Yesterday, I published this post: STEEM: From Social Media and Investment Platform to Global Digital Currency. I'd meant to get into more depth with it about how I think STEEM can become that global digital currency, even with the value of STEEM at its current value and SBD trailing under $1 USD.
As it turned out, the post became more of an introduction to furthering this idea, and so I'll continue with that now.
I left off saying that I felt STEEM could start becoming a global digital currency now, especially in countries where the value of fiat is considerably less against the dollar or euro. It would depend largely on what resources are available in these countries, but in some cases, transacting in STEEM might be a step up.
However, I wanted to address a couple of factors and a few subfactors that I believe make it possible for businesses if not industries to get up and running on STEEM, even in the United States, Europe, and other first world areas.
Could supercars be manufactured for considerably less than they are now if inflation, debt and taxes imposed by banks and governments were eliminated?
One of the essential reasons cryptocurrency was created in the first place was to cut out the middleman, in this case, banks. Cryptocurrency is not subject to the same economic manipulation that the dollar or other currencies are based on whatever central bank might be involved. In other words, Bitcoin, Ethereum, etc., including STEEM, are not subject to the whims of money making policy.
This is very helpful for a business who wishes to transact in STEEM, or crypto as a whole. They have access to their liquid STEEM anytime they want it, and on this particular blockchain, it transpires in three seconds, and it's without a fee.
Currently, STEEM has a stated inflation of less than 9%. Effective inflation, due to other factors, is said to be higher, perhaps into the upper teens. There has been talk about making STEEM more attractive to investors by lowering or getting rid of the inflation. That would mean no reward pool as we currently know it, or for that matter a reduction in funding for the SPS (STEEM Proposal System) and for Witnesses.
However, STEEM does have built in inflationary safeguards, where the amount of inflation decreases overtime. Even if nothing is done, inflation will continue down along a twenty year or so period. What the effective STEEM inflation rate may look like by then if nothing changes, I don't know, but the point is, there's not a central bank creating artificial STEEM out of thin air in mass quantities in hopes of controlling or containing whatever global financial crisis might be occurring.
That's a good thing. That means STEEM holds value at a greater rate relative to itself.
Consider the dollar. It's been around as a monetary unit since 1785, with the Coinage Act of 1792 basically organizing it. If we look at inflation since 1792, the dollar has declined by over 2,500%! In other words, a dollar in 1792 would buy you over $26 worth of stuff today.
At that value, I could pay my monthly mortgage with 13 1792 dollars.
Unfortunately, it doesn't work that way.
STEEM, and crypto in general, doesn't have the same inflationary issues. Which means goods, services, and payments are not subject to the inflationary rates of fiat. That in and of itself should make STEEM very attractive for doing business.
The other major factor in cryptocurrency and STEEM's favor is that there is no government, central or otherwise, issuing the currency. Aside from the Witnesses, whose purpose is to ensure the integrity of each block they verify, validating each transaction in the process, there isn't an official governing authority. We could argue over who controls what on STEEM, but it's not a giant sprawling federal bureaucracy.
That's good. That means that STEEM is not subject to two other subfactors that along with inflation cause prices on everyday goods and services to rise.
The next subfactor is debt. Most, if not all nations on Earth, have some amount of debt. In many cases, this national debt is beyond the ability of all of its citizens to pay back, if the loans were ever suddenly called due. The United States is constantly running in the red to the tune of trillions of dollars each year. So, too, the nations of the European Union, and other so-called first world countries.
Like the inflationary rates of fiat, STEEM is not subject to these national debts. It sits outside of it, since it is not a government created currency, accepted within that nation, or in case of the dollar, accepted throughout the world. Debt in and of itself might not be entirely bad, but it does have bearing on the costs of products and services, and is compounded by the next subfactor.
STEEM, along with the rest of crypto, is not subject to taxation by any governing authority. The taxing problem occurs where fiat is involved, be it with capital gains on earnings, or earnings withdrawal. If everything were earned in STEEM, and it stayed as such, STEEM would not be taxable.
To be clear, what I mean by this is, everything that an individual, entity, organization, business, etc., does, would have to be done in STEEM, or some other cryptocurrency. It would have to be earned and spent in STEEM for it not to be subject to any type of tax.
This is because STEEM wasn't created by any government and is therefore not subject to its laws of taxation. Countries only have jurisdiction when their fiat is involved somehow.
This is good for businesses, indeed entire industries, who could wish to create products and services using STEEM as their monetary unit. Taxes permeate every last thing we buy multiple times, because at each point along the way, taxes, along with inflation and debt, are being added to the cost.
With STEEM, such is not the case. There is not a governing authority setting tax rates.
That means the costs that businesses incur would be less, which in turn, would make it possible to manufacture products for less.
How much so?
Well, I don't have real world numbers to work with, but if you consider how many companies are involved in making the products we buy, we can start to get an idea.
Companies in the United States by and large will have employee payroll taxes to pay, along with property taxes (if they own their own buildings and the land it sits on), or it will be factored into their lease payments, taxes on the energy they use (electricity, natural gas, gasoline, etc.), taxes excised with telecommunication services (telephone, internet), taxes associated with any air transportation, taxes on imported goods used in manufacturing products, taxes involved in shipping and receiving those products—and the list goes on.
In many cases, there are federal taxes, state taxes, county taxes, and local or city taxes, and sales taxes which might come to bear. By the time all is said and done, one small component can have taxes factored in many times over depending on how many different entities touch it. All of that, along with the actual cost of production, gets factored into price.
With STEEM, no taxing authority means that redundancy in taxation, and therefore cost, does not need to be passed on from manufacturer, to wholesaler, to retailer to consumer.
Since STEEM sits outside of the clutches of central banks and governing bodies, it is not affected by the artificial inflation, enormous debt or burdensome taxation they impose on the fiat they create or regulate. That makes STEEM much more viable a currency to operate in. No, it's not going to happen overnight (it hasn't happened in three years and counting), but if we were to start to frame the conversation where these excesses are addressed, I think we could get folks thinking more about what they're doing and the many advantages STEEM has.
Look. Governments of any kind and size, have over the course of history, taken whatever they've wanted. They've oppressed, killed, smeared, imprisoned and taxed anyone and anything that they don't like. In reality, there's very little stopping them from doing so with crypto, if they so chose.
And if it meant continuing on with the power and control they have over resources and the masses that they have now, they wouldn't hesitate to band together to put an end to crypto as we know it. Creating centralized crypto they direct will probably be the way they do it, but regardless, decentralized, transparent, trustless cryptocurrency systems could end up in the dustbin of history if governments decided to act in unison.
For now, they're still trying to decide what they want to do, which is good. How long that will last is anyone's guess, as moves are already being made in one direction or another.
Personally, I feel serious consideration needs to be given to promoting STEEM as a global digital currency, not just a social media or investment platform. The sooner STEEM can start to be something we can all use to get the products and services we all need and want, the more likely it is to really take place. The longer it takes, the more likely governments or other centralized/controlling entities will make moves to thwart it.