I read @aggroed's article today and was very impressed. A lot of people have asked me how I feel about the high price of SBD and in all honesty, I have mixed feelings about the whole situation but when it comes down to fundamentals, I believe that the platform was designed for this to happen and because of that, we need to let it run its natural course.
Based on the article, I've learned a few things about how the Steem community is reacting to this new development. According to my source, there are many advocates including those on Steemit and our Steem witnesses that we must alter the system and bring metrics back to 1USD / 1SBD.
But lets be honest, what kind of message does that send? We need to incentivize people to join the social network, not push them away. What if I turned around and told everyone holding BTC that the price has gone too high, I've just made it worth 1$ so that people can buy in. I don't think that would go down to well now eh?
According to @aggroed there are many good reasons to do alter the economics and bring SBD back to par with the USD, but the point in which we both agree on is the fact that it would be much better to simply allow the market to make this choice and don't try to fix something that isn't broken. The SBD being high isn't necessarily a bad thing. Leave it be.
The Options
"Get rid of the SBD" - Literally stop having them be an option... hard to implement given that 3.6M are already outstanding, but it would make Steem and Steem power the only things on the platform.
Market tampering and radical changes in a mature platform rarely work out well. Getting rid of SBD would be an extremely bad move in my opinion.
"Print more SBDs" - Do things like allow 75% payout in SBD or witness production rewards in sbd. This should lower the price by increasing the supply. Neat ideas, but this also adds more SBD, which is a debt instrument to the platform and could have negative consequences down the road.
This idea although not the worst one I've heard leads to inflation and could ultimately ruin the platform. However, if tampering must be done, this would be the option I would prefer.
"Let SBD be converted back into Steem" - this is probably the most popular option and it would allow a direct conversion of steem into SBD, which would allow Steem the ability to capture the rise in SBD price. I'm against this because I want the value going to the posters as opposed to the historic owners of steem power.
As far as I understand it this means setting SBD and Steem at a 1 to 1 ratio. It would be as if I set Bitcoin Cash equal to Bitcoin. I think this is a credibility killer, if someone wants to destroy the platform I'd say this plan would get the job done quickly and efficiently. Please don't do this guys..
Further Exploration
According to @aggroed he believes that all this talk of changing the dynamics of the platform revolve around the fact that people want their account value to rise.
Many invested in Steem have made a long term investment powering up their Steem in exchange for Steem Power. We all want our accounts to rise in terms of USD but as @aggroed pointed out, the distribution of steem is extremely warped.
According to him 93% of the steem is in less than 1% of the accounts. It makes feudalism look like socialism and is not a good distribution. He goes on to state that the metrics above relate to the distribution of Steem, not distribution of SBDs.
SBDs are tied to author rewards more than historic Steem ownership and so the distribution of those can be approximated to this graph.
That graph doesn't quite show the whole story as it doesn't really show how many of those post rewards are created by the bid bots and that money then flows back to the primary steem holders, but it's one of the best representations that I have available. And it'll have to do. Bid bots are only about 5% of the SP so that graph doesn't quite show that @freedom and @blocktrades and maybe a few others are getting fat paychecks from this, but at least we know that it's not 25 accounts that earn it all on post rewards.
He makes a good point here. Its very possible if not extremely likely that this SBD rise in price is an opportunity for many to get a better stake in terms of their Steem Power. If you convert your SBD posting rewards to Steem and then power up, you may find yourself a bit closer in terms of rewards to the whales that run the place...
The Proposal
@Aggroed suggests a radical proposition, one that after reading his article I am also convinced is the best course of action, that is to do nothing... Simply HODL.
He suggests that the price of SBD will continue rising due to the very limited number of 3.6M tokens in circulation which also correlate to very low inflation. He also argues that the price of SBD is going to continue to rise exponentially if we don't make changes but that's not a bad thing! He argues that it will have an end result of helping the Steem community grow and that one day you may even be able to buy a house with 10k SBD, a nice house.
So there you have it folks... Just don't mess with a good thing if you don't have to.
I'd like to get my reader's opinions on this... What should be done about this insanely high SBD price? What strategy would be best for the overall community?
Thanks for dropping by!
Source:
The benefits of inaction: a defense of a high SBD. - Aggroed
https://steemit.com/sbd/@aggroed/the-benefits-of-inaction-a-defense-of-a-high-sbd
Image Source:
When the SBD is expensive, is it more profitable to use 50/50 than full power up? I just redeemed rewards of 10 STEEM and 10 SBD, and exchanged the 10 SBD to 65 STEEM, so 75 STEEM in total. If I instead had used full power up, would I have gotten 20 STEEM instead?
yup
10k SBD for a real House? That just sounds to good to be true. I think I should start saving some from now on so that I can make this dream come true one day :D But maybe I´ll just stick to a very nice car for 1k SBD, would be good enough as well ;)
I'd rather convert these SBD to 100k STEEM and have a house with a Tesla and a vacation home, once SMTs are going live ;)
Okay you got a point there and the Tesla convinced me as well :)
Let´s get more Steeeeeem :)
If only @ElonMusk would do something with cryptocoins
He has other battles to fight, I don't think that he would want to start projects that are not material.
If the point of SBD is to be pegged to US$1, then it makes sense to bring it down. When the investors that have pumped SBD realise that they are supposed to be on steem, not SBD, they'll swap. The only thing I don't understand about what's happening is why steem is so cheap on the internal market. It should be rising in price as more people take 50/50 rewards and buy steem to power up. But it's been getting cheaper over the last week.
Could we see a game being played here? Pump the SBD to get people to buy the unlimited flowing Steem that is being printed in mega quantities at all times as we speak?
The crypto market bears many secrets and I would bet that there are many whales playing games we don´t know about. So the possibility is definitely given.
Whales are dumping steem in masses, one good example is @dan who is selling a lot every few days. And since everyone who converts their SBD wants to cash out the profit, we are loosing out in steem price.
And you have to overlay the BTC price changes on all coins, so that obfuscates prices even more.
So do you suggest I HODL the SBD i have or exchange for a different crypto? @reggaemuffin
In my opinion: Exchange it for STEEM in the internal market and HODL that (maybe power up).
Personally I think it's a shame because I really liked using the SBD as a relatively stable currently. I was one of those who was supporting it at 0.92 and resisting it at 1.08.
That said, @aggroed makes a lot of good points and it IS a really positive thing that posters are getting a bonus for the SBD component of their payout. Swings and roundabouts I guess.
Yes. It seems clear that there are positive and negative aspects of this situation. We have lost stability in favor of speculation which should see a record number of new users flocking to the platform. I hope the SBD price being high really does do something to level the playing field but I think its just as easy for whales to increase their stake at this point if that's what they'd like to do.
There are many plans for marketplaces on steem that require stable currency and the sbd price kinda killed that. One of the killer apps for steem is a payment solution in SBD and for any merchant to touch that we need a stable price.
I agree with aggroed that a high sbd is good for distribution of STEEM but is stops other opportunities for the Blockchain. And tgese opportunities take really long to develop, many months of time and serious money. I know multiple parties already attempting this, so why kill them off? Why pull the rug from their feet?
Let the minnows cash out their earnings, SBD will slowly go down and we all will be able to pay with our steem wallet soon.
It's difficult to know what to do in a situation like this. Nobody ever thought SBD would go this high and it did it almost in the span of a week. Most people including myself probably had heard somewhere that SBD is closely tied to the value of the dollar and so they never thought to invest in it as if it was a speculative asset. Now everything has changed and people still don't really know what to make of it. I hope Steem can find a way to make everyone happy and if the plan is to make changes with the best intentions at mind, I hope that witnesses and devs at least let the community as a whole take a vote on the changes and make them in a democratic manner. I invested myself in the platform because I believe in its future success and the outstanding community that has formed around it here. Your final statement rings true. Lets let the minnows make a little money here and SBD will probably just normalize naturally. Either way it appears to be a nice reason for holiday glee.
I couldn´t agree more with you on this. SBD´s are meant to be worth around 1$ and as people continue to cash out it´ll slowly get back to that level. It might take days, weeks or maybe months but in the end the market will regulate itself.
It´s definitely awesome for all of us in the short term but just like you say it would do more harm than good in the longrun.
I hope it doesn't do harm. I think in the short term it will bring some amazing growth and speculation around the whole platform. We'll be able to judge the effects of this SBD pump more clearly in a few months from now.
True that, time will tell ;)
I am a minnow and I am not cashign out. I don't think many minnows will do, because this platform is all about building your influence.
I have been converting all my SBD into Steem and then into Steem power and I lost a lot of money. Not only for the conversion, but because I did that convertion through the "convert to steem" button, instead of doing it through the market button.
That's it.
To answer this:
The convert feature makes sense. Like a fire extinguisher makes sense. Just steemit.com advertising it in the wrong moment: 'It is freezing? Use the fire extinguisher!'
Why wouldn't I ?Buy a Houseboat perhaps with SBD @techblogger ?
Whatever kind of house you like... It'll be available for you assuming that you have enough SBD to pay for it!
In my opinion, fluctuations needed for both holding onto new user's and the old one also.
I kinda like your final option.
That is more preferable because if we interrupt the increase in Sbd and try to do one or two adjustments, we could entirely ruin the platform
Am sure we all invested in steemit because we foresaw an increase like this.
The future is bright
Absolutely... I've never enjoyed writing nearly as much until I found Steem and Steemit!
I think you misunderstood. Allowing a conversion from STEEM to SBD doesn't mean the price has to lock at 1/1. It could just be that it allows conversion back at the market rate so that market forces can operate on both currencies.
At least that's my understanding
Yes, you may be right here. Thanks for pointing that one out!
The discussion is less about price and centralizes itself around volatility. A high-valued SBD is perfect, as long as it stabilizes. When SBD jumps from $5 to $12 down to $7 it creates shocks in long-term investment goals and pushes investors away.
Volatility was built for STEEM where the many speculators can place their stakes on a daily basis. The current projection flips SBD and STEEM except it still leaves STEEM at a fairly volatile level.
Pegging SBD isn't about encouraging people to buy in as much as encouraging people to join the steemit community. Showing a steady rise comparable to USD projections allows steemit to maintain a singular stable currency .
I have seen a few witnesses propose a half-peg which would stake SBD at $0.50 which would stimulate STEEM and encourage speculators to place their tents there rather in content creators domain.
Think of it for the long-term strategy for content creators, it creates it difficult for a creator to estimate their income which causes issues for sustainability. A creator can know that their SBD is going to rise 4% per year meaning their articles average earnings of x amount is easily calculatable.
To boil it down, STEEM is an asset while SBD is a currency. Investors, content creators, and speculators should understand that when they make their exchange decisions.
The SBD is currently half-pegged on the downside at $1. This is accomplished by having a build in feature (the convert feature) that allows you to get $1 of steem for every steem backed dollar.
It will be best who have lots of sbd😆😆😆😆😆
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STOPAs I understand it. New SBD is printed every time someone claims their rewards. Eventually this will put downward pressure on the price regardless of what we do. The best thing to do is take advantage of the high price while you can.
The question that rises from this dilemma is that will another social media platform step in steemit's place if the wrong decision is made?