I'm going to disagree with almost everyone here and say that in the long run we will be better off without Steem Dollars. I think a lot of the opposition comes from people who don't understand the fact that SD is not a token in itself.
It is a smart contract to buy one dollars worth of Steem and it introduces the whole issue of debt into the economic equation in a way that may actually make Steem less stable. Getting rid of it may actually increase the value of your payouts.
Speculators will either have to buy Steem or not buy Steem - the presence of SD gives them a safe place to hedge against volatility but the price for that is reduced demand for the real currency which is Steem. As long as you have the SD it will prevent the Steem market from maturing.
Getting rid of it has nothing to do with simplicity - that is an added bonus. The real reason to get rid of it is economic and if you are here you should care about that.
To steem, SBD is a like crutches, a wheelchair, or bicycle training wheels, it's time to move on without it. I see a bright future for steem with no steem dollar
Great points! The increased volatility of Steem due to SBD wasn't mentioned on the show and it is true.
I am all for the removal of SBD if doing so serves to give STEEM the wings it needs to soar to the heights we all know it is capable of reaching. One thing that I believe needs to be clarified in greater detail is how that process would be actuated.
There are plenty of SBD tokens out there currently being held by members of the community. It seems to me that if all SBD were exchanged for $1 worth of STEEM at the same time then that would be a serious problem.
I would expect the removal of SBD would have to be phased out over a period of time, and I think that you or Dan should present the community with a plan of action for how that could--should the community want it--be implemented.
There needs to be a clear method in place as to how this would be achieved before users can confidently decide whether it will be helpful or hurtful to the economy.
This is the main issue that needs addressing.
The community/traders would have incentive to lower the price of Steem in order to get more Steem per SD. Simultaneously, this would incentivize the holding/buying of SD to sell at latest point possible.
The only clear solution and fair method to address this connundrum that I can see is for Steemit to purchase ALL SD at either market rate or preferably an agreed price which would also have to have the consensus of the community/stake-holders. We can't just take or force holders of SD to sell, however holders after a certain date would be holding them on a defunct chain.
The further benefit to this is that it would distribute Steem further, help further de-centralise consensus/influence and substantially reduce Steemit's holdings. This would be consistent with Steemit's stated goals and would address the further problem of perception and FUD currently circulating by detractors.
If this can all be managed, then I believe Steem has a great chance to become THE digital cash of the future. This would help marketing and general perception and adoption by the larger public I believe. Anyway, just my thoughts....
Thanks.
The main benefit that I see with SBD is that there is little to no risk "cashing it out." I've withdrawn around $5000 since starting steemit, but all in the form of SBD. Since it'll always be worth around $1.00, I won't miss my chance by selling it too early or too late, so it's a safe way to earn something now from steemit.
I have almost 7000 liquid STEEM, because I have only rarely powered up 100% and I have never sold any STEEM. My SP and STEEM will be held long-term.
From my point of view, SBD is the best way to withdraw something from the wallet without risking major losses in the future because of a premature withdraw.
Of course, we all want the value of STEEM itself to increase, so if removing the SBD from the platform can help accomplish that, then @papa-pepper will support that decision, but the stability of the SBD may be worth more to the platform in other ways, so many variables must be considered.
Thanks for all that you guys have done and are doing @ned!
In the long run sure, SBD could be done away with. But not while people are still learning about crypto and we want to be the ones to introduce them to it. We are miles and miles away from being ready to give up the stable gateway cryptocurrency that brought so many people to the crypto space back in July.
Honestly, I don't think I'd even be here if it weren't for SBD. At the very least I think we should take our time to adjust to the recent economic changes before we go making more.
I don't think you understand the point I am making. People will go where the money is whether the SD is there or not. For example I prefer Bitcoins to regular money because of the potential for it to grow in value.
SD let's people hold a cryptocurrency without any risk of loss of value - that means that there is no incentive for anyone to really buy Steem. That cuts demand which reduces price.
At what point do we say we have gone too low 1 cent, one tenth of a cent? It is not sustainable.
Simplicity for newbies is not good enough of an excuse to maintain it. If Steem goes down to virtually zero no newbies will be coming after it - nobody will want it.
As Ned says in the interview, the price is not what's important right now. What is important now is growth.
I understand perfectly that SBD is a token if debt. Technically though, the pound is a token of debt too. Yes, it will reduce demand for steem for those who are still adjusting to cryptocurrency. But for those who decide that cryptocurrency is a concept worth learning about and buying into, it is SBD that will ease them into it. Everybody else will gradually see value in Steem as SP and that will gradually increase demand.
I'm not worried about the price hitting 1c although I don't think that it will. There is enough passion for steem right here, we don't need to force noobs into it. They need to come to the realisations we did themselves.
You can't disentangle the two. The pound (even though it is doing badly now) has nowhere near the volatility of a cryptocurrency.
The lower the Steem value goes, the smaller the value of payouts will be. New people will be less attracted by that.
Further I don't think having a pegged note is any simpler than having a cryptocurrency on it's own. People can understand that different currencies have different values.
I really don't see any disadvantage to removing the Steem Dollar in that sense. People will go where the money is like I said before. Money is a great motivator to learn new things.
People will go where the money is -correct. So what does it matter if the payouts get low? I don't see any other social media platforms paying me a couple cents for a comment. We're safer to attract a userbase while the price is low, rather than when the price is unrealistically high, as people quickly get used to making that kind of money, and suddenly $40 a post isn't enough. This is a better price to grow at!
I think most people would go where they are getting $40 dollars versus 40 cents. Further at some point i.e. when your payouts become next to worthless you don't have any benefit left versus other websites that don't pay you.
We must also be wary that there are several alternatives and someone could easily spin off their own version of Steemit that gets this right.
I don't see the compelling reason to keep the SD on that basis.
steem will be a much stronger currency without the ball and chain of SBD, and users who get paid will follow the money wherever it goes, steem with SBD is like a baby with a pacifier, already got rid of pampers(hyper inflation), and steem will be a toddler soon, no need for SBD
Absolutely, it's not needed and will help simplify things over all, as Ned suggests. But those who want the quick $ will want to keep it around for now.
Those people have no grasp of economics.
Steem Dollars have, for me, always been a quandary.
On the one hand, it has been really nice to have them as an option. On the other, I realize that having the power to demand a certain dollar amount of Steem at any time can only lead to Steem inflation.
I don't know that I am ready to let go of the Steem Dollar, but, at the same time, I don't know if Steemit can survive with it.
It leads not specifically to inflation but to leverage. That is, increased inflation when the STEEM price is declining but decreased inflation when the STEEM price is rising (i.e. $1 paid out in SBD rewards can only demand a smaller number of appreciated STEEM)
Nonsensical to you perhaps. Not to me. On the basis of that reasoning we don't need SD anyway since we have USDt or real USD.
We will not agree on this so let's just leave it there.
Why not offer a competing and potentially superior USD peg token within the ecosystem instead of using something external? Unless I'm wrong, Tether has 10 minute (average, so you could be waiting 30 minutes+ sometimes) confirmation times because it's built on Omni which is built on the Bitcoin blockchain. Steem blocks are 3 seconds apart. Nowhere do I see Tether being advertised as speedy.
It might be a longshot but Steem's SBD has the chance of being a popular and possibly even de facto USD pegged token in the cryptocurrency world as it expands to include more than just computer nerds (in line with the goal of Steem).
I think it is dependent on how many people it brings in. It might be useful to get some more expert economic opinion on this - I wonder if there are any economists in the community who can look at this?
That is the heart of the problem I think. We want what is best for Steem but common sense says to hold onto those SD if we think the price will fall. Multiply that by a thousand or ten thousand and it is a problem for demand. On an individual basis it makes sense because we want to increase our holdings but as a community it hurts us.
That really really doesn't make sense. There are plenty of price-stable places to put your money if you want a volatility hedge; for example: USD. By your argument, "as long as we have the US Dollar, it will prevent Steem from maturing." I have a (relatively) large SBD balance; I have that balance because I want price stability. If I were forced to get rid of my SBD, I'd simply convert it to USD.
Maybe but my view is that it distracts attention from Steem itself. Right now you have two choices if you want to invest in Steem, Steem itself and SD.
I would be interested in some professional economic opinions on it.
That doesn't mean everybody would. It is not a straightforward issue and I think everyone does things differently. That is why how markets behave can often be counter-intuitive. For everyone who sells there is also someone who buys.
I'm certainly no expert though so I would love to get some feedback from someone who has professional knowledge in this area. Perhaps there are historical examples of something similar that we can use to guide us?
Also what do you think of @tombstones suggestion of reducing the interest on SD?
So let me ask you, why was SBD created in the first place? Why are the reasons for its creation any different today as then were then?
The original reason as I understand it was to give a more stable currency to be utilised against the hyperinflationary nature of Steem itself. I don't think it was meant to be used or traded the way it was. Since we no longer have the hyperinflationary model the rational for it is gone.
I'm happy we've done away with hyperinflation, but that's no reason to remove SBD since it wasn't the only way of escaping the hyperinflation to begin with. In fact, there were many options to avoid the hyperinflation of STEEM (including SP, almost any other cryptocurrency, most fiat currencies, etc.)
For many people, the primary value proposition of SBD was (and still is) instead to escape the volatility of cryptocurrencies, while still holding an asset 100% in their control (i.e. zero counter-party risk). In fact, I would argue that this is the best reason for most people to hold SBD (perhaps aside from earning interest, depending on your needs and point of view).
Some have also argued that SBD causes systemic risk. But in that case why not just lower the interest rate (substantially, if need be)? That way fewer people will hold it, but it will remain a selling point for some % of people that otherwise might not consider the platform.
Great point. I hadn't considered that. Could we make the interest rate zero or equivalent to it to in an economic sense to just compensate for real world inflation? I think that could be a compromise. Thank you:)
Great points here @tombstone! It also allows people to "hide out" in times of volatility in the underlying currency while not leaving the ecosystem... not many other cryptocurrencies allow you to do that! :) BTW, what made you pick your name? Tombstone is one of my all time favorite movies! :)
Granted, we did away with hyperinflation, but there are other benefits that are just as valid to helping noobs understand and adopt SBD and Steem and easier for merchants to understand. Isn't that just as important?
Can it be sustained and paid for with the Steem price so low? That seems to be the real issue. Is it being managed right?
I know some of my friends joined because they liked the simplicity of the SBD. It's easy to understand for them
I don't think there is any way to know for sure. These are new realities and it is all very experimental.
Perfect response. I agree... always thought it would be too confusing to have two tokens. Having two tradeable tokens is confusing to new users.
Oh sir you hit the nail on the head.
Your argument seems logical to me @thecryptofiend!
Thanks:)
Thanks.
No they don't. They can simply go elsewhere (including USD etc.), as can merchants and users. No one is limited to the choices offered on one particular blockchain.
You miss the point entirely.
I disagree. I believe you are missing the point. SBD provides a distinct service, which brings more people to the Steem blockchain and ecosystem, adding value to both through greater adoption and incremental utility. The situation that is realistic is not people being forced to choose between STEEM and SBD and therefore choosing STEEM instead, it is people choosing between anything Steem and something else. People who are put off by volatility (which is a huge impediment to cryptocurrency, even the least volatile) and want stable value will not suddenly decide on STEEM from the entire universe of assets (or the smaller universe of blockchain) if SBD is eliminated, they will simply not be here at all.
We will have to disagree on this.
Can you elaborate on that? How is the demand for steem reduced? Interested to learn more about this.
Read my responses elsewhere in the same post. Sorry it is 2 am here and must go to bed:)
Can you paste a quote maybe? I did read your posts and couldn't find any explanation which is why I am asking.
Here is the simple one. This is not the only reason though.
I want to increase my Steem holdings. I could buy Steem now or buy in the future. If I buy now I have the risk that Steem will devalue and be worth less in the future.
If I hang onto SD it will still be worth one dollar in the future and if Steem falls I will be able to buy more Steem for my SD in the future.
It therefore makes sense for me to hold onto SD if I think that there is a potential for Steem to fall.
The more people that do this the less demand for Steem there will be, further you also increase outstanding debt in the system. This can then become a self-fulfilling prophecy - less demand for Steem leads to lower prices, leads to lower demand. That makes SD even more attractive.
Even if Steem is only falling slowly it encourages more people to invest in SD instead of Steem. Markets work on sentiments and this kind of sentiment can easily get out of control and become a downward spiral.
I hope that explains it.
Getting rid of SBD does not change this. If I think STEEM is going to fall I will hold BTC or Tether or real USD or something else. I won't suddenly decide to hold something I expect to fall because you have removed one of a huge number of available alternatives. This argument is nonsensical.
Also, SBD isn't in high demand externally. Look at Poloniex... there are zombie coins trading at higher levels. People don't rush into SBD as a hedge... they go to BTC, Tether, etc. My god, has SBD become the zombie coin within Steemit.com??
Thanks for your answer. I don't know why but I always had this idea that the SBD interest incentive would bring in many investors and thus create demand for steem. I was wrong I totally forgot that they could directly buy SBD on the market instead of steem so SBD doesn't really offer any benefits for steem/ SP holders does it?
If the answer is no then it's a no brainer to remove SBD entirely.
Users who invest in steem can deal with the fluctuation, this is to be expected. And I don't think users who earn steem by blogging would be really bothered with slight price movement.
It looks like SBD owners would create debt whether they sell or not, when they sell more steem are created and when they don't the interest they receive from not selling would also mean new steem were created, how does the system keep the debt in check ? Seems like SBD is creating constant inflation is that right?
It make sense to get rid of SBD I think.
I was on the fence, but your comment just made my mind up. I didn't understand the complexities of SBD and how it effected the price of STEEM, and judging from the comments, neither do most here. Thank you for explaining it in perhaps the most concise way possible.
Thanks I'm glad it made sense.
I have read enough of your posts to know that this is simply not true.
Thank you :) Sorry I edited out the second bit but thank you for your kindness. It is hard to know how well one is explaining things oftentimes.