STEEM is a fungible token, meaning that any one STEEM can be replaced with any other STEEM and it will behave the same. However, not all STEEM was created equally.
When most people think about the source of STEEM, they think the rewards pool, the inflation that gets injected into the supply through voting, SPS, interest and the witness payments. But that isn't where most of the STEEM in circulation comes from.
There is currently 340,236,154 STEEM in the total supply. Now I don't have numbers and I wasn't here for the earliest days of the Steem Blockchain, but over the last almost 4 years of the chain ticking along every 3 seconds, about 100 million Steem has come out of the rewards pool. I am sure someone who can would be able to get an accurate account of this, but it doesn't really matter for the purpose of this post.
So, 100M STEEM out of the pool but 340M in the supply? Well, that is because in the very earliest days of the Steem blockchain, the initial supply didn't come from the rewards pool as it does now, it was mined - much like Bitcoin. However, while there are quite a few accounts that mined STEEM in those early days with some of the largest accounts on Steem being among them, one set of miners had designed and set up the system to have an unfair advantage over others - Steemit Inc.
This advantage allowed them to take an enormous amount of STEEM from the mining process by leaving all other miners at a clear disadvantage. As a result, the initial mining balance was very much out of balance from the get-go and Steemit Inc made some social contracts with participants as to how they were going to use that stake - which was in essence, to use it for the development of the Steem blockchain, but not have it get involved with governance of the blockchain.
And for the most part, Steemit Inc has kept their promise with a few caveats including the selling of some to keep afloat and the Misterdelegation account which delegated to applications and voted, but could definitely be construed with some charity, as helping develop the blockchain.
This created an often tense but generally amicable status quo. However, once Steemit Inc and that stake got sold, there was no telling what was going to happen with it, hence the softfork that put limitations on that stake. Now, while there are many opinions about right and wrong and whatever in between, I think the witnesses made a decision on what they considered in the best interest of the Steem blockchain. At least at the time. How it plays out is still up for grabs.
Here we are today.
But, I have done a bit of thinking on STEEM supply several weeks before Justin Sun rode into town, and find it all quite interesting. I stole these numbers from 
Total amount of STEEM stored on all exchanges: 97,099,804 STEEM
Total STEEM supply: 339,814,612 STEEM
Liquid STEEM: 129,722,926 STEEM
Notice something? There s about 100M Steem stored on all the exchanges, which is almost exactly what has come out of the rewards pool for the last four years. Now, while we could say that it is all the selling going on by authors, that isn't the case at all. It can't be.
The reason is that there is ~209 million Steem staked in Steem Power (the difference between total and liquid) and that is distributed across many thousands of accounts like my own that didn't mine STEEM. While some of the earliest non-mining accounts earned a massive amount of STEEM and powered down to the exchanges, there are also many authors who have continually powered up. their earnings. What this means is that most of the STEEM on the exchanges is much more likely to be from the initial mining operations, not from authors.
From what I understand, there was 250,000,000 STEEM mined before the chain started to deliver similarly to as it does now, but based on the declining inflation rate, it will take eleven years from the start or thereabouts, before there is 250 million STEEM is distributed from the rewards pool. And after 20 years of operation, which is around the year 2036, there will only be about 630 million STEEM in circulation. Not too much considering that in 16 years, we should have a few more people around than today.
But, this isn't really what I was going to get into either, but I think that it is interesting to note that while we fight for the reward pool today, we are still being heavily punished on the exchanges from the initial mined STEEM. While it would have been a totally different ball game had the mine not happened the way it did...
Here we are today.
So, while that STEEM in the Steemit Inc accounts is fungible as individual tokens, it actually kind of isn't while it is locked up in those accounts, as we know exactly where it came from. The mine. The mine where Steemit Inc had a very large advantage over others. I wonder how many of the STEEM I have bought off exchanges is mined STEEM? Well the chances are, probably most.
Again, here we are today.
The softfork locked up those STEEM tokens held in a few accounts that are known to have been sold to Justin Sun, for precautionary measures, it wasn't random, it wasn't personal, the source of those STEEM are well known and, they had some conditions preset on them. While I am still unsure as to whether good or bad, the softfork in part, formalized those conditions into the code.
This act by the witnesses has created a lot of turmoil and raised many questions, with one being, "if thy did it once, they can do it again".
Yes, they can. The witnesses can essentially do the same thing to any account on the Steem blockchain, but would they exercise that ability for any account, or would they only exercise it in the case of the STEEM that they know was part of what is referred to as the Ninja mine?
I got an interesting question today concerning this from a member of the Korean community who asked, would the witnesses do the same thing if the Korean community collected 10 million dollars, bought 50 million STEEM and tried to control the witnesses.
I do not think they would.
The reason is that the STEEM bought from the exchanges is liquid STEEM, fungible, unknown and "fair game". If someone or a group tried to control the blockchain through these measures, I think that would be considered above board and the witnesses would do their job and protect the chain as dictated and driven by the community stake. And - it would be community stake.
Due to the way the Steemit Inc stake was mined, it is definitely not part of the community. Now, do not be mistaken, this doesn't mean all mined STEEM or those who mined it are involved in this. Mining coins is common place to build a distribution network and the earliest in benefit. The problem with the Steemit Inc mined stake is the conditions that they engineered to ensure that they had such a clear advantage in proceedings, essentially giving them control of the blockchain.
Oh, and I would like to address one issue with the scenario of the 10 million dollars for 50 million STEEM above and that is, buying 50 million STEEM for 10 million is impossible, unless buying the Steemit Inc accounts. Buying over half the supply on exchanges would cause the price of STEEM to moon so hard that by the time a group had collected the 50 million, the price of Steem would likely be in the tens of dollars and the total cost would be in the hundreds of millions, or more.
STEEM pumps hard under buying pressure. It drops hard under selling pressure too.
But as said, I do not think that the witnesses would interfere in the manipulation or attempt to take control of the blockchain from a group that used community STEEM. However, this softfork and locking of stake wasn't community STEEM at all and, it has hung over the heads of investors like the sword of Damacles, with a slender and tenuous thread of social promises as to how it would be used to ensure it would fall.
While I don't know what is going to happen, I think it is good to understand that not all accounts nor STEEM were created equal, and the least and most obviously unequal out of all, are the Steemit Inc accounts and the reamining STEEM they hold.
To finish up, I will put something else on the table for now that most people haven't really seemed to think about.
If we look at the Steemit Inc stake in the 5 locked accounts as permanently unable to vote on governance or be sold on exchanges, it completely changes the makeup of the system. It means that as an investor, you could trust that when prices were climbing, that stake isn't suddenly going to get dumped onto the market and you could trust that it can't be used to centralize outside of the community wishes. Stake is your voice and a community which can gather a lot of stake can speak loudly, but that stake in the Steemit Inc accounts shouldn't have a voice at all, let alone a megaphone blasted through some amps.
While investors might think of the witnesses being able to lock stake as a risk, perhaps the larger investor risk is having one very large account that gained its size unfairly, being able to do what it chooses without any checks or balances. Perhaps the softfork might actually bring some peace of mind to some investors who actually want to have their voice through the stake they bought, without the fear of being overruled by Steemit Inc, who obtained their stake and voice unfairly. Maybe when one of the core requirements of a blockchain is security, on Steem, that takes the meaning for the security of community participants also.
It is hard to predict how this will play out, but I think that at least from a community perspective, if that stake never existed, the community would be better off for it now. If from the start the mined Steem went to more people or the distribution to non-mined accounts started earlier and went wider than it did, we would likely have a much more eclectic and vibrant community.
However, that stake does exist. So we have to deal with it the best we can. What the "best" is for it is very much open for interpretation and debate. Eventually, it will be sorted, one way or another.
