Steemit?
Cheers!
on poloniex click on balances > deposits and withdrawls
click on withdrawl next to your STEEM wallet and enter your account name in the address and fill in your withdrawl amount.
BOOM! :)
Stay Steemy
i only responded because it took me like 30mins to figure out how to send steem from polo to steemit earlier today. haha.
Yes you can transfer from Poloniex (i think), I've only tried sending to Poloniex before.
Thanks for dropping by a word, mate!
Hey Kevin,
With pleasure man!
I don't think so man! I just checked again and did not see the option to transfer Steem. I only see BTC to Steem.
I asked this same question and a bunch more here in case you want to see: https://steemit.com/steemit/@thedailyhobbyist/a-quick-list-of-questions-from-a-semi-newbie-looking-to-invest-in-steem-with-money-and-time
Now thats what I CALL GOOD CONTENT! I totally agree w/u ! Keep up the good work
Nice post, i´m just waiting for a btc payment to buy STEEM to power up my SP, i think that now is a good to buy and hold for long term.
Could have been better if it wasn't so hypish lol.. but yea typed it out coz i'm feeling optimistic
Another good reason is, and I'm not 100% sure of this, maybe 95%, that without much SP your smaller curation rewards get rounded down to zero, and with more SP you'll collect more of the smaller ones.
Craig Grant takes us to the same place.
Different route, same SP smile.
wow very nice
Nice, you got me to follow you.
Great strategy also steem needs people powering up dollars as well it will be good for currency too
Everything is in the beginning stage. Next year these prices will look like bargain
coming from Craig Grant if one stays close to blogging curating and voting the SP bleeds back payout quicker than can need it.
The mythical Horn of Plenty comes to mind.
Stop and then see it dwindle.
thanks man great informative post.
This powering up stuff is not quite as easy as it looks, unfortunately. Seems like a clunky process. With it was as easy as doing a transfer.
I dont even know yet what it is Steem Power and Steem Dolar is...