RE: Should SBD Be a Pegged Asset? If So, When Should We Peg It?
SBD going back near $1 is one of my criteria to reevaluate my stance that we shouldn't convert now. I'm pro conversion eventually. Just not now.
Triggers:
SBD naturally falls back near $1
Coinbase wants to use us as a fiat exit
Ebay wants to price shit in SBD
Bittrex wants to replace tether with us
We hit a 10B marketcap
Doesn't have to be those, but those or something like it would make me reevaluate immediately. Those opportunities mark major events that would push the rise in steem over the current benefit of high SBD to posters.
Otherwise crashing the SBD market with this conversion now I think would cause harm to the network as a whole and I don't see how the millions, billions, or trillions suddenly materialize because we had a $1 SBD before and no one gave a shit.
@aggroed For those triggers to happen you need to fix the SBD peg first! Doh!
I'm not gonna use SBD as a Teher alternative if it is not dependable with its peg.
Same goes for Commerce. It cannot seriously get off the ground without a proven stable SBD.
If you're an ebay seller and want to sell a product for 300$ on SteemBay, with the current SBD it is a nightmare: you need to rely on a real time conversion system (ala BitPay/Coinbase), which still means converting to BTC (fees) then converting to FIAT (more fees) and all in a fluctuating market. Good luck with that.
Instead with a stable SBD I can set the price at 300 SBD (and not 50 SBD as it is now), and when I sell the product I can keep the 300 SBD in my account knowing my earnings will be unaffected by crypto market swings. And then the 300 SBD can be used at any time to buy products on SteemBay, without needing to return to the FIAT market! (no need to sell the SBD for FIAT= Steem Moon). This will be a game changer especially in heavily taxed countries.
The SBD has never been stable since it's conception, it has some stable periods...but that's not sufficient for a online shop to move it's operation to Steem unless the SBD peg is proven dependable . It needs to be within the narrow range as envisioned in the whitepaper.
Imagine a shop selling 300$ products for 50 SBD today, and then seeing the SBD tank shortly after. That would be immediate bankrupcy.
Btw posts are already receiving high payouts, the problem is that payouts are not distributed widely and always end up in the pockets of the few circle-jerkers. Overly greedy and shortsighted people are making us miss these big opportunities.
If the pegging had been done 7 months ago by now Steem would be among the top 5 cryptos and SBD would have been used as Tether alternative and we'd have a thriving market-place.
If SBD was stable right now I'd be using it rather than Tether which is untrustworthy, who wouldn't? This opportunity is probably lost though as new ETH based stable coins are soon to be introduced on exchanges.
I hope you enjoyed the SBD earnings, but you've done tremendous damage to Steem with your front page posts defending the broken SBD and you held us back. It's time to realize it.
Upvoted as a well-written and powerful expression of the "Pro Peg" case. I'm personally quite open minded about this and willing to consider both sides of the issue, but your comment has indeed swayed my views a bit in making clear in stark terms how ignoring the peg and savoring the increased rewards has come at a real cost, perhaps a catastrophic one in terms of lost opportunities now that we've squandered our early lead and competitors are arriving.
thanks. it was more of a disjointed frustrated rant, I'm glad I managed to somehow put some points across.
But I apologize to @aggroed for the tone of my post, I'm sure his posts defending the high SBD are NOT done with malice or nefarious intentions.
It doesn't have to involve malice to still do tremendous damage (and I don't think you suggested any). Often that happens with the best of intentions.
I kind of implied blind greed and author short term self interest as the reasons why he supported the high SBD, and I might be wrong on that.
That's a good point. But I still think there is a strong case that defending the broken peg with whatever motive has done a lot of damage, and your comment was unusually clear and effective in making that case.
To be clear though, I don't view it as primarily a personalized issue, if at all. @aggroed is not at all the only one making that argument and certainly is not personally solely responsible for where things stand today.
Let's try not to make unsupported claims about what would have happened in a could of, should of, would of way. We can't possibly know what would make STEEM a top 5 given decisions made 7 months ago. We also don't get very far as a community making direct, personal accusations unless we have direct evidence of malice involved.
Instead, let's try socratic questioning and let people make up their own minds. Is it possible @aggroed's passionate love for this ecosystem and community caused him to miss some important parts of this discussion? Maybe. Is he solely to blame for the price of STEEM (either up or down)? Clearly not.
Let's be nice. We can disagree, even passionately so, but when we throw out unsubstantiated claims as accusations, it just makes people defensive and angry.
I'd say it should go without saying the @aggroed has the ecosystem's best interest at heart and so do you, that should be obvious to everybody!
But in this particular case, I think he is the one making the more sober and realistic analysis.
If the SBD had taken tether's place then it would also take its place when authorities choose to take action against Tether for the creation of money and various other schemes they've been up to. You do not want to be in that position. None of us should want to be in that position.
And as far as pegs go, you must not be a very good student of economic history to not know that pegs go terribly, terribly wrong all the time, and are very exploitable and ripe targets for manipulation. If you know there is an infinite buyer or seller on the other side, and you outweigh them or even just whittle away at them over time, you can destroy them. It leaves us at great risk to attempt any sort of peg, and the consequences would be far worse than letting the speculators get burned.
For instance do you think China's peg worked at all? What good has that brought the world. Deflated wages for Chinese workers, their country's soil, water and air is in ruins, and they've burned up all their capital reserves. Add to that the amount of new debt creation they had to endure just to stay afloat and it's just a total mess right now, even if they can claim to have the largest economy.
Pegs always fail. Do not think otherwise.
You make some valid points. But the current SBD already has a peg mechanism when it falls below 1$ (Steem needs to be printed to keep it afloat). So the current SBD has all the disadvantages of a pegged asset without any of the benefits. If we are to keep SBD lets peg it properly, if not lets get rid of it altogether.
Regarding the risk of authorities getting involved ....Steem is a decentralized blockchain what can they do about it? The Steemit website may face a shut down, but decentralized apps like Vessel would still operate and Steem based websites will still operate outside US jurisdiction. Frankly I wouldn't be surprised to see Steemit relocate HQ to some cryptohaven like Zug, Malta or Isle of Mann. The regulatory framework in the US has become way too oppressive for innovation
Do you think the bitUSD peg is being manipulated or has failed or will fail terribly?
I am very, very uncertain about bitUSD's future, I mean I asked Stan right here on steemit about what Arise Bank's association with it is and he just vaguely said "on and off-ramps". That combined with what I've read about Arise Bank does not give me great confidence. And sadly for new users like me it's one of the few trading pairs we have access to off of the steemit website, so it's very troubling to me.
Literally every one of those items on your list except the first and last is guaranteed not to happen unless SBD becomes stable at $1 first. Since you saw fit to list them, you clearly recognize the importance of those opportunities and others like them to the Steem ecosystem. In order to have any chance to pursue them, we need to fix the peg first.
Read the post. The market conditions have changed dramatically. There was a time when Tether was a tiny little thing stuck at under $1 million market cap for years and no one gave a shit! Yes that's right, Tether went from $500000 to $1.6 billion. Likewise for BitUSD, NuBits and the others (though they are of course smaller; Tether is the current leader).
The answer to your (implied) question as to why this matters now when it didn't matter before is simply that it is 2018 now and not 2016 (however, I will say that even in 2016-2017, the Steem community was spawning its own SBD-based initiatives that could accomplish some of the same goals as items on your list, initiatives that were smothered in the cradle because we failed to act to fix SBD when it started to de-peg back then). The environment and market is completely different and the scale of the opportunity is vastly larger now. Given the other powerful attributes of Steem (large user base, ease of use, ability to on board users, speed and scalability of the blockchain, no/low fees, etc.) we are well positioned to pursue that opportunity but we have to fix SBD first, or we are just not even in the game.
I think you're right, because of the social media aspect we're still well positioned. Once the changes are brought in we can:
Normally it would take 6 to 12 months before anyone would trust a pegged asset with big money, especially after a somehow failed experiment like the SBD was. But if we are able to put across through the influencers the message that the SBD was only meant to be a coin with a 1$ floor (therefore pretending that it worked perfectly), and that SBPD is instead a new pegged stable dollar coin....then we can see adoption much sooner.
I don't know when the ERC 20 pegged coins will be production ready, but I believe because of the Ethereum brand they will be adopted immediately by the community. Ethereum has had more fuckups than any blockchain out there but somehow they can't seem to do wrong in the eyes of the investors for some reason which frankly I can't comprehend. Also their peg may be backed by real dollars in the bank (I don't know yet).
So it is possible that they might beat us in capturing the Fiat market on exchanges. Currently we only have Poloniex as potential market anyway. But for the retail and online shopping we're still in with a shot. Also lets not forget we have an internal market here on Steem which could skyrocket in volume.
To capture the retail market it would be wise to start already working on a SteemBay portal in preparation for the SBD changes. So it can launch as soon as the fork occurs.
Though it is very possible to imagine a future where retailers start accepting all battle tested pegged assets: OpenUSD, SBPD, ETHUSD, TETHER etc
Because of the integration with Steem social media and the 0 fees the SBPD could end up being the most convenient. Ultimately though no pegged asset can compete with a proven Dollar backed coin (meaning with dollars in the bank) like Tether was supposed to be.
So I might overstated the importance of having a properly pegged Steem backed Dollar, but we should at least give it a proper go. Even a small fraction of the finance and retail markets would bring enormous value to Steem.
Btw before announcing the replacement of the SBD with the new pegged Dollar coin it would be best to wait till it goes back towards 1$ so not to cause a major backclash in the market.
This is such an important point. We have to have a long, trusted history as a pegged asset before we'll be taken seriously as a pegged asset. It may take many months or even years and the longer we wait, the longer it will take to build that trust.
Daaaaamn. Either BitFinex is just friggen amazing at on-boarding new fiat into cryptocurrency or that sure seems like a nice money-printer they have there. Heheh... I won't get into that discussion here though. :)
USDT doesn't necessarily work the way people think it does in terms of so-called "on boarding" (i.e. people from outside crypto deposting new USD and getting USDT in return). It can also attract capital directly from crypto wealth and do so completely legitimately (i.e. without the rumors of fiat printing being accurate). Here's how.
Let's say people are selling their ETH, BTC, XRP, etc. (even STEEM) wealth into USDT, and this drives up the price of USDT (say to 1.01 or 1.02). Assume Tether/Bitfinex has $100 million of its own corporate working capital from VC, private backers, etc. They can use that $100 million to legitimately print 100 million USDT for their own account. At this point the printing is not fraudulent, fractional reserve, etc. because $100 million gets transferred from corporate working capital into the USDT escrow account. They then dump that USDT onto the market in exchange for BTC, ETH, etc., driving the price of USDT back down to 1.00.
Now the final step is interesting. Tether can take the BTC, ETH etc. they just bought and send it to a high-limit corporate account on a major fiat exchange, and sell it back for USD, replenishing the original $100 million corporate funds, to repeat the process again when needed.
I have a feeling this is actually where most of the USDT market cap growth has come from (assuming it isn't mostly fraud), but I have no proof it of, just inference.
Interesting. I question how they can keep printing new Tether and aren't burning it, but maybe that's just a sign of more people coming onboard. To my understanding, they can't print Tether unless it's backed by money in the escrow. If they keep printing, that implies real new money going towards the escrow, right? Maybe it's not "new" money, but money Tether/Bitfinex already has on hand, but it still seems to me when things fluctuate the other way, we should be seeing Tether burned and funds returned back from the escrow to BitFinex to cover real USD withdrawals. Maybe if the bull run turns bearish we'll see that.
Again it isn't a question of onboarding necessarily, just capital flows, and quite possibly it is because with $400 billion or so in newly-added crypto wealth the overwhelming majority of capital flows are from other highly-appreciated cryptos (BTC, ETH, XRP, many others) toward USDT not away from it. Also keep in mind USDT's role in trading pairs, which itself creates added demand for it (especially as USD price of the other coin increases; more USDT needed for buy orders). Also, to me it sure looks like many of the paths by which new outside, so-called "onboarding" capital is entering crypto have little to nothing to do with USDT (Coinbase, Korea, Japan, etc.). Or perhaps it is all or part fraudulent as many suspect. I don't know (and in some sense it doesn't matter; part of the problem with the non-trustless peg model is that it simply can't be trusted).
It isn't so much a matter of bull run vs. bear run as it is demand for stable crypto. It is quite plausible to me that demand for stable crypto has mostly just increased over the past year or so (and indeed this is mirrored by the other, smaller stable cryptos). But at some point when the demand for stable cryptos tops out and heads downward, there should indeed be burning of USDT.
By all accounts BitFinex's ability to handle real USD withdrawals has, at best, been greatly hampered by banking issues. So this path by which capital could conceivably exit USDT may be quite small. But in any case given the natural friction of exchanging between crypto and fiat (and relative lack thereof in exchanging crypto-to-crypto) it may always (or at least for a long time) be that the dominant flows into and out of USDT are between USDT and other cryptos, not between USDT and USD directly.
Or! ... The witnesses wanting this shit could come together and create a THIRD, off-chain, dollar-pegged currency and hop the fuck off SBD. :) Just a thought ;)
It just makes me so mad that a FREE, DE-centralized (not centralized) community is SO quick to hop on a controlled, socialist-like mentality to try and regulate shit - exactly which was supposed to be PREVENTED on this DE-centralized platform. It makes me sick.
@boobysteem if you want "free market" for SBD then lets remove the bail-out rule for SBD. let's see how long it lasts next time it drops below 1 $..
In case you haven't noticed Steem has to be printed every time the SBD drops below 1$.to keep it afloat. The SBD is already a regulated coin, just a poorly regulated one.
Dan, which I have immense respect for, got 2 things wrong with SBD : 1- the SBD peg isn't working as the WhitePaper envisioned . 2- the reverse converse is not exploitable anymore in the way the Whitepaper describes
Have you read the white paper? Do you know it was written mostly by an anarcho-capitalist (Dan Larimer) who is not, at all, a fan of the "socialist-like mentality" you're describing? What's the point of creating another currency that is pegged with two unpegged, speculative currencies? Do you realize how confusing that would be and how much coding effort would be involved?
If you understood the conversion mechanisms built into this system, you'd have to come to the conclusions they aren't "controlled" by anyone. They are all done voluntarily by individual market actors without any centralized control at all.
I want to believe you're working to bring constructive discussion here, but this comment looks like trolling. Please, read all the sources I referenced in my post and then we can have a more informed discussion about what's really going on here.
I'll answer your questions using points below here:
"It's confusing"
"If you understood the conversion mechanisms built into this system, you'd have to come to the conclusions they aren't "controlled" by anyone. They are all done voluntarily by individual market actors without any centralized control at all."
"they aren't "controlled" by anyone"
"written mostly by an anarcho-capitalist (Dan Larimer)"
Thanks!
I said two separate currencies would be confusing. People are already confused with STEEM and Steem Dollars. How would STEEM, Steem Dollars, and Steem Dollars For Real This Time not be more confusing?
Of course they aren't using it now. Who would? They'd lose out big time because it currently only goes one direction. That's why it was removed from the steemit interface. The point being, anyone can use it. It's not some lever that only some people can pull. As long as enough people use it, the peg will be maintained (at least when it drops below $1).
Can you explain to me how that would happen? Do you really think witnesses would risk their position by doing something 500k people who voted them into that position wouldn't want? The whole point of this discussion is to figure out all perspectives for what's best for the network. There's a sound argument that we've lost quite a bit a money for everyone involved because we didn't fix this sooner and instead Tether went from $500k to $1.6B.
So Dan's opinion, considering he's no longer involved in STEEM, is more valid that the existing 20 witnesses and all the supporters and users we have here today? How is that decentralized? If the network sees the value in a pegged asset and wants one, then the Steem Dollar should be it, as designed. If we can do that after it naturally corrects back down to $1, why shouldn't we? That's what this discussion is all about.
I gave a shit. I gave many shits, aggroed. Heheh.
I hear what you're saying though. We can't assume a conversion would automatically increase the value of STEEM (even though it's a compelling story, in my mind). At the same time, we can't assume the high SBD value is what is getting people excited about Steemit right now when it could just as well be (and as smooth argues and I mentioned in my post) more of a result of STEEM itself growing in value which increases the reward pool for everyone.
Those triggers sound mighty nice to me.
Do you have concerns about SBD going higher and making it even harder to bring the peg back in play? If not, why should we even bother with SBD at all? Why have two speculative tokens on the STEEM blockchain if we're going to abandon the peg? I'm also curious what you think about the argument that some in developing nations really do need and highly value a stable currency. For them to hold their money in a speculative cryptocurrency doesn't make sense if they have bills to pay.
"concerns about SBD going higher and making it even harder to bring the peg back"
Literally what is written here is this: "Do you have concerns about making too much money which makes it harder to become POOR again?"
These whales and witnesses literally don't live in real life and can therefore afford to DESTROY millions of dollars. Why? Because "muh fiat currencey!"
Nice.
The more comments of yours I read, the more it looks like trolling. Did you even read my post? Did you even consider the possibility that the single greatest way to help the poor would be by giving them a stable asset to trust in while also increasing the value of STEEM which increases the entire rewards pool they enjoy?
What bothers me most about your comments is they seem to imply malicious intent where there is none.
@aggroed you may want to read what I mentioned to @lukestokes about yourself helding a panel with the top 20 or 25 witnesses specifically only to debate about the SBD.
This is something important I thin, very important to be discussed and people hearing the witnesses opinions will see the side of each, and then people can take their voting opportunities to see whats best to do.
Looking forward to your thoughts!
Regards, @gold84
Not all the witnesses are native english speakers so I'm not sure a panel discussion is the best way to flesh out this issue. Reading just my post on video took me over 21 minutes. This isn't a simple topic to be figured out on a short-from panel discussion. This should be done carefully and methodically with data-driven, well thought out proposals.
You are totally right @lukestokes ! Perhaps a panel can be done at the end, once everything has been analyzed properly as you mention. Or perhaps no panel is needed. Just thinking in a loud voice, and trying to find ways to help.
Regards, @gold84