Reminder: If SBD Are Below $1, Convert to STEEM
I noticed the SBD peg is slipping a bit which means it may be a good time to convert your SBD to STEEM.
You can do this from your wallet. Just click on the arrow next to your SBD balance and select Convert to Steem.
You'll then see this pop up window:
Put in the amount you want to convert and hit the Convert button. You'll then be asked to enter your Active key (you should only ever be logged into Steemit using your Posting key, to protect your funds).
In 3.5 days, you'll get an equivalent amount of STEEM for your SBD based on a $1 value of SBD and the price feed for STEEM. SBD or "Steem Blockchain Dollars" (what I previously called "Steem Backed Dollars") are essentially debt on STEEM via a smart contract. When you convert, you're running that contract. This removes the SBD from circulation and if the price of STEEM stays constant during your conversion, you'll essentially get an extra bit of STEEM for your SBD as if it was still worth $1.
You can see others doing conversion requests as well via @jesta's labs page:
Keep in mind, everything fluctuates. If the price of either SBD or STEEM changes while you're doing your conversion you may have been better off just using the market or waiting to act later for a better price. There are no guarantees. That said, I feel like converting when SBD is trading below $1 is a good actor thing to do to support the peg and hopefully benefit yourself financially. Also, if after the conversion the price of SBD is still down, you can just repeat the process, buy up SBD off the market with your STEEM and convert again to get more STEEM.
It's a bit complicated and, as I said, it won't always work out in your favor, but it seems to me whenever we restrict the supply of SBD (i.e. lower the outstanding debt on STEEM), then we're doing something useful for the long term.
If this sliding SBD trend continues, it might make sense to sell some other crypto to buy up cheap SBD and convert it for a quick profit. Again though, with changing prices all around, anything can happen.
I know there have been many posts already about SBD and SBD conversions, but with new people signing up all the time, we have to repeat things often. From the Steemit Blue Paper, SBD are:
Steem Blockchain Dollars (SBD) Many users who are introduced to cryptocurrency struggle to comprehend how “magic internet tokens” awarded by the platform can actually have real world value. In order to help bridge the gap between more traditional fiat money systems which mainstream users are used to, and the cryptocurrency tokens which they are awarded through the platform, a new currency called Steem Blockchain Dollars (SBD) was created.SBD tokens are designed to be pegged closely to one USD, so that users who receive them can know approximately how much they are worth in “real dollar” terms. SBD tokens also offer a relatively stable currency for users to hold if they are looking to preserve their account value relative to USD. A more detailed technical explanation can be found in the Steem technical whitepaper.
You can read more about SBD in the Steemit White Paper starting at page 9. In my last witness update, I mentioned adjusting the SBD Interest rate to 1%. If more of the top witnesses do this, there might be more incentive for people to buy and hold SBD which might help the peg a bit as well.
I hope you found this useful and informative.
Thanks for repeating this advice. I had not seen it before. I am a relatively new user so am still learning how Steemit and the 3 currencies work.
You imply there is some sort of arbitrage opportunity, so I would like to see if I understand correctly. Is it as follows:?
1 buy sdb on an exchange at $0.91
2 move them to the steem platform
3 convert them to steem based on 1 sbd = $1
4 move the steem to an exchange and sell them at hopefully the same price as in step 3 above.
5 repeat all of the above
The big risk is the price in the 3.5 days you are waiting to convert sbd to steem?
How long has the sbd price been low? What could be the reason? The price of steem fell from $1.22 to $1.19 today. Could this be linked to the arbitrage that
I just described?
Yep, sounds like you have the process down.
Not long. Check the markets on coinmarketcap.
Why does anything happen in the markets? It's chaotic and usually has no single reason. Basically more people are selling than people are buying. As to why that is... anyone's guess.
The price of STEEM changes all the time. It's linked to many things, but I don't anyone's been able to come up with a magic formula for it.
Well, I am very surprised that such a large difference could exist. An arbitrage operation would have an expected mean profit of 9% minus frictional costs. You would never see that kind of difference in the mainstream stock markets. I am quite tempted to try it - but I think I won’t. It would mean sending more BTC to an exchange, and now is not the time to reduce BTC holdings.
I think that explains the fall in the price of steem. Arbitragers don’t need to wait 3.5 days. They simply sell the existing steem now, knowing it will be replenished in 3.5 days. They only risk a loss if steem is trading higher than $1.00.
Prices change pretty quickly around here. 3.5 days is an eternity in the cryptocurrency markets. 9%... well, that's nothing. Things will move that quickly in hours, sometimes even minutes.
Steem has been going up and down all over the place since the beginning, as has SBD. Check the charts, and you'll see what I mean. Sometimes there are no clean patterns to explain things.
Hello Luke! I am pretty new to steem and to steemit so making articles which repeat the basics is really helpful for me. I just have one question which may sound silly, but I feel like I don't get it completly: how that steem can produce value for all the users? I mean that even my account which is pretty new got about a half of dolar, but since I didn't invested any money, somebody must have invested them in order for steem, and my account to have this value. But who is investing this money, and why so?
Steemit, Inc owns the @steemit account which creates the existing accounts. When this blockchain first launched, they mined a lot of it early on so they could have enough STEEM to create new accounts and onboard them. That quickly got expensive so they devised a way to delegate Steem Power (which is needed or bandwidth to vote or post on this blockchain) to new accounts. The next big change ("Hard Fork 20") will reintroduce a mining concept so accounts can be created more easily without having to spend STEEM on them.
As to "where does the money come from" for everything else? Well, like most cryptocurrency blockchains, new tokens are being created all the time. Some go to the witnesses who actually get scheduled via DPOS to add new transactions to the blockchain and the rest goes to authors and curators. You can see a break down of that on https://steemdb.com/.
I hope that helps answer your questions. Let me know if you have any more.
If you could write an article about this, or point me to one, I will be very glad. Thanks for the great articles you are writing!
Thanks a lot, this gives me a better idea of how STEEM was created and works. If I will have other questions, for sure I will ask you :D
Thanks for putting this out Luke. Funny thing, right before this article came up I made my first SBD to Steem transaction on the market here. I really like this being so easily accessed from our wallet. I'll finally be getting that BTC I've been talking about (thanks to your recent article reminding me to not wait for the next dip, just buy now for goodness sake!) and I think I'll be converting some to SP. Between verifying my bank account on both BitShares and Kraken, I'm just going to go the route of using credit card on CoinBase for the ease and quickness of it. Also, their CC fee is less than my bank's wire transfer fee (with the amount I'll be transferring). I'll then certainly be getting my freshly acquired BTC into a private wallet and off CoinBase.
As always, your support of the platform here and very informative posts are greatly appreciated! Thanks for your work.
I'm really glad to hear you're benefitting from it all. To me, this is one of the greatest values of Steemit: bringing cryptocurrency knowledge to the masses.
Compared to the years I've followed on the fringes, I've learned more in my little over one month of time on Steemit. Because I'm getting hands on and there's a community here willing to help. Aside from that I enjoy making crypto here on things I enjoy like writing, art, and photography, but even more so I like followers who back their upvote with a comment. This is a fun thing to be a part of right now.
Definitely fun. I've really enjoyed the last year+ I've been here.
Just an aside about CoinBase. I attempted to at least acquire the maximum amount of BTC allowed to purchase by CC after verifying, and it was declined. No explanation. I feel like it's been very difficult to try and purchase my first BTCs, and my only option might be to pay the outrageous wire-fees of my bank to transfer USD to an exchange.
EDIT: CoinBase was quick to reply to my email and it was on the CC issuer's end, declining the transaction. Really seems like big banks don't want to make it easy for you to sell USD for crypto... probably just have to give them a call to let them know it's not a suspicious charge, but that's just one more bump on the crypto road.
Steempower all the way, but yeah I'll keep an eye on it more to get steem for a lower price. The time to wait though on a low price won't make you miss out on stronger votes? Well in my case it won't matter I only vote about 2% for my own content and the rest for others.
:)
wow!! This news make me in profit thanks to give info
Nice advice @lukestokes. Never thought about it
Hi Luke, can you answer another question? I just voted an up vote for you and it credited you with about $48. Why so much? Most people only get a couple of dollars when I vote for them. Why so much for you? Of course I am very glad that you get paid for your excellent work.
Your vote alone did not give out $48, that just happened to be the number you saw once the page refreshed and recent votes (including yours) were counted. According to https://www.steemnow.com/ your vote is worth around $1.74 which I see you've used entirely on yourself for your comment above. I think I've mentioned to you before my opinions on that (and many in the community).
As to why some make more than others, well, it's about building a following who have Steem Power to vote your way with. I've posted and commented over 8,000 times and many feel I'm bringing value so they add me to their auto-voters so to support my work and earn curation rewards for themselves.
Thanks. I learned something new. I had not heard of steemnow.com. Ijust had a good look at it now. On the question of voting, I am new-ish so don’t have a 100% understanding of how it works. I read a number of versions. Some said you only get 10 votes a day. That doesn’t seem right. Others say that each vote uses 5% of your voting power, but then I see a slider bar asking me to use 100% on each vote. I will go off and hunt down an article explaining all this. On the voting for one’s own post, I haven’t read your views but I will be sure to hunt down yours oranother article on it. My knee-jerk reaction is that it shouldn’t be allowed. From a community point of view, voting for yourself does nothing, and that right should be removed. Shill voting should also be banned. For the moment it is allowed, so I sometimes vote my own posts, but I may have a clearer idea of the pros and cons after I have read some articles on how voting is supposed to work.
I love your response because you're willing to learn. Reminds me when I first started figuring things out here. I couldn't read enough. :)
Sorry if I got you confused with someone else on the self-voting thing. Here's my most recent take on it.
Voting Power is something that replenishes all the time. The target vote per day (5) concept isn't a hard limit, but it's a number you can aim for if you want to keep your voting power high. If you vote more than that per day, your voting power will start to go down and the strength of your vote with it.
That's not really possible though due to Sybil Attacks. It's not really something you can easily avoid. Self voting is at least a bit more visible than someone commanding hundreds of bots (which happens around here quite a lot as well).
I finally located your post from 3 months ago on the topic of self-voting, and read the hundreds of comments. I wrote a long reply: https://steemit.com/steemit/@lukestokes/self-voting-scammy-behavior-rational-roi-or-something-else#@swissclive/re-lukestokes-re-surfyogi-re-lukestokes-self-voting-scammy-behavior-rational-roi-or-something-else-20171009t042154329z
I have a lot to learn on Steemit. For example I put the full URL in the above link, as I don’t yet know how to shorten it. It must be easy, but I haven’t learned it yet.
I wonder if there is a book called “Steemit for dummies” yet?
Sorry, I linked directly to the post in my comment with the text "my most recent take on it." As for making links, that's just HTML or Markdown. It's a bit tricky, but a little googling will get you going.
I always assumed SBD was more of a savings vehicle than STEEM. 1% isn't too much to make happen I think.
Yeah, it's not much, but it may be better than nothing. SBD is supposed to be a good, static savings tool but if it falls below $1, then it's not very helpful in that regard.
I'm no expert at all, but it is so simple to remember...buy steem with sbd when price of steem is low, convert steem to sbd when price of steem is high.
There is no "convert" from STEEM to SBD, but I assume you mean sell on the market. Yes, that's the basics of it, but no one can time the market. The conversion from SBD to STEEM adds another dimension because you should be getting $1 worth of STEEM for trading an asset the market is currently valuing at less than $1.
I thought sbd is more or less always 1.00$ (+/-0.01) and that price of steem is only going up and down. If was only like that, you could gain profit on internal market easily. Obviously I was wrong about sbd value.
There's no magic way to say "SBD is worth $1 because we say so." It floats up and down based on market forces. The conversion is one of the ways we can help maintain the peg.
Since my total account value is so low, I view it all as dollar cost averaging. When I get a larger balance, it might make now sense. Until then building up as much SP as I can will hopefully get my upvotes up to a penny or two ASAP.
Building up SP is the way to go. :)