According to the Steem Whitepaper
If a token is viewed as ownership in the whole supply of tokens, then a token-convertible-dollar can be
viewed as debt. If the debt to ownership ratio gets too high the entire currency can become unstable. Debt
conversions can dramatically increase the token supply, which in turn is sold on the market suppressing
the price. Subsequent conversions require the issuance of even more tokens. Left unchecked the system
can collapse leaving worthless ownership backing a mountain of debt. The higher the debt to ownership
ratio becomes the less willing new investors are to bring capital to the table.
The high SBD price is good for the long term, but as the whitepaper says, will make Steem unstable because a higher SBD means you can generate way more Steem tokens, thereby significantly affecting the price and supply of Steem.
Also,
If the amount of SBD debt ever exceeds 10% of the total STEEM market cap, the blockchain will automatically reduce the amount of STEEM generated through conversions to a maximum of 10% of the market cap. This ensures that the
blockchain will never have higher than a 10% debt-to-ownership ratio.
Having a high SBD relative to Steem would increase the amount of debt on the network. If the price is high, people will be trying to get as much SBD as possible and then cashing out.
Having it worth $1 USD adds stability. Sure, you could have it worth more, as long as the total value does not exceed 10% of the Steem marketcap, but then you can't really control it as well. The blockchain will not allow you to convert the SBD to an equivalent value of Steem. As a result, I guess people will just send it off into other cryptos.
everything looks correct, but i do not get the point how more steem is going to get generated since SBD is already pegged to $1 here on steemit and 50% of the reward will always be SP which will take SBD as $1.
talking about the outside conversions, they are only possible upto the extant of total STEEM generated already as rewards, nobody can buy more steem than the generated amount and the post payout will increase with rising value of STEEM not SBD.
so authors can earn extra by coverting to other coins but i do not agree that STEEM circulation is going to be affected by a higher valued SBD.
Correct me if i am wrong,
It has nothing to do with the fixed number. It's like stocks. Think shares. They divide in number as their value increases. They start out as an Initial Public Offering--people can purchase them for what they will.
When people from the outside have the opportunity to purchase steem tokens for their businesses, this will revolutionize the world's economy as larger corporations incorporate crypto currency into their model without even realizing it. They'll do Initial Coin Offerings, and bam. Steem value increases (as does the reward pool).
I posted an article on it awhile ago, that I think may answer some of the economical questions on how it impacts the growth here, if you'd like to read it: Smart Media Tokens Take Over the World
You'll have OUTSIDERS speculating on tokens that are steem tied. It's brilliant. I can't friggin wait.
Nowadays, when you convert SBD to STEEM or SP, blocktrades takes into account the value of SBD from exchanges. That is why people got pissed before, because when they sent their SBD to SP, the conversion was assuming that SBD is valued at $1 USD but on exchanges it was worth $5-$13 USD. So if they had $10 SBD, they were only getting $10 USD worth of SP, as opposed to getting $50-$130 worth of Steem/SP.