Strategies for Maximising the Value of Posts on Steemit - Are SBDs a Reliable Form of Wealth Storage?
In my recent post about the declining value of Steem Backed Dollars I pointed to how the value of the SBDs that Steemit's post payouts are now made in - has rapidly dropped in a big way. Since all post payouts are made in SBDs, all post payouts are now worth less than 50% of what they were a few weeks ago!
In the meantime and until a forensic analysis is performed on the data to understand the drop in full detail...
The reality is that a strategy is needed to ensure the SBDs (Which Bittrex shows to have been continually dropping in value since their records began in July 2016) which we are paid are maximised in their value as we trade them for use into other more accepted currencies such as Bitcoins and Fiat Currencies.
Exchange Strategy for SBD Payouts?
Until recently, I was simply exchanging SBDs for STEEM in the Internal Steemit Market, then trading the STEEM for Bitcoins and then again exchanging the Bitcoins for GBP£. At that time, this approach took best advantage of the exchange rates available, but how has the situation changed today?
I now have a substantial amount of SBDs (substantial to me, anyway) and I recognise that it's value needs to be shielded somehow, having already seen it's value drop by 50% in a couple of weeks. If I had converted it to STEEM two weeks ago and just stored it that way, the value would have been retained quite effectively since, as Bittrex shows, STEEM's value has been retained relatively well during the same period. :/
So am I best off to bite the bullet and convert the money to STEEM to avoid any future 'surprise' and unannounced nosedives of the value of SBDs? Some have said that the nosedive was because the value of SBDs are intended to be matched to the US Dollar and the value was too high - but if that's the case, doesn't the fact that it reached $2 imply an error in the algorithms used to manage coin production in relation to the value of STEEM? I don't currently have enough faith in the management of the SBD as a currency to want to keep my money in that form - So maybe the solution is to always exchange SBDs into STEEM at the earliest opportunity and then consider whether to continue holding it as STEEM or to move it into Bitcoin or another Alt-Coin.
The following graph is from the new and useful STEEM/SBD conversion rate tracker at https://www.steemchart.net :
As you can see, the cost of buying STEEM in SBDs has gone consistently up for the last 4 months, reflecting the drop of value of SBDs and the retaining of value of STEEM.
No real conclusion here. What do you think?
I am still unclear as to exactly what can be done here other than just sell SBDs as quickly as possible, blindly trusting that somehow their value is being set intelligently and in a 'now' reliable way. Am I missing something here? I'd love to hear the comments of any real data monkeys and 'experts' here. Maybe I will do a proper investigation of the public data myself if I don't get a reliable answer here - it's always fun to fire up some code editor and make some fancy graphs!
Wishing you well, Ura
Hmmm got me thinking.
Lovely Monday to you. :)
I believe that we are living in a historical moment, it is an extraordinary revolution in cryptocurrency and monetary creation in general, and also a new concept of the social network redeemer, steemit will be the first social network in the world, Will copy the innovative steemit project, such as akasha based on ethereum or others; Brief steemit is the future, we must invest time and money to maintain and grow this community
Thank you for your post, amazing picture
If you read the Steemit white paper (which I strongly encourage you to do) you will see the SBD is not really a currency, but a smart contract. It is supposed to hold the peg at $1 and this is achieved on the internal market by the price feed published by witnesses (me included). If you see SBD trading well over $1, then you should be warned that this is a very speculative trend. At the moment, the rewards are paid in SBD precisely because it is artificially pumped. A few months ago rewards were paid like this:
And that's how they should start be paid once SBD reaches a normal price.
Thanks for responding here. I did read the white paper a while ago, but am not currently recalling the exact definition of SBDs in that document. I think/feel though that since SBDs are traded in exactly the same way as a currency, it is not wrong to think of them as being a currency. Regardless though, they are a method of storing wealth. I was not aware of the role of witnesses in setting the price of SBDs, I need to learn more about that - but it sounds a bit like you are saying that the actions of Witnesses can potentially influence their value.
I understand your comment about the value of SBDs being volatile if it goes above $2, but it sounds like you are ultimately agreeing with me when I have said that holding on to SBDs is a bad idea.. All of which appears to confirm my thought that SBDs are not such a great idea, period.
:) if you say so...
Yes, that may be a good starting point if you want to understand the role of each currency and when it is a good idea to hold on what.
This post has received a 7.38 % upvote from @booster thanks to: @ura-soul.
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STEEM ON