SHOW ME THE MONEY! - Explaining the "CASH OUT NOW" paradox to friends
So my conversations have started...
Friends want to know, "How do I cash out now, dammit!" I promised them cash for posts, and now they want to cash out and go on holiday. They read my last post and loved it, but they love the idea of a couple of nights in Ibiza more.
So we ran a simulation earlier. Let us cash out 1 USD worth of Steem.
- 1 USD is worth 0.001493 BTC (@$669.8 USD per BTC source: Preev)
- 0.001493 BTC is worth 4.45 STEEM (@ 0.00033601 BTC per STEEM source: Bittrex)
Therefore they need to be able to buy STEEM in the internal market at:
- 0.2247 (1/4.45 = 0.2247) to get a full 1 USD for their Steem Dollar (SD). Then run across and sell their Steem on Bittrex for BTC.
Here is the problem. The lowest ask on the internal market is 0.299
Buyers of Steem are effectively selling their 1 SD for 0.75 cents, if they sell straight-away.
This is a best case scenario. Should they wish to sell substantially more than 1 SD, say 1000 SD, they will run into liquidity problems and will be selling for even less than 0.75 cents per SD.
We could, of course, put in a Steem Buy order at 0.2247 and wait if it gets filled. But then we need to keep an eye on Bittrex to ensure we can still sell Steem at 0.00033601 BTC or greater (and keep an eye that BTC hasn't fallen substantially).
Yes, at this point, their eyes glazed over.
They wonder what they have got themselves into?!? "Just give me something dammit! 50% I don't care anymore..." They silently cry.
And this is the point.
The more people start caring about how much they get for their SD, the more it will be worth.
That's the paradox.
Believe me, in a couple of weeks' time, after the initial euphoria of 'just getting paid' wears off, they'll be wishing they hadn't lost 50% of their earnings in conversion.
I'm convinced there will be easier methods of processing SD in the future (e.g. a BTC-SD market). Many of us have waited weeks for the payouts to hit our wallets, what's a few more weeks to ensure you extract maximum value?
Patience is our best ally at the moment.
Thanks for the short article. I am also willing to wait for the upcoming faster and more use-friendly methods... Namaste :)
The actual solution to make $ from SD cost too much. So I think i'll do like you and wait until new solutions allow us to easily exchange SD for $.
By the way I have a question: if the BTC skyrocket, the exchange rate of 1 Steem for 0.00033601 BTC will drop isn't it? And we will make the same amount of $ for a Steem, but less BTC for a Steem?
Look, if people want to sell we let them. However they will be back to make more content to earn more money so they can sell again. These are the people that are going to make good content, bring in their friends and lead to this site being a success. They go on vacation and say yeah I paid for this because of stuff I wrote on this new social media platform. Other people go wait what? you got paid? HOW?
Let anyone sell at any time, these people are all going to lead to the success of this site.
Indeed, it's all different perspectives. My friend just cashed out and she's VERY happy with the deal. I'm happy for her.
I've explained the whole process. Used my crypto accounts to facilitate it her getting her cash and paid her through my bank account.
This post is my perspective. She knows it, we laughed about it. She may have made the right move, she certainly made the right move for her.
No doubt I'll go through the same process with other friends.
My thing is as long as they make their choices with open eyes, understand why I'm not cashing out just yet, it's all good. :)
Hopefully she will keep trying to make good content so she can cash out again and again and again.
I can sympathize with wanting to get paid. ;)
Thanks for explaining all of this! Very useful, so what about that holiday to Ibiza then?? Did they go, didn't they? I'm in suspense.
She got her money and is going on holiday! :)
nanzo-scoop I really enjoyed your post. I see the benefits of staying. We are a part of something big our balance can grow too if we really believe in STEEM. Sure some people will cash out and lose but that money can mean a lot to them at a time.
The external market was at even more of a discount yesterday (I saw up to 60%), I was taking the opposite side of the trade, bought Steem on the external and converted to steem dollars on the internal market. So it is coming down and converging, over time it should be much closer to fair value.
https://steemit.com/steem/@wingz/how-to-buy-a-steem-dollar-for-less-than-a-dollar
For everyone that looses for example 30% ... someone else win it... Over time these arbitraging opportunity’s will be less and less and the spread will be super tight very soon...
Good way of putting it. Just hold on to your britches people. :) You'll be glad you did.
I can't tell you enough how true this is!