SBD - how do you explain what is going on?
My understanding is that SBD is design to be 1 dollar - exactly 1 dollar. This is done by making it guaranteed by the blockchain that you are able to exchange 1 SBD to steem worth 1 dollar at any particular time.
So basically SBD is a token saying "You can exchange me any time for another asset which has a value of 1 USD". So very similar to the US Dollar at that time when it was pegged to gold. At that time it had a printing on it saying ""Will Pay to the Bearer on Demand" in terms of you could always change it to gold.
Of course the US abandoned the gold standard a long time ago but that is another story. Some similarities are there - The possibility to exchange SBD for steem has been deactivated front end wise. But lets assume that was made to protect people to not change an 6 dollar asset against 1 dollar worth of steem.
Since November 22nd valuation of SBD is climbing - now being around 7.3! USD. And the volume is around 100 million - wow.
Why is SBD trading for more than 1 USD? Who is paying more than 1 USD for basically a paper that says it is worth 1 USD? What is the intention? Only reason I see is pure speculation and "playing" an coin which would show how deformed the market is.
Or is it intentionally done by steem core to increase rewards as a possibility to attract more user (it certainly worked looking at the stats which say that we doubled active users since November).
What is your reasoning for SBD trading higher than 1 USD? Do you see point which I am missing?
my response: https://steemit.com/steem/@knircky/is-sbd-propped-up-by-design
What I say is: Thanks to the speculators for the higher payouts to the authors. :-) In my opinion people speculate on SBD because of its low marketcap and people don't really know what SBD is. People have also take into account that inflation of the SBD rises with its price. And inflation then causes downward pressure.
Here I have a chart where you see the price of SBD versus the inflation:
Its from my weekly steem statistics. https://steemit.com/steem/@sevenseals/steem-statistic-charts-week-03
great chart. Very interesting. Have you insights how the technical constraint is between price and inflation?
The inflation is calculated from the supply of SBD. The reason why inflation rises is that no SBD will be destroyed if SBD is higher than $1. I also wrote an article that explain the regulation of SBD:
https://steemit.com/steem/@sevenseals/why-the-steem-dollar-sbd-will-fall-back-to-1-us-dollar-the-self-regulation-of-the-sbd
Actually, the inflation of SBD is much simpler than this: It's essentially based on the STEEM price feed. Please take a look at this.
What you say is true when SBD is lower than 1 USD though. In that region conversions are king!
This is NOT the case. I think its a simple misunderstanding of what is being passed around as fact.
SBD is not redeemable for $1.00 at any given time by anyone.
SBD is only redeemable for $1.00USD worth of STEEM any given time.
The mechanism to support that works and still works today. That mechanism does not create an environment where SBD is worth $1.00 instead it just incentivises it to not be below $1.00. Its working as intended by code.
Yes - That is totally in line with my understanding of how SBD works. Probably I wasn't precise enough. But like @knircky outlines the economic design (not the technical) of SBD would have brought value to steem if it is a stable coin. What benefit does SBD has when it is fluctuation like this. Why not just stick with steem only. What are your thoughts on this?
I think SBD has its purpose as a coin that can be used in place of the dollar, which means it needs to be pegged to the dollar. I think its impossible to achieve that peg, so SBD's purpose must change.
I personally think we need to hardfork and increase the SBD generation, but what this will also do is accidently introduce too much SBD which results in too much inflation and brand distruss.
I think the problem (if it is one) will take care of itself. SBD supply must be increasing much faster than STEEM at the moment (unless an exceptionally large percent of STEEMIT users are powering up 100%) so in the long run the value of SBD will drop relative to STEEM. I don't think there is anything that needs to be done about it.
Best explanation I saw was SBD being listed on some big exchanges recently alongside STEEM has led to confusion and people buying SBD instead. Since its a much smaller market cap it's causing big changes and volatility.
Who knows though. I'm not complaining as it let me bump my SP up nicely. @famunger
You are right - I won't complain either. But confusion for now over two month? But I guess people could confuse SBD. Probably a lot are not going into detail and don't understand what is behind it.
That's really interesting, one of the reasons why steemit community is growing that fast is because of SBD price. In my opinion people with big pockets making this up trend purposely, but if SBD is designed to be worth exactly one USD than sooner or later we will see SBD drop. At the moment entire currencies market is in complete chaos, it's really hard to predict what's going to happen. We are living in interesting times :)
Yeah - that is great but also worries me as this behavior is clearly irrational and still it is going on for month.
very good and helpful information, thanks for sharing @famunger.
The fact that SBD is available instantly after a posting got payed out is a huge factor imo. While you have to wait 13 weeks to get your full STEEM from the post rewards, the SBD is available instantly and is therefore way more practical for services like boosters, paying for delegations, etc. ...
However there are thoughts and plans about helping out to get it back to 1$ and to stabilize it there so that we would have the benfits of a pegged SBD.
Check out this post, many witnesses are discussing that topic there. Since I want you to get the arguments from both sides, here are two posts:
One is for changes: Witness Discussion – SBD price and reverse peg
and one is against:Still in Defense of a High SBD: Why Witnesses Should not Implement Steem to SBD Conversions Now-
Great - thanks for the links. I will dive into it - but not today. ;-)
Hey und Hallo,
ich habe Deinen Post eben auf der Seite von @knircky entdeckt. Als Neuling lese ich (fast) alles, was mit Steem oder SBD zu tun hat. Das ist für mich in der Anfangszeit noch alles sehr undurchsichtig. Je mehr ich lese, desto schwieriger scheint das Thema Kryptowährungen zu werden. Da bin ich gespannt, wie sich das alles bei mir entwickelt.
Grüsse Dich.