Against the Price Feed Bias: Why SBD is worth more than Bitcoin, Why SBD should be left untouched + Interview with @dan
If repeated economic crisis situations have resoundingly clarified anything, that is the fact that you should not mess with the market. The market always regulates itself. It won't happen in the nicest way. Any non-idiot can see that the government bailouts wrecked the economy more than it helped. If you put aside the technological developments, the current economic situation is much worse than the housing bubble.
CME Futures case
Some people were happy and hyped because institutional money is finally getting into crypto (Bitcoin). Many short sighted people thought of it as a good thing. It was supposed to make BTC reach the MOON. For the short term it happened. And as many intelligent and/or experienced people expected, the prices came crashing down. What I'm going to ask you is: "Are You Happy?"
Yeah, it wasn't good. In fact messing with markets have never been good. From great depression to now and before, all crashes had some form of manipulation inherent to them. When there is a disparity, market solves the problem on its own. This is what "Human Action" is. People eventually figure things out.
Chaos Theory and Frédéric Bastiat
According to Wikipedia, Chaos theory is a branch of mathematics focusing on the behavior of dynamical systems that are highly sensitive to initial conditions. 'Chaos' is an interdisciplinary theory stating that within the apparent randomness of chaotic complex systems, there are underlying patterns, constant feedback loops, repetition, self-similarity, fractals, self-organization, and reliance on programming at the initial point known as sensitive dependence on initial conditions. The butterfly effect describes how a small change in one state of a deterministic nonlinear system can result in large differences in a later state, e.g. a butterfly flapping its wings in China can cause a hurricane in Texas
Frédéric Bastiat talked about this in his long piece of writing titled That Which is Seen, and That Which is Not Seen.
In the department of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause — it is seen. The others unfold in succession — they are not seen: it is well for us, if they are foreseen. Between a good and a bad economist this constitutes the whole difference — the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee. Now this difference is enormous, for it almost always happens that when the immediate consequence is favourable, the ultimate consequences are fatal, and the converse. Hence it follows that the bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, — at the risk of a small present evil.
In the above quote I can summarize why I'm absolutely against doing anything about the fact that SBD is trading above $1 USD. You can read the almost 2 centuries old piece of masterful writing at http://bastiat.org/en/twisatwins.html
I'd also like to share this interview with @dan who pretty much confirmed what I'm saying. $1 is a floor of value for SBD. The market can trade it at any price they want.
Market Manipulation by Witnesses
Some witnesses have been very unwisely fighting against the value of SBD without proper reasoning behind it. Bitcoin is backed by nothing. Each SBD is backed by $1 USD worth STEEM. As long as STEEM doesn't go below a certain price (at the moment ~4 cents) SBD is as good as Gold Backed Currency.
Yes. SBD is pretty much A Gold Backed Currency. Since SBD printing would stop when the debt level hit 5% we can calculate how much value STEEM should have for SBD to be as good as A Gold Backed Currency. There are 271,555,695 STEEM and 10,859,268 SBD out there. If you run the math when STEEM price go below $0.0399891005784283 USD, SBD cannot be backed by $1 USD worth STEEM. As long as STEEM is at 4 cents, SBD is As Good As Gold
Stupidity of messing with the markets
I'll start with a quote from my friend @ew-and-patterns
I know that it can and likely will get much worse before it gets better again. Worse because the witnesses are planning to soft peg SBD to 1$, once it reaches this level again.
They will pat themselves on the shoulder for bringing the price of SBD down to 1$ again and that their increasing the payout rate for SBD (and thus inflation) caused this. BUT THEY DID NOT CAUSE THIS. IT'S BULLSHIT. It's a normal crypto wave 2 correction. And here is the proof for that:
If you cause gigantic price inflation like they did with SBD (the amount of SBD in circulation more than doubled in only 3 months) you would expect the market to react in selloff movements on heavy volume because everyone wants to throw their SBD on the market. But that did not happen. We saw very slow selling on basically no volume at all.
That means people value SBD way more than its current price level is... There is just not enough buyers yet for the price to start a new uptrend.
Since 2 days ago, a portion of your Author rewards are payed in STEEM. Here is a post that explain what's happening: https://steemit.com/steem/@eonwarped/steem-rewards-news-flash The bottom line is that less SBD is getting printed. Less of something means more of a price for that thing. @ew-and-patterns Congratulations, you can pat yourself on the back. The efforts of some witnesses that used a price feed bias to bring SBD down is now making SBD go up.
Here we have the latest prices from coinmarketcap
- Steem (STEEM) $2.24 USD (13.57%)
- Steem Dollars (SBD) $2.36 USD (16.89%)
We can't have Knee-Jerk reactions and long term stability with a bright future
Witnesses are responsible to give a price feed to the STEEM blockchain. Some of them are unwisely using a price feed bias percentage (AKA feeding non-market/adjusted prices) which could also be called fake prices in an attempt to bring down SBD without thinking about the "Invisible hand of the market". This is just economics 101 and you don't need to know economics to be a witness.
But at least you could stay the hell away from the things you don't know!!!
In case you didn't know, here is a definition for the invisible hand:
Term used by Adam Smith to describe the natural force that guides free market capitalism through competition for scarce resources. According to Adam Smith, in a free market each participant will try to maximize self-interest, and the interaction of market participants, leading to exchange of goods and services, enables each participant to be better of than when simply producing for himself/herself. He further said that in a free market, no regulation of any type would be needed to ensure that the mutually beneficial exchange of goods and services took place, since this "invisible hand" would guide market participants to trade in the most mutually beneficial manner.
After discovering what was going on, I went to https://steemdb.com/witnesses and even though I only have a tiny 4.174 MV I unvoted all the witness votes I've given for those who use a price feed bias.
I'm not telling you what to do. I'm just laying you some facts. You can make up your mind on your own.
very interesting, market manipulation and price feed bias happens all the time and quite honestly didn't realize it was as prominent with cryptos as you mention, so I thank you for sharing.
SBD is a vital asset to the steem blockchain as a whole and with some witnesses unwisely combating the value of SBD, without a proper reasoning to back up their claim seems rather unreasonable and something that can ultimately hinder steem(it)s growth in the long-term
Bold move to unvote witnesses, but very interestingly enough I think you deserve a pat on the back my man- keep up the good work.
Upvoted, resteemed and followed
Respect from @conradsuperb
Thank you very much @conradsuperb
The main claim of theirs is that SBD is "pegged" which is BS. I came across this excellent post after posting mine: https://steemit.com/sbd/@lexiconical/attention-keynesian-meddlers-sbd-floor-non-peg-is-working-as-designed
Saw some nice content on your blog. So I'm following you too.
Of course and my pleasure, I will have to take a peek at the post you dropped above.
Thank you, I always have the backs of those who have mine
See you around & steem on!
How do you tell which witnesses use a price feed bias?
Go to https://steemdb.com/witnesses and scan for price feeds with (-xxx%) next to them.
It was a joy to read this post , You had my whole attention the entire post!
I would to like more post like this , I genuinely learned something new ,which is also quite interesting .
Thanks. I'll try to make more.
Now I must try to make a more focused and short post.
how do we know if they are using a price feed bias or not? I agree with you and @dan completely. Market forces need to determine the price of STEEM and SBD. STEEM to $14 by August!
Go to https://steemdb.com/witnesses and scan for price feeds with (-xxx%) next to them. The effects of these actions were not huge. But we shouldn't less these unwise practices spread. It's better to kill it while its hatching.
are they the ones paying less than 1.0 STEEM?
Yes.
I was sad to see yabamatt on the list. I will have to unvote. I do like steembottracker though
The Price Feed Bias has not had much of an effect. You can consider the pros and cons and keep the vote if you'd like. We are both still minnows. It's not going to have much of an effect.
I am still not fully understanding how I benefit from voting for them anyways. I will for sure not vote for anyone else who is trying to fix the price of SBD.
I just wish this wasn't all like trying to figure out how to speak french, I've never paid attention to markets so I haven't the slightest idea what all this means no matter how many times I read it again I am just as baffled as the first time.
I consider myself pretty smart and I have had to learn a lot to follow this shit which I still don't entirely understand.
I love this article! Especially the part about chaos theory is marvelous - Thank you! 🙏
You have a nice blog too. https://steemit.com/steemit/@atmosblack/3-steemit-myths-debunked was just right to the point and amazingly well done. Totally following you. Too bad that post was too old for a resteem.
BTW you might like this post: https://steemit.com/steemit/@vimukthi/a-philosophical-and-economic-outlook-at-steemit-sbd-and-flagging-and-suggestions-for-a-better-future-based-on-positive
Thank you! I'm honored! 🙏
Thanks for educating me on this. Never knew before now that those witnesses had role in the price reduction of SBD.
I can say the same...
You just planted 0.26 tree(s)!
Thanks to @d-zero
We have planted already 3681.98 trees
out of 1,000,000
Let's save and restore Abongphen Highland Forest
in Cameroonian village Kedjom-Keku!
Plant trees with @treeplanter and get paid for it!
My Steem Power = 18638.10
Thanks a lot!
@martin.mikes coordinator of @kedjom-keku
Resteemed upvoted
Technology has changed so many thing over two decades
This is quality writing, quality, quality.... finally someone sees exactly what I am talking about, I have be stating it over and over==> SBD is one of the most brilliant innovation with the blockchain space, 1 USD is the flow and the market would determine its value but we know where the flow exist and the necessary system is in place to ensure it supply does not go beyond market fundamentals....Thank you