SBD Is For STEEM What Bitcoin Is For Alts
We're officially in a correcting downtrend for STEEM / SBD and please don't tell me you didn't expect this. The growth - as pleasant and deserved as it felt, for all of us - was spiky and way too sudden. So, for the sake of the ecosystem health, I'm enjoying this correction.
But, if you know where to look, even during the strongest correction, there's some upside.
Let me explain myself :)
You know the Bitcoin "dance" with the alts? Every time there is an increase in the price of Bitcoin, alts go down. Or, equally true: when alts appreciate, Bitcoin gets cheaper. The rationale behind this swing is that Bitcoin is perceived as a safe haven, as a safe store of value. So, when some type of liquid, but not so stable currency depreciates, value flows into Bitcoin, increasing its value. Then if some alt gets interesting and creates demand, value flows out of Bitcoin and into that alt. It happened like this with paper notes and gold for years.
Now, if you have a little bit of knowledge about how the Steem ecosystem works, you'll see some surprising similarities.
Only in this case, SBD plays the role of Bitcoin, and STEEM the role of alts.
It may not be obvious from the first look, so let's try an example. Using the same example for calculating rewards, suppose your post display a potential payout of $100. We already know that the "$" sign is irrelevant, and I replaced it with STU (Steem Token Units). Out of this 100 STU, you give 25 STU to curators.
The rest is split 50 / 50, like that:
- half of it in SBD, as exact numbers (e.g. 37.5 SBD)
- half of it as the worth of SP in USD, at the market STEEM price (e.g. if STEEM price is $6, you get 37.5 / 6 = 6.25 Steem Power).
Let's look at this example on two scenarios:
- SBD = $13, STEEM = $7 (it was like this until no long ago)
- SBD = $5.5, STEEM = $4 (like it is now)
First Scenario
37.5 SBD * $13 = $487.5
37.5 / $7 = 5.35 Steem Power
SP to SBD fiat percentage: 1.09%
Second Scenario
37.5 SBD * $5,5 = $206.25
37.5 / $4 = 9.375 Steem Power
SP to SBD fiat percentage: 4.54%
It's obvious that when the price goes down, in fiat, your absolute value in rewards will be down too.
But the interesting part is that when the SBD price goes down, you get more Steem Power.
In the example above, SBD price halved, and STEEM price went down with almost 43%, but the rewards in SP tripled as SP to SBD percentage and almost doubled as absolute numbers!
I know it's a bit mind boggling and there's a lot more to talk about this, but I just wanted to note that there is this very interesting correlation between SBD and STEEM which will always create some sort of a "dance" between the two currencies, and the result will be the growth of the entire ecosystem, just like the Bitcoin dance with the alts made the entire crypto market close to 1 trillion.
Also, as far as I know, this SBD / STEEM dance is unique amongst all cryptocurrencies.
I'm a serial entrepreneur, blogger and ultrarunner. You can find me mainly on my blog at Dragos Roua where I write about productivity, business, relationships and running. Here on Steemit you may stay updated by following me @dragosroua.
https://steemit.com/~witnesses
If you're new to Steemit, you may find these articles relevant (that's also part of my witness activity to support new members of the platform):
It is actually a genius system, and very unique as you mention. I believe that the market should decided the SBD price. The peg is not important.
Hey @dragosroua check out this Excel STU / SBD calculator I created!
https://steemit.com/steem/@reseller/i-made-a-steem-power-sbd-rewards-calculator-dtube-rewards-calculator
Yes I've been watching the decline of SBD over the last few days.
I finally got some good payouts of SBD and it seems as much as my store of SBD goes up, the value goes down.
So the value of my SBD is about the same as it was over a week ago, even though I have more than double the amount. Doh! hehe
I'm not overly bothered by that. I think it is entertaining.
But it does mean that the next time it spikes I should have a good amount stored away to profit from ;-)
I think the spike was a good thing - it showed the possibility. It got people excited. So now they are beavering away writing content knowing that it is possible for the SBD and STEEM price to go up.
They'll be doing what I'm doing, working hard to produce good content to earn as much as I can, and then waiting for the rise. And it will rise again ;-)
While I keep telling my husband my worries of SBD price going down, he keeps telling me it's better that way because it will be cheaper to invest. I kept missing his point until I read this post.
The math can be confusing at times, but you nailed the explaining !! Also the best part of steemit is we can earn tokens with quality content. (No fancy GPUs/CPUs Unless someone wants to be a witness.)
Lol, you don't need that type of equipment as a Steem witness, only loads of RAM and SSD.
SSD/RAM ain't cheap either :P
@dragosroua:
Could you explain that further? Even better, publish a post on that if you feel there is no posts about this them. And if there are would you please, share links?
I am sitting back and just watching this roller coaster while Hodl...
Thank You @dragosroua for keeping us all updated on this journey!
Enjoy the vote and reward!
I was wondering why the payouts seemed so weird. I wish there was a possibilty to earn 100% SBD on posts.
really good stuf!you clearly undestand the steem power and steem process!really happy to see these like article !your are creative mind who always do something special
Thanks for the great explanation. I'm still rather new so it's very confusing to navigate. I just learned about witnesses yesterday and am happy to vote for you. Keep up the great work educating us Newbs!
This is purposedly built in the system by rewarding on a dollar basis and to help lower the amount of SP and SBD that is paid out in the future correct? That way inflation can be held in control while still being able to keep the function of Steem by preventing the depletion of the reward pool?
I don't know if what I'm asking is understandable, but in my head I know what I'm asking lol.
The relationship between SBD and STEEM is not coupled with inflation. The inflation is calculated in STEEM and its projected to diminish 0.5% / year, until flattening at 0.5% (from 9.5% as it is now) in 20 years.
SBD is a debt instrument, it started from representing "$1 worth of STEEM". As such, is not backed by real dollars, or any other collateral, it's debt denominated in STEEM.