I understand everything you're saying except for the last part. Why would converting it into Steem hurt the community? I fully expect this apparition to right itself and for steem to be the dominant currency, so why not take advantage and convert 20SBD into 30 Steem while I can?
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Because there's a difference between converting and selling. Converting does not give you the market price! When you convert, you get the price of STEEM in USD, not the price of STEEM in SBD. There are technical reasons for this that are important, but unfortunately this makes it incredibly confusing.
Right now, if you convert 20 SBD, you'd only get about 17 STEEM for it (20/1.15). Instead, if you go to the market and sell, you'd get 28 STEEM for it.
It all comes down to the original Steem dev team's poor decision to use the word "convert" for the operation that destroys SBD.
Anyway, do you believe me that there's a technical difference in Steem between "convert" and "sell"? If not, I can try to be more clear.
Ah my bad, I misunderstood. Yeah, never straight up convert it through that button. I went to the internal market and sold/converted it for about 1.5x. Thanks for the clarification
Right, excellent. I wish Steemit would just remove the option to do the destroy/convert operation.
You can't remove the option to convert SBD to Steem without destroying the peg, which is the raison d'être of Steem Backed Dollars. Check out the name, by decree of the Steem Blockchain, 1 SBD is at a minimum worth 1 USD worth of Steem. SBD is basically an IOU from the Steem Blockchain to the holder for 1 USD worth of Steem. Without the convert option the guarantee of 1 USD of value is gone and you're left with nothing more than just another crypto-currency that offers nothing more than what Steem already offers.
A short historical side note: At one time the USD was backed by gold and the holder of 1 USD could go to the treasury and 'convert' that 1 USD to 1 USD worth of gold. That is what is meant by backing a currency. The backed currency is convertible to another store of value on demand and that conversion is what gives that currency its value.
SBDs is a useful currency because it offers this peg that acts as a rock in the turbulence of the crypto market. When the price goes above 1 USD people will dig it out of their wallets and sell it. Which will drive the price down. When the price falls, people will convert their SBD holdings to steem or buy SBD to convert to steem and the price will go up. If everyone is patient the market will fix the problem for you. If you understand the rules of this market, you can not only help restore the peg for SBD but you can profit from helping to restore the peg.
As for hurting the community, I don't understand what damage the community is suffering right now. It is a bit inconvenient for those (myself included) who are looking for a pegged currency to 'lock in' their profits from the recent upswing in the overall crypto market. However, such is life. To complain about this is sorta like complaining about overeating at Thanks Giving to a starving man. Be happy with the upturn, be patient, and the great forces of the Steem economy will return the peg shortly.
It's cool how you just assumed I didn't know what I was talking about, and then wrote a novel to tell me that I'm wrong. I think you just mansplained me.
Indeed. But right now people are converting in droves because they don't understand what it means. Steemit can remove the "convert" button, but leave the blockchain operation intact.
The forces only push the peg in the right direction if people understand them. Hence my post, helping people to understand them. We are all market participants, and I am currently participating in your mystical "great forces of the Steem economy!" It's actually pretty magical.
Please forgive me for 'mansplaining to you'. My actual intention was to mansplain to any one who did not understand the situation or for normal people, just explain. So that everyone that read it can not only participate in the solution but profit from the solution. Please note that this response was not directed to you. It was a response to the whole thread in general. You simply provided me with a good segue into the topic. BYW, how do you know that I'm not a woman? In which case you should have said 'womansplained'.
As for the removal of the convert button, yes, the blockchain would still function. I never said it would not. What I said is that the unique usefulness of SBD would be lost as the peg to USD would be destroyed. This solution would prevent people from converting when the price is above 1 USD. However, it would also prevent people from converting when the price is below 1 USD, which could potentially allow the value of the SBD to drop to 0 and destroy it even if Steem is strong. The convert button is a tool, and with any tool people do need to understand how to use it safely. So they don't disadvantage themselves. That is why I 'wrote a novel' not to embarrass you but to inject a bit of understanding into a thread that I hope will be read by many and of course maybe get a few upvotes.
Also, since when is 4 paragraphs a novel? It's like 10 minutes of writing.
All fair, you're more than welcome to write novels and I apologize for jumping on you like that. I said "novel" because Steemit doesn't display long comments very well and it takes up a lot more space than it could, but of course you didn't do anything wrong. Oh, and are you a woman? I could go change it if you like... ;)
My point is that if the blockchain operation still exists, then people who are technically savvy can execute conversions even if there's no button on Steemit.com. Surely you agree that the convert feature is an advanced feature that is more likely to be misunderstood than understood (just read the comments on this blog post if you're not convinced), and as such it's not unreasonable to take measures to reserve its use for advanced users. Removing it from the website would do this. The incentives to convert when it's appropriate would still exist, and the technically-savvy whales who have API access to the conversion feature would still easily be able to regulate the price of SBD. But it would save casual users from mistakenly losing 30% of the value of their SBD when the price is high.
At the very least, Steemit.com should hide it in some kind of "advanced features" section.
@voicie-of-reason I'm still new to Steem and still trying to figure how it all works. Your reply cleared up a ton of questions I had. Thanks for writing it.
I read your article and was not sure why you were advising not to press the "convert" button. Was it because it would be a waste of cryptomoney for me and that I would make more money selling thorough the market, or was it because you thought the price being out of wack was damaging to the economy as a whole, and thus I'd add to the problem by "converting" SBDs? In other words, I wondered if you were advocating your position on ideological or practical grounds.
The reply from @voice-of-reason cleared that up for me. So please don't get butthurt from his elucidating comment. Maybe you can learn to bring more clarity to your own writing from his feedback.
Sorry, I'm more than happy to be unbutthurt -- thanks for your comment.
Really both, because the incentives are aligned. Doing the right thing for you does the right thing for SBD.
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