RE: Debating Steem Backed Dollars - Come On Baby Let Me Know Should I Stay Or Should I Go
It seems like this could become or is becoming a problem that is putting downward pressure on the price of Steem. Coupled with the recent changes that allow users to power down faster, it could be hurting the platform to have to peg SBD with Steem.
The problem with this entire debate is that nobody on the anti-SBD side wants to put any of the STEEM price declines into context. The overwhelming percentage of the downward pressure on the STEEM price is mostly due to two factors:
Inflation - Despite the recent inflation adjustments, the volume of available liquid STEEM has greatly increased. This increase (4 million+ in the last two weeks) is a direct result of the changes in the recent hard fork and trumps the relatively tiny amount of pressure that SBDs are putting on the STEEM price.
Power Down Schedules - The STEEM price had been declining week over week because many of the largest stakeholders were cashing out (and some still are). Coupled with the inflation rate, that was enough pressure to bring a $4+ STEEM price down to ~$0.10 in about three months.
And as stated several times already, SBD supply can be managed much better than it has been and some of the largest holders of SBDs are accounts that are controlled by Steemit, Inc.
Steemit would have more Steem to direct to development if it could reduce having to pay SBD at today's Steem prices.
The relatively tiny amount of STEEM that is needed for SBD conversions makes this a non-factor. Steemit, Inc. has STEEM/SP/SBD value in the millions of U.S. Dollars. They have plenty of resources available to develop and market STEEM/Steemit.
Initially, I agreed with this as it makes perfect sense until I learned merchants do not have to think about wallets, fluctuating altcoins prices, bookkeeping, taxes or how to price items in crypto, they don't have to change a thing.
This just isn't true. They do have to think about these things - and that's why there are very few merchants who accept cryptocurrencies. They do have to change things, even if it's a POS app and registering with another payment system. The advantage of SBDs is that merchants don't need the additional conversion software and don't need to immediately withdraw the money, which would reduce the downward pressures on the STEEM price. The idea is to not have constant selling of STEEM on exchanges in order to cash out earnings so that they can be protected from volatility.
My understanding of SBDs is that there should be few actual conversions and sales of the token - that they are supposed to be used as an "internal" currency between accounts. The SBDs are pegged because the value is supposed to be fairly consistent so that they are not constantly sold or converted. The STEEM ecosystem would become its own marketplace - it would create its own economy that wouldn't require every user to cash out in order to protect their earnings or realize gains.
Of course, this is a long-term outlook. We obviously don't have the user base right now. It needs to grow.
Keeping SBDs on the platform and having users exchanging them with other users is the whole point - it's what makes crypto tokens currency. If SBDs were eliminated, you eliminate the advantage that STEEM has over other cryptos and you eliminate the single largest reason for merchants to join the STEEM ecosystem. Without merchants and customers, there's no network effect. We'll just have another second-rate alt-coin.
You do make some very good points and to be clear,
I like SBD just the way it is and I'm for it
I'm just looking at all sides of the question from as many perspectives as possible. I know you like SBD a lot and think that's the main reason people join Steemit, but it wasn't the reason why I joined.
That may be a bit of an exaggeration and there really are platforms that work right alongside existing POS systems where a merchant wouldn't have to change anything to accept crypto, so yes, it is true. Business owners don't care about crypto, they care about more customers and sales. Explaining crypto to them is not as necessary as you think.
In any case, I think it would be premature to make any change like that so soon after the recent fork and as I mentioned in this post , I'm not 100% sure I understand all the implications it would have on the system as a whole. The whole reason I wrote this post was to learn more about how people feel about it and to share my thoughts. From where I stand and how I use the platform, nothing would really change that much.
I do agree with you on the points you make in your post about not always tinkering with the system and the effect this has on the perception of Steemit, but it is an experiment in beta and tinkering it is to be expected. This is just an idea we're talking about and no action needs to be taken right away as @ned pointed out.
If I want protection from volatility, I would have to sell. How this would affect the price of Steem if everyone had to sell (or power up) is something to consider as well and you make a good point for that.
This is very appealing, but from what I understand this SBD stability is paid for by having to constantly sell Steem, thereby undermining Steem price stability. While it's true the SBD are not constantly sold, the Steem to support it is. At least that's my understanding and again, I may be mistaken.
If this is a potential systematic problem as @ned mentioned, we need to talk about it before it becomes a problem. If it's not a problem, them why did he mention it?
@clayop made another post about this you may be interested in here: https://steemit.com/ned/@clayop/should-we-keep-sbd-or-remove-it