Steemit Devs: Try To Fix The SteemDollar USD Peg In The Next Hardfork And Boost Demand For Steem!
The need for a USD pegged cryptocurrency is HUGE since Tether is getting a lot of negative attention and a full collapse is not impossible. Despite the risks many are still using it (2.2 billion market cap!) because it is very useful and there is not really another option. I want to ask @ned, @dantheman and the Steem devs to try to fix the peg because SteemDollar could fill this demand when devs are able to fix the peg in the next hardfork!
An USD pegged cryptocurrency is very useful, but at the moment we don't have a proper one
Why is a full collapse of Tether possible?
Tether (USDT) is a digital currency that follows the USD price. This is done by holding a real USD in a bank account for every Tether that get printed. However, nobody knows where these dollars are and it is not even proven that they actually exist.
Probably they do exist, but then still there is a single point of failure. When the government want to crack down on it they can simply freeze the bank accounts and Tether will collapse. In case Tether is backed by real dollars they are in a weird situation, because if they show the bank accounts they make it more vulnerable to a crack down and if they don't show them everyone will shout that it is a scam. In any case it is risky to hold your wealth in USDT.
If Tether was trustworthy it would be very useful
I don’t ever use Tether because of the risk, but if the risk wasn't there it would be extremely useful and I would use it a lot. I need to live off my crypto’s, so in a bear market like we experience now it would be really useful to hold some Tethers that I accumulated in the bull market and live off while the BTC price is to low to sell. Other use cases are:
USD trading pairs
USD Trading pairs at most of the exchanges are pairs created with USDT against another crypto. Because USDT is used in the pair you can immediately see the USD value of the other crypto. This is the easiest way to refere the value for most people. It is way easier to understand that one Steem is 4,37 dollar than one Steem is 0.00047233 BTC.
Arbitrage
Some traders make money from arbitrage by chasing the price difference of certain coins on different exchanges. After the trader bought a coin low on one exchange and sold it higher on another one he probably want to send the value back to the original exchange to make his next trade.
When they use USDT the value will not increase or decrease during this proces because the price is stable. Beside that USDT makes it easier to see the result of the trade (understandable numbers).
Safe crypto heaven
Cryptocurrencies are volatile and the dollar is relatively stable. Traders can hold their value in USDT after a successful long position and wait for the next buy opportunity without the need to take their money out of the exchange. This way they can ride the uptrends while avoiding downtrends.
Till the end of November the Steem dollar followed the USD quite well, after it broke out to a multiple of it.
Steem Dollars can be very useful when the peg get fixed
Steem Dollars (SBD) have the same properties as USDT, but there is no single point of failure and the the is backed by Steemit, so very transparant. Beside that transactions are free and instant! Too bad that the peg is broken, otherwise it would be the perfect substitute for Tether!
Having a working USD pegged asset would be great for Steemit!
When the peg of Steem Dollar would be holding there would be some huge opportunities for Steemit. When it is the only useful option exchanges would support it. It could replace the entire market share of USDT because it is way more trustworthy. This would add more than 2 billion to the total market cap and maybe way more when people really trust it!
Beside that it would probably make Steem more stable as a currency because in a bear market when Steem also goes down too the demand for Steem Dollars will go up and this can stabilize the price. Supply and demand of Steem VS Steem Dollars could be normalized by giving users no option whether they want their payout in Steem or Steem Dollars, but payout in a way what is best for Steemit.
I have to make clear that I never dived deep in how Steem Dollars technically works, so maybe I am wrong on my last assumption (if this is the case I love to hear it in the comments). Further more I understand that holding the peg of Tether is way easier than doing it on Steem. What I will say is that IF the peg is stable, it could be HUGE for steemit!
Another option for now is Bitshares. Here you can buy Bitgold, Bitsilver, BitUSD ect. When you spread properly among these assets the risk is relatively low, but you have to create an account first:
https://bitshares.openledger.info?r=michiel1
Agree? Please upvote so that Steemit devs will see this post. Disagree? Please leave a comment below!
Very detailed, timely and much needed write-up. Shared with my audience. Will share in a Facebook group too. @ned should take the required action as this is HUGE step forward and will help Steemit. Excellent effort @michiel. Steem On!
Thank you for sharing! Steem on too!
I think it’s funny that people don’t understand that Tether is a way to provide trade. It is a token that needs to have the same liquidity across all exchanges. When new money comes into the market that same amount of Tether has is distributed to all exchanges that pair USDT. Of course, they print the shit out of it. It’s dollars.
Go to your bank and ask them to have proof that they have the liquidity to provide dollar bills for all their customers. You’ll get laughed at.
steemit should concentrate on growing first specially when the market is in collapse mode. There is a saying that one should not keep his legs in two separate boats. Steemit should first try to grow and become a good social media and blogging alternative that pays its users. It should stop trying to become everything. On one side it wants to challenge bitcoin, then became an alternative for US dollar, become competition to youtube, etc. concentrating on trying to become all might to collapse. Concentrate on one thing at a time.
Also, haven't you heard news yesterday about Cryptocurrencies in India. Well the thing is there is no point in making it an alternative to US dollar. No country will tolerate its use for payment system. As soon as anyone tries to do so, the countries will try to stop it by making the whole system collapse just like they did yesterday by using their Media outlets. Yesterday the price had collapsed to almost 4000$ per bitcoin on Indian exchange for few minutes. That's how bad the situation was. When US woke up the whole international market collapsed. The price came down to $8300.
The thing that i learned yesterday is instead of waging war on established systems unarmed, we should try to coexist. We should operate as a reward system rather than trying to open market places which run SBD.
This platform is providing employment to many lets not destroy it by decisions like these.
The peg of the Steem Dollar worked fine for 2 years, only the last 3 months it is off. I don't ask the devs to create something new, but to fix something that is created already for a reason and is broken atm. The crash that we have now is based on nothing then air flowing out of the market after a bull run that was way to positive. Governments that announce to ban crypto's will most of the time only stricter regulate it. When they really ban they will miss out way more than the crypto's itself in long term. I don't care about governments by decentralized systems, because game theory will do it's job and the markets will punish the countries that ban and reward the countries that adapt.
Governments don't lose anything it is the people who do. Government and the media of that particular country are spreading rumors to save their banks. Their banks are crashing. People are putting money in crypto instead of banks this is why they are doing all this.
Good new, thank for share bro
Tether is definitely making people afraid, but if we see the deeps on the market Tether is probably one of the coins that are holding stronger... its less volatile because of the claim that it is backed by USD, but as you said there are no proves that this money actually exist.
Right now all the markets are coming down and the negative attention that should be going into Tether is being camouflaged with all this panic in the crypto markets.