Earlier I read a post by dragosroua which discussed HBD and the price appreciation. I have seen a number of other posts related to this topic so I feel compelled to write about it to clarify a few things.
https://steemit.com/steemit/@dragosroua/are-you-really-playing-the-steem-long-game
There appears to be great confusion surrounding HBD.
To start, Hive Dollars are debt. Hence, they are a liability to the Hive ecosystem. Each HBD entitles the holder to $1 of $HIVE. This is similar to convertible notes which are often used to fund projects.
The amount of coins outstanding is not limited like $HIVE. They are issued when someone creates content. In other words, they are paid to content creators. This can come in the form of an article when the individual opts for the 50/50 split or when commenting which is always paid in that manner. Curation is paid in Hive Power (HP).
I will use the time frame in the article to show how the expansion of SBD is not a problem. In fact, it is a very good thing for the ecosystem.
The Debt Actually Went Down
It is crucial to understand how HBDs are converted.
A HBD entitles the holder to $1 worth of $HIVE. However, the holder is not paid $1; this is crucial.
In November there were roughly 3.5M HBDs outstanding. At the time, I recalled buying some $HIVE for about 80 cents.
Today, there are 10.2M HBDs outstanding with $HIVE at $3.25.
Most would say the ecosystem had $3.5M in debt in November and it jumped to $10.2M today.
That would be incorrect.
There is no way to convert HBDs to dollars. The USD as a peg is nothing more than a ratio. HBD is really worth 1/whatever the price of $HIVE is priced at. Each HBD entitles one to $1 worth of $HIVE...a token that fluctuates in dollar terms.
So what does the debt work out to in $HIVE?
November: 3.5M HBD divided by .80 = 4.375M $HIVE.
Thus the outstanding debt had claim to 4.375M $HIVE.
Today: 10.2M divided by $3.25 = 3.138M $HIVE.
Thus the debt today lays claim to 3.138M $HIVE. In other words, the Hive ecosystem owes 1.2 M LESS $HIVE than it did 4 months ago.
The fact that people are paying a premium for HBD above the $1 value in $HIVE makes no sense. Yet, it is not relevant either. Markets pay a premium above face value for assets all the time. Initially, it looks like HBD were pumped. The fact they remain elevated for such a prolonged period of time shows that there are a lot of buyers who probably have no idea what they are buying.
@dragosroua hit the nail on the head when he said markets will figure it out. I cannot tell you if the price of HBDs will go up or down from here. What I can tell you is there is a point, if the price does go up, where there will be too many HBD created for the market to handle. I do not know if it is 20M, 30M or 50M but at some point, the price pops.
A crash in the price will cause those who trade on the open market to lose money. Yet Hive will be protected unless they are sitting on HBDs. Powering up means HBDs are turned into $HIVE. Also, if the price gets to parity with the $1, people will opt for the 100% payout in HP, thus reducing the number of HBDs created.
The other advantage is that while the price of HBD is above a dollar, no interest is paid on it.
Helps Distribution
It is a great time to be powering up. Payouts are higher than normal. On a 50/50 split, 1/2 the payout is receive about 3.5 times what it should. This is enabling people who power up much quicker.
As noted, HBDs are only paid to authors, not curators. Hence, the ones profiting are those who actually create content.
Why is this important?
Hive has a distribution problem. Over the last month, I wrote about how this is changing. One of the central premises is that as more people join and post, the reward pool is diluted from the bigger players. In short, they cannot churn out enough content to maintain their percentage of the overall holding.
Therefore, the ones who are benefiting are the smaller accounts who are posting more content. Collectively, they make up a greater percentage of the whole than they did before.
Another factor in this is many of the bigger holders are using the increase in HBDs to minimize their risk. There are many who tied up a lot of money into this blockchain. These people are taking the HBD payout and moving it elsewhere. There are a lot of them who are not powering up since their accounts do not really need it. Looking through some of these accounts, you find a lot of HBD that is sent to exchanges, which, I presume, means they convert it into a different currency.
Regardless of what they are doing with them, they are not turning them into HP.
Evening out the distribution is a great thing for the blockchain. I believe, at the moment, the increased payout on posts because of the break from peg by HBD is helping this significantly.
At some point, the market will figure out it is paying a premium on SBD. When it does, the price will move downward. Until that time, however, my answer is still the same...power up.
Pictures by Google Images
Also, if the price gets to parity with the $1, people will opt for the 100% payout in SP, thus reducing the number of SBDs created.
Is it possible to be paid in just Steem Power, or were you making a suggestion mate?
Holy shit... I feel like a dumb ass now. 😀
its not worth doing unless. sbd is $1 or less so youre good
I'm glad you learned me though, for future use, just in case it ever gets re-pegged.
also you can use markdown for quotes
">Also, if the price gets to parity with the $1, people will opt for the 100% payout in SP, thus reducing the number of SBDs created."
Finally someone comes up with a different opinion. I have been saying this but it seemed like no one was ready to listen. I have always said that sbd going up is good for the system. The reason we have a large number of steem users today is coz of the high price of sbd...I wonder what happnes if it falls so much.
I'm not too sure building a community just based on how much the creators will make is too healthy going forward, so maybe them leaving would be a good thing. People have to focus on creating good content first, and then worry about the pay later.
Upvote, Comment, Create quality content, Resteem, Power up, and most of all enjoy the Steem ride. Thanks Task. 😎I try to power up as much as possible, but I'm thinking about running some type of contest to give away @steembasicincome to newbies. Maybe that will help them grow. @f3nix has a cool contest right now, where a player finishes a #freewrite started by @f3nix the winner gets a share of SBI.
I did notice that the payouts for 50/50 were disproportionately higher than what the blockchain reported. I really like this, and it has really helped me grow my account fast. If the SBD is pegged at one dollar, do you think it's possible to use it to back the price of Steem instead of BTC?
I have less faith in the market than some. They are driven by greed, not altruism. A stable SBD is good as it means people will use it to buy stuff. I want to be able to buy and sell goods and services for it. I don't mind if my posts make me less.
I just don't know how an increase in value could be a bad thing... I realize that it is designed to be pegged to the USD, but dang. Don't look a gift horse in the mouth (this time).
I do like using small amounts of SBD’s for things like donations and micropayments to other Steemians but can’t understand why anyone would sit on any significant amount of it. 50/50 and daily power ups seems to be a no-brainer.
Me too... I really like that SBD exists... but it never exists in my account for very long... I power up as quickly and as often as I can. I personally can't wait until I can get 100% SP on posts...
I think the people who own significant amounts of SBD are playing the internal or external market... which means they'll probably realise before anyone else when it starts trending downwards and cash out.
exactly, I power up as much as I can. At my level, a daily power up is not always possible but I do as much as I can
Can i get money on my bank account by blockchain?
Yes. Get an account with Coinbase. You can buy and sell Bitcoin, Ethereum and Litecoin using your bank account. Use ShapeShift to convert Steem or SBD into the Coinbase account. If ShapeShift doesn't have your coin, then just use an exchange to sell your coin for one of those that Coinbase has and transfer that to Coinbase.
i like this post,thank you for shareing
waoo!!thank You for sharing..
Thanks for this cryptocurrency news providing...
I appreciate your post.keep it up dear friend
It works out perfect for us! I still don't see why people want it to make it worth more than $1. Oh well....
Great explanation. I have heard so many people say that the higher sbd price is a bad thing. I agree with you that it is not a bad thing but a great opportunity to get more SP with every post. Thanks for sharing your thoughts. Keep them coming.
Never looked on SBD as debts before, but anyway agree with you that a high SBD is beneficial to the platform. It is helping distribution and is maybe the market's way of telling us that content creators are worth more than 75% of the reward pool.
Dangit you did it again! Demystified the SBD. I learned something again. Thanks!
So you’re recommending I get SP with my SBD, taskmaster?
That is what I do...power up.
What is mannabase... i found it in your footer.
A cryptocurrency designed to be a basic income.
Thanks for taking the time to write this. I plan to read carefully through it later today. Resteemed :)
Amazing observation man... really impressive.👍
Thank you for the very clear breakdown of SBD/Steem. <3
Beside the complicated situation, I still believe, that SBD is pumped by Steemit Inc.
It's easy for them to do so with these small trading volumes, and they have all the reasons for it. First, no one will cash in a debt if the prices are this high on the markets and second, it's the best marketing to use the blockchain, when people get more payout value through keeping SBD high.
You mention an important point that the market will figure out, but history is witness to the fact that the market often takes a long time to find out, and when it does it often comes crashing down.
Eventually as and when SBD comes crashing down, you mention this
My question is, will this also not impact Steem price also because to the outside investors, trading on exchanges, its another currency from the same blockchain, so if goes down, they may panic sale the other.
At the same time, I want to power up as much as possible before something like this happens.
Yes, one of my concerns with holding SBD right now is that the price is going to drop. Powering up is the best way to protect against that. The analysis of the price and the fact that SBD is debt is good to know. I might have heard it before, but I forgot. I had wondered why no interest was paid. Now I know it's because SBD is above $1.
Thanks @taskmaster4450. Your posts are always thought provoking.
First, I have a request:
Can you please do a post on powering up and powering down and the technicalities involved. I bet many would benefit from how simple you explain these things.
Second, I have a couple of questions:
I will stop here for now. Thanks so much
That's the clearest explanation I've seen since seeing on Steemit. Thank you!
For those of us who are new to the platform and looking to grow within it, the higher SBD helps us also. I will be converting any SBD I create here into Steem and powering up. This lets me buy at a discount and grow my SP faster. At least this is the way I look at it :)
I still think that people will occasionally pump SBD simply because it will allow them to cheaply buy steem if the have previously accumulated SBD. Of course this will happen once steem explodes in price. So in my mind the days were SBD will be stable around the dollar mark arre far away, of course it can go down to that value but I won't think it will remain there for long periods.
P.S I haven't received my manna :(
Did you get into your dashboard?
Have you verified your account?
You should have gotten an email to verify a couple of weeks back?
In the early days i used to power up but now i have put the process on hold for some time. I want SBD's to accumulate in my account for some time now so that i can figure out what to do with them.
I perceive steem and sbd's in a little different way. Steempower is like holding stake in the blockchain. The more steempower one has the more it benefits the owner but i don't consider this as an earning because in order for it to become money one has to power down which takes 13 weeks. This also means that one will lose his stake on the blockchain.
On the other hand i consider SBD's as real earnings because in its original state one just has hold on his earning when ever he wants and however he wants. Powering up or using sbd's for other purposes is the owners choice. I know people look at the picture in the long run. They perceive STEEM as investment for future and thus power up with their sbd's thinking that they will power down when the price goes to their desired number But me, i consider steem as permanent investment. I would never power down as long as this blockchain exists thus it is important right now for me to keep sbd's as sbd's only and allow it to accumulate.
You can convert your SBD to STEEM and not power up. STEEM can be held like that.
SBD are worth, at face value, only $1 worth of STEEM.
Holding could very well be profitable if the price of SBD goes up....
However, it is a debt instrument that has a par value of what it is worth....if the market decided to listen, you could get hit hard on that....
Just something to keep in mind.
Thanks for share this important news.
Great to share your post.
I see no direct way to power up SBD inside of Steemit once received. I understand the 50/50 payout is beneficial now because SBD is supposed to be pegged at $1.00. However if you use the transfer function to convert SBD to Steem or Steem power, you can expect a $20 fee in the transfer (as I found out once using Blocktrades). Do you know a better method of powering up SBD to Steem Power?
Here's a current snapshot of the SBD to Steem ratio:
The actual price of SBD on CoinMarketCap.com is 3.51, but Steem is at 3.25. That ratio works out to about 92.6% But the blocktrades ratio of 1.028 to 1.0 works out to 97.3. The difference is about 4.7% which represents the fee. That's very steep.
I use the internal market.
Under the Steem Dollar drop down, market will take you to the internal market.
It says buy or sell Steem, not SBD which is a bit misleading. Not sure how to use this tool, but it looks similar to Bitshares which I am familiar with. Somehow, it seems reversed from what it should be. I assume one would use buy Steem and use the SBD in your own account?
This represents a fee of about 3.3% which is a little better, but still a bit steep and more confusing.
I wonder, how do you think this will effect those making an income off of SBD? I figure you could also power down a little and make money that way if need be, but I am not technically minded enough to understand this all haha.
Thanks for the mention @taskmaster4450! Is there any specific reason why you linked to a post on the steemit platform, and not the one that is sitting on the hive platform? Something like this: https://peakd.com/steemit/@dragosroua/are-you-really-playing-the-steem-long-game