The first post was incoherent nonsense and another post quoting the first post adding nothing new is building more confusion on top of nonsense. @enki's comments on the first post were correct.
Don't bother voting for this post because if I see this recycled nonsense getting big rewards I will be downvoting it.
I'm not a fan of using the downvote in that manner, but otherwise agree with what you're saying about the incoherent arguments, and I upvoted your comment so it stays up top.
As stated, this post was intended to raise awareness to the issue - as seemed the original didnt get much attention - not for rewards.
Appreciate your perspective - given you've been around since the start and have a deep knowledge of the back end dynamics, your voice is highly valuable in the discussion to help clear up any misinformation on the matter.
also updated the post title as suggested and inspired by @pfunk & @recursive 's comments to tone down the seriousness suggested by the first headline.
Enki was correct generally speaking for abritrages. He was not correct for this specific case.... his analysis is easily disproven by market observation. If he were correct, prices would tend to meet in the middle (or at least a volume weighted middle)... they don't. The price always corrects to the (lower) external exchange price.
Don't you mean by the amount of steem (or more accurately the size of the order) rather than Steem Power/Vests?
An a example, current price on internal market is around $1.25. Let's say there is a large buy order for $1.25 and I want to "front run" (put a buy order in just above it). With an order size of 1 steem, I would need to bid $1.251 to avoid being rounded down to $1.25. If instead I place an order of 10 steem for $12.501 I can get to the front of the bids without sacrificing as much of the price.
Thus, more steem available for trading rather than SP gives an advantage in the precision to which one can place orders, no?
That said, it doesn't really seem to me like the issue here is the recycled nature of the post. There are many "hidden gems" and similar type posts designed to get attention for unnoticed posts. What it seems like to me is that you either disagree or simply don't want the issue discussed, and youre doing your best to make sure it doesn't get exposure.
Although you are entitled to belileve whatever you like, and vote accordingly, I take exception to the claim that the post i n question was "incoherent nonsense". If it was something that Rok felt was compelling enough to repost (which, incidentally, was entirely unsolicited) , and many other presumably intelligent people agreed with and found it compelling (including @andrachy, who proofed it) and a hundred something people who voted for it. Even if im wrong (ftr im not), there seems to b e enough of a compelling argument to make a lot of people think.
It's absolutely both. The hidden gems posts reference several posts not just one. And even then people still debate whether those are worthwhile . A post referencing only a single post which was not missed but as you point out already got 100+ votes is recycling.
Yes my view on the merits matters too. If I thought something really important and profound was being missed and needed more exposure then I would support giving it that, but I don't.
And even ten people still debate whether those are worthwhile .
well youve got a point there.
A post referencing only a single post which was not missed but as you point out already got 100+ votes is recycling.
I should point out (then im finished with the matter) at the time when rok reposted, i think i had like 30 or 40 upvotes, nearly all of them by my followers who are (for the most part) no one important.
Basically, if you read the discussion itt, youll see that theres one primary disagreement between me and the people who think this is "incoherent nonsense" They believe a buy order on the internal market will offset a sell order on the external markets to determine price. I do not.
It occurred to me that there is a relatively simple way to test this theory. Because we really don't have to wait for an arbitrage opportunity to see if this works. Its just as easy to run money through the system (sell steem on the external market and buy it on the internal) and see what happens. With out the existence of an arbitrtage as a constraint, you could continue doing this indefinitely. You'd lose a little bit of money, but whats a little money in the name of science.
So heres what im going to do. Im picking up $5 or $10K worth of steem tonight, depending on how much BTC i have left over after paying out all my clients. Im going to set up a little script to cycle it through the exchanges super quick (and nby set up a little script, i mean pay someone to set up a little script), and start cycling it saturday.
NOw there are two potential things that could happen.
1.I could be right, in which case it will draw the value of steem down. I will consider my point proved if i can reduce the value of steem 40% in one night.
2.I could be wrong, in which case nothing will happen, except ill llose out on a bunch of trading fees.
I suppose we'll see. Science is fun i feel like mr. wizard. here is a seeded hash of the exact time and account im using (to prevent cherry picking)107e73fa614bdca40292469a0109c0f6f74836ea8c1fe9b20fadd26107a40004 I am not revealing the exact time or account im using before the fact, because i don't want to leave myself vulnerable to having the trading exploited on either market.
I'll post my results on saturday or early sunday after the expirement is finished.
then again, you also didn't think that SBD redemption came out of the vesting fund. Maybe its time to stop pretending to be an expert and just admit you don't have any idea whats going on. Rather than hide the fact that youre incorrect by taking the discussion off site like you did last time.
If not, maybe an actual argument or justification, instead of unsubstantiated assertions delivered from on high, might be nice.
You should stop pretending to be an expert, too. Especially since you really have no idea what you're talking about here. You're seeing 2 different things occurring and assuming one is causing the other when they are merely coincidental.
@enki already explained this to you in great detail in the comments of your original post. So I'm surprised you keep pushing it. And I'm even more surprised that your debunked ideas are being given new life on a new thread here.
also, as a side note, the whitepaper predicts precisely this problem. apparently they changed their mind at some point and broke the universe.
If people could freely convert in both directions then traders could take advantage of the
blockchains conversion rates by trading large volumes without changing the price. Traders
who see a massive run up in price would convert to SMD at the high price (when it is most
risky) and then convert back after the correction. The Steem protocol protects the
community from this kind of abuse by only allowing people to convert from SMD to STEEM
and not the other way around.
What the hell are you talking about? Changed their mind and broke the universe? The whitepaper says you can't convert STEEM to SBD. That was true from the start and it is still true today. You CANNOT convert STEEM to SBD.
If you want SD, you have to trade your STEEM for them on the internal market. Or you can trade BTC for them on the external exchanges. But the system won't do the conversion for you.
You know, you're constantly confusing concepts. I just can't tell if you're doing it purposely with an agenda, or if you're just clueless.
You know, you're constantly confusing concepts. I just can't tell if you're doing it purposely with an agenda, or if you're just clueless.
no reason it can't be both.
That said, i do recognize that this part was about conversion (rather than selling on the internal market)
my point is that the whitepaper recognizes that being able to convert a large volume of steem to SBD without effecting market price is exploitable.
Just for the sake of argument, do you? If I could prove to you that such a large volume conversion on the internal market does not effect price, might you acknowledge that I could have a point.
Just because someone with a lot of SP disagrees with what im saying, doesnt mean the idea is debunked. ... Its certainly your option to disagree, but i think people ought to know both sides.
I don't consider myself an expert in trading, but i am an expert in finance and business. I have an MBA and a JD< and i have run multiple business with 7 figure annual revenues. I advice and run us financial operations for dozens of offshore business, many with multi million dollar gross revenues. I am certainly not depending on my expertise as the sole backing for my agrument though.
More importantly, i back up my statements with fact and arguments, rather than making pronouncements from on high.
Im certainly not coming into the thread and claiming that "this is wrong" or "this is such and such" without first establishing a clear argument as to why i feel it is so. Because doing so would be arrogant and disrespectful.
I don't know why it's so hard for you to understand that the price is going down quite simply because there is more selling than buying. And although I doubt it, the selling could conceivably take us down to 25 cents. If you want to discuss the reasons for the selling, fine.
But stop overcomplicating it. Stop trying so hard to make the bogus case that there is some horribly fatal flaw in the system. And stop with this "from on high" crap. No one in the conversation is in a position of authority. We're just pointing out that you are dead wrong and have no clue what you're talking about.
It has nothing to do with SP, I didn't look at his wallet or yours and why would I? I just saw him shred your arguments nine ways to Sunday. He explained it like he was talking to a 5-year old. He clearly understands arbitrage and you clearly do not. Sorry.
basically, your problem seems to be that a mere mortal like me presumes to have an opinion not officially sanctioned by the self appointed "steem clerisy".
@baccist im not saying theres a conspiracy against me. Im saying that you and certain others have decided that anyone holding an opinion thats not part of the "official line" is wrong automatically, because youre the experts and youve decided it just aint so.
Thats why you feel that you can just come into a thread and just say claim someone is incorrect without any type of substantiation or justification.
The thread above is a great example of that. You accept a bet, then declare yourself the winner with out submitting one shred of evidence to back your claim.
I have nothing to do with anything official. I doubt @enki does either. And the only people around here that are self appointed are the founders, Dan and Ned. And that's only because THEY ARE THE FOUNDERS. Get it?
@sigmajin I've agreed to accept smooth's judgement for the outcome of the bet, whatever that may be. The rest of your statement would be absurd in light of my posting history...
Well, no, not really. You announced yourself the winner first (like 2 minutes after you accepted the bet) . Then i suggested smooth decide. Then you agreed to accept his call.
@sigmajin I've agreed to accept smooth's judgement for the outcome of the bet, whatever that may be. The rest of your statement would be absurd in light of my posting history...
Can you address the reason why I think your analysis is wrong? That is:
For every sell order, there's a buy order. It will bring the price down on one exchange while bringing the price up on the other exchange. This arbitrage will make the exchanges more equal in price, but won't lower the price of Steem as a whole.
I actually talk about that in the comments. In general, in normal market conditions, this is absolutely correct. The arbitaguers distribute buy and sell pressure throughout the market, but have no net effect on market price. BEcause sell orders on one market are mirrored by buy orders on the other.
As an example, when there is an arbitrage between bittrex and poloniex, that is exactly what happens. The arbers cycle the money, and the prices meet somehwere in the middle based on volume.
There are a variety of conditions that make the internal market more resistant to buy pressure, including the inverse relationship between steem and SBD and the imprecise way buy and sell orders are set (the more steem power you have the closer you can get to naming your price), and the dollar peg.
If what you were saying was true of this particular market dynamic, then the two markets would set a price and meet in the middle, based on the volume at each market. That is, in fact, not what happens. They always meet back up at the interneal market price. As i said in the comments in my post, you can actually see this happening if you watch long enough.
I am actually planning to go through the market history and demonstrate several examples tonight.
@bacchist your beer analogy is flawed, because youre just talking about 2 things. Beer and dollars. If there was a "beer backed dollar" and beer, BBD, and dollars were being traded that would be analogous to what we have.
and beer and BBD's would be inversely correlated in value. More precisely the dollar value of beer would be inversely correlated to the beer value of BBD.
@sigmajin so there is an inverse relationship between an asset backed note and the underlying asset? Please tell me more. This is all so fascinating.
No, as ive told you multiple times,
there is an inverse relationship between the dollar value of an asset, and the rate of exchange of a convertible note backed by that asset and the asset itself.
that is to say, as an asset goes up in value, the amount of that asset you can get with a convertible note goes down.
if you want to look it up, the specific kind of convertible note were talking about i s a reverse convertible bond.
I've been reading all your comments, trying to understand where you're coming from here, and it doesn't make sense to me. I don't understand how it could possibly lead to more selling than buying.
It doesnt. but the buying (on the internal market) only effects the steem:SBD rate, not the actual $ (or btc if you prefer) value of steem.
I've been reading all your comments, trying to understand where you're coming from here, and it doesn't make sense to me. I don't understand how it could possibly lead to more selling than buying.
"inverse relationship between steem and sbd"
This makes no sense whatsoever. None.
Again, a foolish and incorrect pronouncement from on high. Of course SBD and steem are inversely related.
As steem increases in value, the steem value of SBD decreases.
So if steem is worth $1, 1 SBD is worth 1steem
if steem is worth $2, 1 SBD is worth .5 steem
if steem is worth $10, 1 SBD is worth .1 steem
that is to say, whenever the $ value of steem is x, the steem value of SBD is 1/x.
Very simple, very basic, but you just don't get it. and because of your foolish arrogance, you presume to litter the thread with absurdities. ABsurdities which are, again, completely unsubstantiated in any way.
What? The first item doesn't make any sense and the second is not true. SP has zero effect on the way buy and sell orders are placed or priced.
this is incorrect. its why Abit was getting so much liquidity rewards. More steem power means you can place a buy or sell order more precisely. again, its weird that the guy who thinks i should just roll over for the "experts" doesn't understand the basic parameters of how the market works...
(PS, im looking for the part of the white paper that describes the system rto include for ref._)
There are a variety of conditions that make the internal market more resistant to buy pressure, including the inverse relationship between steem and SBD and the imprecise way buy and sell orders are set (the more steem power you have the closer you can get to naming your price), and the dollar peg.
What? The first item doesn't make any sense as description of a problem and the second is not true. SP has zero effect on the way buy and sell orders are placed or priced.
@sigmajin: Yes, and if the price of a can of beer goes from $1 to $2, there will be two dollars per can of beer and only half a can of beer per dollar. Does that mean there is an inverse relationship between dollars and beers? You're not making any sense.
as a further side note, as i mentioned in the other thread, this is priceisely what almost imploded citigroups common stock in 2009. Its a perfect example of a preferred stock (ie, a convertible note) common stock (ie an equity) arbitrage dragging down value.
Do you know how to transfer the 100 STEEM to me, or should I make an instructional video for you?
although he called it a draw, i was off by enough that i feel obligated to pay the bet anyway. I should make you actually post the video first, but i won't.
SBD redemption absolutely comes from the vesting fund. Again, youre wrong. Again, youre misreading the thread. Again, youre attempting to mislead investors.
Smooth explained this pretty clearly. But of course, he did so off site, so as to help preserve the credibility of "elite" posters like you and anonymint. As far as I can tell, neither of you has the slightest amount of economics, investing or finance knowledge
again, this is a fantastic demonstration of @baccist 's arrogance (right or wrong) he accepts the bet, then demands payment as the winner without showing an iota of additional proof.
Here is how it actually works. There is a concept that doesn't exist in the existing blockchain statistics that I will define for convenience as extra_virtual_supply = virtual_supply - current_supply. Equivalently, virtual_supply = current_supply + extra_virtual_supply.
STEEM are created and placed in the reward fund (and 9:1 added to the vesting fund) each block (2 per block, an amount that is constant until the inflation rate floor is reached).
At time of payout, STEEM are removed from the reward fund and divided between content and curation rewards. Half the content reward is converted to SBD at the current exchange rate by moving those STEEM from current_supply to extra_virtual_supply and creating new SBD (as a virtual liability).
Any change in the SDB/STEEM exchange rate is reflected in an adjustment to extra_virtual_supply.
At time of conversion (redemption satisfying the virtual liability), SBD are destroyed and corresponding STEEM (at current exchange rate) are moved from extra_virtual_supply to current_supply.
No STEEM are ever removed from the vesting fund except by power down.
Honestly I can't follow this whole discussion and I would have to judge the bet as a push due to confusion (or at least confusing explanations) all around.
I'll follow up later with a more clear explanation.
What's your view @bacchist? In the scenario laid out in this post, for every sell order, there's also a buy order. Someone could make a lot of money in this trade, but it's not going to bring the price down, as the author claims. Rather it will make the prices more equal across exchanges. Can anyone point out a reason why my view could be wrong?
I completely see your reasoning there and that is also another problem with this platform.
That is there are valuable posts that didn't get seen in a certain window of "time" and thus there is less incentive to UPvote or maybe even incentive to NOT vote.
So I can see some of why this works and all in all love Steemit and would keep using it even if it didn't get better. Yet my hope is that it gets a LOT better. That there are people who have great ideas, those ideas are supported and upgrades are made and the community as a whole is better.
The problem then of course is that not everyone will agree on everything...EVER. hahaha so it is possible that many agree on a lot and thats best case scenario.
If the platform works the way a lot of people want it to then even though some don't like it enough do to keep using it thus it is "successful".
If it doesn't then it won't get used. I hope that not only does Steemit stay awesome but get more awesome.
Eventually someone or more likely a group of people will develop something even better. Those who can adapt are the ones ahead of the curve~*~
This is FUD. What the link you post describes is standard arbitrage. This is hardly a problem at all. It's a normal phenomenon in a market. Downvoted to reduce visibility. Please add an edit to moderate the alarmist tone.
The first post was incoherent nonsense and another post quoting the first post adding nothing new is building more confusion on top of nonsense. @enki's comments on the first post were correct.
Don't bother voting for this post because if I see this recycled nonsense getting big rewards I will be downvoting it.
I'm not a fan of using the downvote in that manner, but otherwise agree with what you're saying about the incoherent arguments, and I upvoted your comment so it stays up top.
Thank you for your input and explanation.
As stated, this post was intended to raise awareness to the issue - as seemed the original didnt get much attention - not for rewards.
Appreciate your perspective - given you've been around since the start and have a deep knowledge of the back end dynamics, your voice is highly valuable in the discussion to help clear up any misinformation on the matter.
also updated the post title as suggested and inspired by @pfunk & @recursive 's comments to tone down the seriousness suggested by the first headline.
Enki was correct generally speaking for abritrages. He was not correct for this specific case.... his analysis is easily disproven by market observation. If he were correct, prices would tend to meet in the middle (or at least a volume weighted middle)... they don't. The price always corrects to the (lower) external exchange price.
Don't you mean by the amount of steem (or more accurately the size of the order) rather than Steem Power/Vests?
An a example, current price on internal market is around $1.25. Let's say there is a large buy order for $1.25 and I want to "front run" (put a buy order in just above it). With an order size of 1 steem, I would need to bid $1.251 to avoid being rounded down to $1.25. If instead I place an order of 10 steem for $12.501 I can get to the front of the bids without sacrificing as much of the price.
Thus, more steem available for trading rather than SP gives an advantage in the precision to which one can place orders, no?
That said, it doesn't really seem to me like the issue here is the recycled nature of the post. There are many "hidden gems" and similar type posts designed to get attention for unnoticed posts. What it seems like to me is that you either disagree or simply don't want the issue discussed, and youre doing your best to make sure it doesn't get exposure.
Although you are entitled to belileve whatever you like, and vote accordingly, I take exception to the claim that the post i n question was "incoherent nonsense". If it was something that Rok felt was compelling enough to repost (which, incidentally, was entirely unsolicited) , and many other presumably intelligent people agreed with and found it compelling (including @andrachy, who proofed it) and a hundred something people who voted for it. Even if im wrong (ftr im not), there seems to b e enough of a compelling argument to make a lot of people think.
It's absolutely both. The hidden gems posts reference several posts not just one. And even then people still debate whether those are worthwhile . A post referencing only a single post which was not missed but as you point out already got 100+ votes is recycling.
Yes my view on the merits matters too. If I thought something really important and profound was being missed and needed more exposure then I would support giving it that, but I don't.
EDIT: typos
well youve got a point there.
I should point out (then im finished with the matter) at the time when rok reposted, i think i had like 30 or 40 upvotes, nearly all of them by my followers who are (for the most part) no one important.
So i wanted to give everyone a quick update.
Basically, if you read the discussion itt, youll see that theres one primary disagreement between me and the people who think this is "incoherent nonsense" They believe a buy order on the internal market will offset a sell order on the external markets to determine price. I do not.
It occurred to me that there is a relatively simple way to test this theory. Because we really don't have to wait for an arbitrage opportunity to see if this works. Its just as easy to run money through the system (sell steem on the external market and buy it on the internal) and see what happens. With out the existence of an arbitrtage as a constraint, you could continue doing this indefinitely. You'd lose a little bit of money, but whats a little money in the name of science.
So heres what im going to do. Im picking up $5 or $10K worth of steem tonight, depending on how much BTC i have left over after paying out all my clients. Im going to set up a little script to cycle it through the exchanges super quick (and nby set up a little script, i mean pay someone to set up a little script), and start cycling it saturday.
NOw there are two potential things that could happen.
1.I could be right, in which case it will draw the value of steem down. I will consider my point proved if i can reduce the value of steem 40% in one night.
2.I could be wrong, in which case nothing will happen, except ill llose out on a bunch of trading fees.
I suppose we'll see. Science is fun i feel like mr. wizard. here is a seeded hash of the exact time and account im using (to prevent cherry picking)107e73fa614bdca40292469a0109c0f6f74836ea8c1fe9b20fadd26107a40004 I am not revealing the exact time or account im using before the fact, because i don't want to leave myself vulnerable to having the trading exploited on either market.
I'll post my results on saturday or early sunday after the expirement is finished.
Great! :-)
I don't think this is a problem at all.
then again, you also didn't think that SBD redemption came out of the vesting fund. Maybe its time to stop pretending to be an expert and just admit you don't have any idea whats going on. Rather than hide the fact that youre incorrect by taking the discussion off site like you did last time.
If not, maybe an actual argument or justification, instead of unsubstantiated assertions delivered from on high, might be nice.
You should stop pretending to be an expert, too. Especially since you really have no idea what you're talking about here. You're seeing 2 different things occurring and assuming one is causing the other when they are merely coincidental.
@enki already explained this to you in great detail in the comments of your original post. So I'm surprised you keep pushing it. And I'm even more surprised that your debunked ideas are being given new life on a new thread here.
also, as a side note, the whitepaper predicts precisely this problem. apparently they changed their mind at some point and broke the universe.
What the hell are you talking about? Changed their mind and broke the universe? The whitepaper says you can't convert STEEM to SBD. That was true from the start and it is still true today. You CANNOT convert STEEM to SBD.
If you want SD, you have to trade your STEEM for them on the internal market. Or you can trade BTC for them on the external exchanges. But the system won't do the conversion for you.
You know, you're constantly confusing concepts. I just can't tell if you're doing it purposely with an agenda, or if you're just clueless.
no reason it can't be both.
That said, i do recognize that this part was about conversion (rather than selling on the internal market)
my point is that the whitepaper recognizes that being able to convert a large volume of steem to SBD without effecting market price is exploitable.
Just for the sake of argument, do you? If I could prove to you that such a large volume conversion on the internal market does not effect price, might you acknowledge that I could have a point.
Just because someone with a lot of SP disagrees with what im saying, doesnt mean the idea is debunked. ... Its certainly your option to disagree, but i think people ought to know both sides.
I don't consider myself an expert in trading, but i am an expert in finance and business. I have an MBA and a JD< and i have run multiple business with 7 figure annual revenues. I advice and run us financial operations for dozens of offshore business, many with multi million dollar gross revenues. I am certainly not depending on my expertise as the sole backing for my agrument though.
More importantly, i back up my statements with fact and arguments, rather than making pronouncements from on high.
Im certainly not coming into the thread and claiming that "this is wrong" or "this is such and such" without first establishing a clear argument as to why i feel it is so. Because doing so would be arrogant and disrespectful.
I don't know why it's so hard for you to understand that the price is going down quite simply because there is more selling than buying. And although I doubt it, the selling could conceivably take us down to 25 cents. If you want to discuss the reasons for the selling, fine.
But stop overcomplicating it. Stop trying so hard to make the bogus case that there is some horribly fatal flaw in the system. And stop with this "from on high" crap. No one in the conversation is in a position of authority. We're just pointing out that you are dead wrong and have no clue what you're talking about.
It has nothing to do with SP, I didn't look at his wallet or yours and why would I? I just saw him shred your arguments nine ways to Sunday. He explained it like he was talking to a 5-year old. He clearly understands arbitrage and you clearly do not. Sorry.
sigh
No, there's not. Obviously.
Does this really require explanation? its kind of finance 101.
there is precisely the same amount of buying as there is selling.
the problem (in a simplified way) is that for steem, all the buying is with SBD and all the selling is with BTC.
Well, i disagree... and it turns out there are quite a few who think im making a lot of sense.
You obviously don't think there's a problem, so more power to you. Maybe youll change your mind when your steem is worth 20 cents. Or maybe you won't.
You might want to ask yourself though, at what price point do you admit something might be wrong.
basically, your problem seems to be that a mere mortal like me presumes to have an opinion not officially sanctioned by the self appointed "steem clerisy".
@baccist im not saying theres a conspiracy against me. Im saying that you and certain others have decided that anyone holding an opinion thats not part of the "official line" is wrong automatically, because youre the experts and youve decided it just aint so.
Thats why you feel that you can just come into a thread and just say claim someone is incorrect without any type of substantiation or justification.
The thread above is a great example of that. You accept a bet, then declare yourself the winner with out submitting one shred of evidence to back your claim.
I have nothing to do with anything official. I doubt @enki does either. And the only people around here that are self appointed are the founders, Dan and Ned. And that's only because THEY ARE THE FOUNDERS. Get it?
Well, no, not really. You announced yourself the winner first (like 2 minutes after you accepted the bet) . Then i suggested smooth decide. Then you agreed to accept his call.
There's no conspiracy against you... you're just wrong a lot.
@sigmajin I've agreed to accept smooth's judgement for the outcome of the bet, whatever that may be. The rest of your statement would be absurd in light of my posting history...
Can you address the reason why I think your analysis is wrong? That is:
For every sell order, there's a buy order. It will bring the price down on one exchange while bringing the price up on the other exchange. This arbitrage will make the exchanges more equal in price, but won't lower the price of Steem as a whole.
I actually talk about that in the comments. In general, in normal market conditions, this is absolutely correct. The arbitaguers distribute buy and sell pressure throughout the market, but have no net effect on market price. BEcause sell orders on one market are mirrored by buy orders on the other.
As an example, when there is an arbitrage between bittrex and poloniex, that is exactly what happens. The arbers cycle the money, and the prices meet somehwere in the middle based on volume.
There are a variety of conditions that make the internal market more resistant to buy pressure, including the inverse relationship between steem and SBD and the imprecise way buy and sell orders are set (the more steem power you have the closer you can get to naming your price), and the dollar peg.
If what you were saying was true of this particular market dynamic, then the two markets would set a price and meet in the middle, based on the volume at each market. That is, in fact, not what happens. They always meet back up at the interneal market price. As i said in the comments in my post, you can actually see this happening if you watch long enough.
I am actually planning to go through the market history and demonstrate several examples tonight.
@bacchist your beer analogy is flawed, because youre just talking about 2 things. Beer and dollars. If there was a "beer backed dollar" and beer, BBD, and dollars were being traded that would be analogous to what we have.
and beer and BBD's would be inversely correlated in value. More precisely the dollar value of beer would be inversely correlated to the beer value of BBD.
No, as ive told you multiple times,
there is an inverse relationship between the dollar value of an asset, and the rate of exchange of a convertible note backed by that asset and the asset itself.
that is to say, as an asset goes up in value, the amount of that asset you can get with a convertible note goes down.
if you want to look it up, the specific kind of convertible note were talking about i s a reverse convertible bond.
It doesnt. but the buying (on the internal market) only effects the steem:SBD rate, not the actual $ (or btc if you prefer) value of steem.
I've been reading all your comments, trying to understand where you're coming from here, and it doesn't make sense to me. I don't understand how it could possibly lead to more selling than buying.
"inverse relationship between steem and sbd"
This makes no sense whatsoever. None.
@bacchist replying here due to nesting.
Again, a foolish and incorrect pronouncement from on high. Of course SBD and steem are inversely related.
As steem increases in value, the steem value of SBD decreases.
So if steem is worth $1, 1 SBD is worth 1steem
if steem is worth $2, 1 SBD is worth .5 steem
if steem is worth $10, 1 SBD is worth .1 steem
that is to say, whenever the $ value of steem is x, the steem value of SBD is 1/x.
Very simple, very basic, but you just don't get it. and because of your foolish arrogance, you presume to litter the thread with absurdities. ABsurdities which are, again, completely unsubstantiated in any way.
this is incorrect. its why Abit was getting so much liquidity rewards. More steem power means you can place a buy or sell order more precisely. again, its weird that the guy who thinks i should just roll over for the "experts" doesn't understand the basic parameters of how the market works...
(PS, im looking for the part of the white paper that describes the system rto include for ref._)
What? The first item doesn't make any sense as description of a problem and the second is not true. SP has zero effect on the way buy and sell orders are placed or priced.
@sigmajin: Yes, and if the price of a can of beer goes from $1 to $2, there will be two dollars per can of beer and only half a can of beer per dollar. Does that mean there is an inverse relationship between dollars and beers? You're not making any sense.
@sigmajin so there is an inverse relationship between an asset backed note and the underlying asset? Please tell me more. This is all so fascinating.
as a further side note, as i mentioned in the other thread, this is priceisely what almost imploded citigroups common stock in 2009. Its a perfect example of a preferred stock (ie, a convertible note) common stock (ie an equity) arbitrage dragging down value.
you get that a preferred stock is just like a convertible note, right.
So you had people exchanging convertible notes for equities in one market, and trading both for cash on another market.
Its precisely the same thing. maybe point out a difference if you disagree. I really don't know how much clearer i can be.
The linked Citigroup article has no correlation here. It's not at all applicable. Totally different things.
SBD redemption doesn't come out of the vesting fund. This was verified in the post you're referencing. What are you talking about off site?
although he called it a draw, i was off by enough that i feel obligated to pay the bet anyway. I should make you actually post the video first, but i won't.
That is very honorable @sigmajin. Props to you.
Well played, sir.
SBD redemption absolutely comes from the vesting fund. Again, youre wrong. Again, youre misreading the thread. Again, youre attempting to mislead investors.
Smooth explained this pretty clearly. But of course, he did so off site, so as to help preserve the credibility of "elite" posters like you and anonymint. As far as I can tell, neither of you has the slightest amount of economics, investing or finance knowledge
@baccist fair to let smooth settle the bet?
FTR, i say that steem is created and placed in the vesting fund when SBD are created. then removed when theyre converted via the convert SBD function.
you say that steem are created from nothing when SBD are converted via the convert SBD function.
@bacchist no, its created ex nihilo when the SBD are created. thats the 20:1 thing. its created and placed in the vesting fund. care to bet 100 steem?
again, this is a fantastic demonstration of @baccist 's arrogance (right or wrong) he accepts the bet, then demands payment as the winner without showing an iota of additional proof.
Then wonders why people think steem is a scam
Here is how it actually works. There is a concept that doesn't exist in the existing blockchain statistics that I will define for convenience as
extra_virtual_supply = virtual_supply - current_supply. Equivalently,virtual_supply = current_supply + extra_virtual_supply.STEEM are created and placed in the reward fund (and 9:1 added to the vesting fund) each block (2 per block, an amount that is constant until the inflation rate floor is reached).
At time of payout, STEEM are removed from the reward fund and divided between content and curation rewards. Half the content reward is converted to SBD at the current exchange rate by moving those STEEM from current_supply to extra_virtual_supply and creating new SBD (as a virtual liability).
Any change in the SDB/STEEM exchange rate is reflected in an adjustment to extra_virtual_supply.
At time of conversion (redemption satisfying the virtual liability), SBD are destroyed and corresponding STEEM (at current exchange rate) are moved from extra_virtual_supply to current_supply.
No STEEM are ever removed from the vesting fund except by power down.
@sigmajin Yes, I will absolutely agree to have smooth settle the bet.
My stance is that the STEEM is in the virtual_supply and added to the current_supply upon conversion.
@sigmajin Yes, I would bet 100 STEEM on that.
@sigmajin you now owe me 100 STEEM. Please pay up promptly.
Honestly I can't follow this whole discussion and I would have to judge the bet as a push due to confusion (or at least confusing explanations) all around.
I'll follow up later with a more clear explanation.
I've agreed to let smooth determine the outcome.
It absolutely does not. As @theoretical said in the thread you are talking about, the steem is created ex nihilo upon redemption.
@sigmajin please see smooth's comment. He couldn't follow this thread, but his explanation is what I've been saying.
Do you know how to transfer the 100 STEEM to me, or should I make an instructional video for you?
What's your view @bacchist? In the scenario laid out in this post, for every sell order, there's also a buy order. Someone could make a lot of money in this trade, but it's not going to bring the price down, as the author claims. Rather it will make the prices more equal across exchanges. Can anyone point out a reason why my view could be wrong?
see my response to your previous.
Yes, of course you are correct.
Off to read @sigmajjin post thanks for the heads up
Thanks for posting the link to the original post. I upvoted that one as well.
Edit: I thought about this some more and changed my mind, so I deleted my post.
I read it, but did not vote as it is already past the payout limit of 24 hours
I think there's a second payout that happens about a month later if there are upvotes after the inital 24-hour period.
I completely see your reasoning there and that is also another problem with this platform.
That is there are valuable posts that didn't get seen in a certain window of "time" and thus there is less incentive to UPvote or maybe even incentive to NOT vote.
So I can see some of why this works and all in all love Steemit and would keep using it even if it didn't get better. Yet my hope is that it gets a LOT better. That there are people who have great ideas, those ideas are supported and upgrades are made and the community as a whole is better.
The problem then of course is that not everyone will agree on everything...EVER. hahaha so it is possible that many agree on a lot and thats best case scenario.
If the platform works the way a lot of people want it to then even though some don't like it enough do to keep using it thus it is "successful".
If it doesn't then it won't get used. I hope that not only does Steemit stay awesome but get more awesome.
Eventually someone or more likely a group of people will develop something even better. Those who can adapt are the ones ahead of the curve~*~
thanks for sharing this material, I like what you posted. Good luck
Wow... I hope some people who can do something about see these post. I love steemit...
This is FUD. What the link you post describes is standard arbitrage. This is hardly a problem at all. It's a normal phenomenon in a market. Downvoted to reduce visibility. Please add an edit to moderate the alarmist tone.
thank you for the suggestion and for sharing the reason for your downvote.
as per your recommendation, upgraded headline to
"Steem Arbitrage: Flaw Or Nothing For Concern...?"