To SBD or not to SBD – Why is That a Question?
What happens when you create a platform with a vision, then lose your sight?
The hot topic of the past 24 hours has been centered on whether or not STEEM Backed Dollars (SBDs) are helpful or harmful, or whether they should even continue to exist. What will follow is my opinion from my own perspective as an entrepreneur, investor, and writer/blogger.
Onboarding as a Goal
Steemit.com was to be the website to bring non-crypto users into the crypto world and to give them the opportunity to acquire cryptocurrency tokens by simply doing what they normally do on social media. As new users join the platform, they will learn about the system, the tokens, and how these tokens are used.
The other purpose of having a social media interface for the STEEM blockchain was to create transactions between accounts by simply upvoting content – and to also encourage other transactions, such as payments for goods and services. After all, STEEM and other cryptocurrencies are supposed to be...currencies.
The STEEM Backed Dollar (SBD) was supposed to be pegged to the actual U.S. Dollar in order to facilitate transactions between parties based on a relatively stable price metric. This SBD allows users and entrepreneurs alike to send and receive payments without the constant need to calculate price conversions for STEEM and other currencies. Having this option available, in my opinion, is necessary for broader adoption from the mainstream – from non-crypto users.
Why SBDs are Necessary for Widespread Adoption and Use.
Thinking as a businessman, it would be a nightmare to have to do full accounting with a non-pegged, volatile cryptocurrency that cannot be directly converted into a native, government fiat currency. Why does it need to be converted into government fiat? Because governments still issue fiat currencies and demand their use via taxation. As a result, businesses within those jurisdictions (which is nearly all of them) must account for their earnings, report them in the native currency, and pay the taxes that are due.
Without a reliable pricing and conversion mechanism, accounting can become a nightmare.
Businesses that want to accept payments for STEEM or SBDs need a reliable way to price their goods and services. Currently, there is an option to accept payment as SBDs, which are equivalent to essentially one U.S. Dollar in STEEM. These SBDs can be sold for approximately that $1.00 equivalent on exchanges.
Unfortunately, exchanges currently run these conversions through a token like Bitcoin before they can be converted to native currencies, which adds another layer of crypto-info, learning curves, and complexity. This, however, is not caused by the existence of SBDs – it is a result of STEEM not being accepted as a currency by the exchanges that directly convert to native currencies.
So, while onboarding may be the easy part – via social media – the hard part is price conversion, payment acceptance, and ultimately, “off-boarding.”
Accepting payment is easy to do. The question is, how, as a businessman, do I want to accept payment?
SBDs give me the benefit of pricing any of my goods and services in U.S. Dollars and accepting SBDs as an equivalent payment on a daily basis. There is no immediate need to formulate a new pricing system. Joining the Steemit.com or Busy.org platform as a business is simple. Prices are easily understood. Payments are easily accepted. Conversions into the government’s fiat Dollars – while not necessarily simple – make accounting much easier. Balances remaining in the STEEM ecosystem also make calculation and accounting easy to do.
Don’t underestimate the ease of use and accounting. If widespread appeal, adoption, and use are the goal, then you need an appealing mechanism for those people who will be bootstrapping the economy: Merchants and customers.
SBDs are the appealing mechanism that can drive adoption and use for commerce.
This really is a no-brainer for anyone who makes online purchases – and for practically any business. But the functionality and appeal of SBDs is not limited to just businessmen and to commerce.
SBDs and Investing
One of the appealing features of SBDs are their relative stability and interest payments. This allows an investor to buy into the STEEM ecosystem, see their daily balance in approximate native currency values, and to generate a small monthly profit. It can serve as a means to onboard without directly moving into the more volatile STEEM currency. At the same time, it provides an investment vehicle that can protect gains made from a rising STEEM price without leaving the ecosystem altogether.
If the only options were to either buy or sell STEEM or to power up STEEM, then onboarding those who are not interested in blogging/curating or those who have less of an appetite for crypto volatility will likely not happen. Investors look for ROI, not excessive risk. There is less risk involved if U.S. Dollar-pegged SBDs are available and can be quickly and easily acquired. The ability to collect interest on these SBDs is a plus.
SBDs and Blogging
When people finally decide to join Steemit.com and become new users, they have already decided to join the crypto community, whether it was their explicit desire or not. Maybe they just liked the sleek design of the website or the thriving community. Whatever the reason, they’re in and they now have some learning to do if they want to capitalize on their time and effort.
The easiest thing for a new user to understand is the SBD. What is SBD? It’s a U.S. Dollar equivalent. You can trade that one SBD for approximately $1.00. Sell it for $1.00 of STEEM tokens. Transfer it to another user for a $1.00 cup of coffee. Send it to an exchange for $1.00 of Bitcoin. It’s simple.
All of this talk about how it’s confusing and unnecessary seems quite a bit absurd to me, really. It’s one of the simplest things to understand both conceptually and visually. There is even a Dollar sign in our account wallets in front of the number so that there is no confusion.
So, when blogging on the platform, SBDs and Dollar estimates are fairly consistent and mostly interchangeable. Did you just earn $40 from your post? Great! Now you have approximately $40 in your account. (It may be split between three different tokens, but that’s a payout issue, not an SBD issue.) If you want your earnings from that post to be held in SBD and collect interest, then you can sell the STEEM portion and buy SBDs with it. You’ll then know that your earnings have been “locked in” – assuming that the peg is stable, of course.
What happens if we keep changing everything?
This is a real problem and now I’m going to get into my more critical mode.
When I first learned about STEEM/Steemit, I thought it was a surprisingly innovative idea for both social media and cryptocurrencies. At first, I didn’t quite understand the three token system – but it was the STEEM and STEEM Power tokens that I didn’t quite understand because of their functionality and relationship. The easiest part to comprehend was SBDs.
If you’re having trouble understanding what a STEEM Backed Dollar is and/or don’t know what a U.S. Dollar is, then that’s not a problem with SBDs and it shouldn’t be a reason for eliminating them.
What bothers me is the constant tinkering from the founders of STEEM/Steemit. Believe it or not, I think the concept was brilliant – the SBD-Dollar peg is part of that brilliance, whether you believe it should be U.S. Dollars or not. As stated above, having a peg is a critical component for onboarding and widespread adoption of the currency. Why eliminating such an instrument is even being considered – let alone publicly questioned – is baffling to me, especially when we can see that the peg is actually working.
Yes, having SBDs does come with risk and it does incur a debt for STEEM. But is this risk too high? Is the debt load a real concern, given that a large portion of SBDs are currently being held by @steemit accounts? Can SBD creation not be reduced sooner than it is currently, before debt ratios become more of a problem? Is this a problem right now only because the STEEM price is low? Are these concerns about SBDs simply a reaction to price movements and not based on actual potential use and benefits of SBDs in the future?
I can’t help but feel like a lot of the discussions and decisions being made are based on short-term thinking.
Yes, the STEEM price is dropping again. Why? Surely it’s not due to the existence of SBDs.
Prices are falling because the STEEM supply is too high, relative to the demand for it. Just in the past two weeks, the liquid supply has increased by over 4 million. SBDs are not causing that.
Prices are falling because distribution of STEEM has been poor from the start of the project. With that poor distribution comes a host of other problems, such as large sell-offs, skewed influence and post payouts, disenchantment of users, and a consequent disinterest in the platform. SBDs are not causing that.
Prices are falling because investors can’t reasonably predict how the system will be operating next month or next year. They are sitting on the sidelines and watching change after change to many fundamental aspects of the system. At this point, the whitepaper ought to just be scrapped. SBDs – again – are not the issue.
The biggest problem with STEEM/Steemit continues to be the lack of development of the interface, the lack of marketing, and the lack of stability to the economic fundamentals of the system. Every new change to the latter will delay new investment. The time spent on debating these changes is time that can be better spent on figuring out the onboarding and retention issues, which is mostly tied to development of the interface.
If we want the STEEM price to go in the direction we all want it to go, we need STABILITY. We need to see some proven RETURNS ON INVESTMENT (ROI). We need the leaders in the community to start reaching out to or at least accepting help from those WHO ARE OFFERING TO MARKET THE PLATFORM. And we need more time dedicated to DEVELOPMENT – which means less time devoted to fantasies about world currencies and governments crumbling and billions of people fleeing to crytpocurrencies in order to be “saved” from such an apocalyptic event.
Make STEEM/Steemit and other interfaces usable for the average person – but more importantly, make them more easily usable for MERCHANTS AND CUSTOMERS. The success of STEEM as a currency depends on the success of onboarding people who will actually use the currency. Merchants and their customers will use the currency...but they’ll use the currency if it is easily understood and easy to account for during their daily use.
U.S. Dollar-pegged SBDs offer that.
Please stop debating about whether to take away the one good asset that can bring in a large number of people who will actually put the STEEM blockchain to good use.
Perhaps I’m wrong for thinking this way, but I was not a crypto enthusiast when I joined. The only thing that intrigued me was the SBD concept and its peg to U.S. Dollars. I look at this platform from an entrepreneurial perspective. I try to avoid getting caught up in the fanciful concepts of UBI and the dreams of worldwide government collapse. We have to deal with the things that are actually happening right now and what is likely to happen in the near future.
Resolving the onboarding issue and making the platform appealing must be done with the understanding that individuals and businesses exist in today’s world. Not everyone shares the vision of a stateless society. Not everyone shares the enthusiasm of crypto tokens becoming the currency of the future. Making adaptability simple for the greatest number of potential users should be the main focus. And we should also understand that simplicity itself does not mean that the system is necessarily better.
Stop thinking like coders and developers all the time and start thinking like social media users, entrepreneurs, and investors.
Keep the SBDs. Continue developing useful social media interfaces. Make commerce easier. Market the platform(s).
Perhaps Steemit, Inc. needs a business plan, if it doesn’t have one already.
The biggest concern for me right now is pushing out the last of the people who actually believed in this idea. It’s possible that the road map might alleviate some concerns, but I don’t think it’ll be of much use if nobody is here to see it. Continually scaring away existing users and investors with drastic changes to the ecosystem obviously isn’t good.
Can we at least give STEEM/Steemit a chance to breathe before we try changing things again?
As always – comments and criticism are welcomed.
*I didn’t bother to proof-read this, so if there are any errors, if I’m rambling, if things are out of order, or if something makes no sense, just ignore it. Maybe I’ll correct it at some point.
Follow me, if you must: @ats-david
BETA = change gone come
Accept change to get out of beta
If that's the case, then they need to stop reacting to price movements and focus on fundamentals. This new debate about SBDs isn't that. The SBD-Dollar peg has been working and the benefits of it outweigh the negatives. The existence of SBDs is not harming the STEEM price. The price would be this low without them, because STEEM/Steemit is struggling due to almost entirely unrelated issues.
What I heard from Ned, the issue is moving from complexity to simplicity, the steem price argument was brought up by someone else
Moving to simplicity for the sake of simplicity, while eliminating the one feature that can actually attract widespread use in commerce, is stupid, quite frankly. The SBD-Dollar peg has been working as intended. Moving to "simplicity" before any legitimate attempts have been made to market this entire concept is a little short-sighted.
Maybe test the actual attractive features of the blockchain on a wider user base before scrapping those components because a very tiny fraction of people just can't comprehend how ~$1.00 of SBD means ~$1.00 US?
yes, needs more testing, i can agree with that. I would like to see the witnesses vote on whether to keep it or not, the job of being a witness could be easier without it
I'm sorry, are witnesses the only one's using the SBD? No. I think we all need to have a say in keeping it or not.
A price stable cryptocurrency is important longer term. We don't really have the volume or demand to support it yet. Let's focus on growing STEEM and taking on Bitcoin. I don't care whether they scrap SBD or not in the short term, because I know Dan and his team will want a price stable currency in this system later. When the time comes, it will be a welcome part of this ecosystem. For now, I think we should focus on STEEM.
For now, I don't think we should be focusing on prices at all. We ought to be focusing on development and onboarding new users and investors. If all we do is focus on the price every day and make decisions based on that, then STEEM/Steemit will never go anywhere.
What you don't understand is maintaining SBD is not free. Also it is not cheap. It's quite EXPENSIVE. SBD causes downward pressure on steem price. we have to get rid of it ASAP. I agree with NED. Does it even worked as a bait to lure ordinary ppl into steemit system? no. We have to think like a business man. If we used money to promote steemit on IT magazine instead of SBD, we would have much better result now. We have to be smart.
Yeah - that's what I do. And as a businessman, I would much prefer to work with SBDs than with STEEM. If we want merchants to engage in commerce, then having the SBD option will bring more of them into the mix than having only a volatile cryptocurrency. What most of you fail to realize is that cryptocurrencies are volatile. STEEM is no different, with or without SBDs. Getting rid of SBDs won't auto-magically make the STEEM price more stable. It will only make onboarding merchants more difficult.
If you think like a businessman, then you should think about what benefit SBD brings to Steem price. So simple right? No benefit but serious cost! Let's say SBD lured merchant, what benefit steem get from that? NONE but price collapse. Since SBD is[ steem backed dollar], sbd will collapse too eventually. Sophisticated investors understand this and they don't invest money into steem! this is act of stupidity. We have to be smart.
So you're dismissing network effect as a potentially enormous contribution to STEEM prices? Interesting.
"Sophisticated investors" would likely understand the value or utility of a U.S. Dollar-pegged cryptocurrency and how it could greatly outweigh any pressures on STEEM prices. Also, those "sophisticated investors" would likely not invest in either STEEM or SBDs so long as the development and marketing of STEEM/Steemit is poor. This is a much larger issue than debt loads from SBDs.
As I said - I think like a businessman. I am one. There is much more value in SBDs for me as a potential merchant/investor using STEEM/SBDs for my business. If we want "to be smart," we need to stop confusing causes and effects and we need to stop trying to find reasons to eliminate features that will assist with onboarding users. STEEM/Steemit needs more people using the currency and platform. SBDs help with the onboarding issue, whether you want to believe that or not.
NO, there is NO SBD network effect.
SBD is only another form of DOLLAR. If SBD starting to take fee, merchants will simply change to paypal.
Network effect created when ppl actually use STEEM.
You are confusing two very different things.
If SBDs can actually lure merchants, as you suggested, then there certainly would be a network effect. Right now, there is no network effect, either for STEEM or SBDs. But - once again - this is not because SBDs exist.
Cause and effect. You're confusing or just completely missing them.
Tell me this: how do you scrap SBD without eliminating SBD holders' wealth? Are you advocating taking away the money that I've been saving in my SBD account? How can you be so flippant about my money?
Yeah - the problem here is that, given the choice, many people will simply leave the STEEM ecosystem. If your choices are STEEM/SP or holding something more stable, guess where the money will go.
If they're serious about getting rid of SBDs and actually do it, my prediction is that STEEM fails anyway. This isn't a conversation that should be had right now or any time in the near future. There is no support and little interest for STEEM and there is even less interest in the Steemit social media interface. If SBDs were to be eliminated, there would be very few reasons to care about STEEM/Steemit from an investor/merchant perspective. And bloggers would probably just cash out as quickly as the STEEM came in because there would be no other way to protect their earnings from volatility (which would mostly just be declines).
Yes, the price is low - and yes, we need to start talking about debt loads and ratios. But the problem isn't that serious and can be pretty much resolved by adjusting the holdings of the various @steemit and Steemit, Inc. accounts anyway. There seems to be a lot of fuss and scare tactics about how "bad" SBDs are for STEEM, but nobody seems to want to address the actual issues that have been driving STEEM prices down since July.
The arguments are bad and these people should feel bad.
Haha, perfect. I love it.
Absolutely. I often go for days without checking the price. STEEM is just the underlying currency, so if we keep building the system here and making it better, then eventually that should be reflected in the price.
Before doing away with something in a system we should ask ourselves:
Why was SBD created in the first place? Why are the reasons for its existence any different today than they were when it was first implemented? Why are we even having this discussion at all? What benefits would removing SBD have and to whom?
I agree with @ats-david and @pfunk in keeping it. It's easier to explain to noobs and merchants with SBD pegged to the USD than it is to explain Steem. That IS simplicity.
Ask a business owner considering pricing items in Steem or SBD about simplicity and I'd bet they would find it more simple to price items and do accounting in SBD.
ADDED THIS EDIT: The more I think about it, it doesn't really matter from a merchant perspective. They could continue pricing items as they normally do and POS apps like BlockPay can do the conversion for them at the current Steem price when the purchase was made. They got their price and the bookkeeping wouldn't have to change at all.
Removing SBD would give an author earning Steem two choices.
Yes. They can price the equivalent in fiat currencies pretty easily and even have a running dollar conversion amount printed next to balances if that would help. I agree that a price stable currency is easier to explain to people, but where we are going with this thing, I hope we will get to a point where it's just "click, click, click" and the casual users simply won't know/care that crypto runs the back end.
When I look at the big picture I think you may be right. One thing I don't hear anyone talking about on any of today's posts on the subject is how posts would be paid if we made the change.
Next to a post today, the earnings are expressed in SBD and we know this is pegged to the dollar. If the change was made, would the posts earning now be expressed in Steem? And if so, pegged to what? Dollars or today's Steem price?
I assume that's correct. Most of the time, you get some Steem from posting now anyway, so it would just be more Steem if SBD went away.
"Designing a blockchain is like frying a small fish...you spoil it with too much poking." Lao Tzu
Lao Tzu is a smart man.
I think tweaking the system from time-to-time can be okay, but it is hard to invest in something, when I don't know what it is going to be next week.
Yeah - and it's not even the changes that are necessarily a problem. It's the constant questioning and hinting that some of the major features of STEEM/Steemit might be changed. Doing this publicly all the time just fosters more and more uncertainty among users and investors (and potential ones) alike.
Agreed.
What a great post and I agree just about 100%! The part about changing too many things scares me as well... The site was built to operate a certain way and if you change too many things it may not be able to operate the way it was intended.
My opinion is to only change things when it is absolutely necessary.
Ned did say the community would decide.... I think we are deciding...
Hear Hear!
SBD is perhaps one of the best components of the Steem ecosystem. It needs to stay... but in my mind the biggest risk to Steem is that the anchoring store of value is tied to the FRN. This is not a good long term strategy for storing user's value as it puts all the eggs in one increasingly volatile basket. And... Trump.
My vote would be to go the other way - instead of reducing available assets in an effort to simply/boost pricing/whatever, pull the Bitshares DEX directly into the Steem ecosystem. Allow Steem users to store value in whatever way they choose via bitAssets. bitGOLD, bitSILVER, bitCNY, etc.
This will diversify the value contained within the Steem ecosystem and make the platform much more robust and resilient. The whole point of crypto is move away from the existing economic power structures - and tying Steem to the FRN is severely handicapping the ability to become a freestanding economy.
"My vote would be to go the other way - instead of reducing available assets in an effort to simply/boost pricing/whatever, pull the Bitshares DEX directly into the Steem ecosystem. Allow Steem users to store value in whatever way they choose via bitAssets. bitGOLD, bitSILVER, bitCNY, etc."
That is a cool idea and I have been thinking about something similar myself. A voting interface on top and then unlimited tokens on the protocol level.
PM me if you want to talk.
http://www.bitcoinmeetups.org
I agree with about 85% of your article, and you made some really good points that make me rethink some of my positions.
Here are a few points of slight differing views though:
What is interesting is that I think SBD has a lot of value in mass adoption, as you have pointed out so well in your article - but it is unclear how much of that value adds to that of STEEM, vs how much of it is actually achieved at STEEM's expense.
This greater risk only exists when STEEM prices are too low, relative to SBD supply. That's not a problem with SBDs. That's a problem with STEEM supply/demand fundamentals and the inability to attract interest in the currency. This will cause a STEEM failure regardless of the existence of SBDs.
The problem of risk is there due to the volatility though, not the direct price of STEEM. If STEEM went up to $20, then crashed down to $1 - we would have the same risk (although on a larger scale) that we have today with the price recently being at $0.20 with the possibility of it dropping to $0.01.
Sure, but then the volatility isn't due to the existence of SBDs. So, SBDs don't necessarily pose a systemic risk. There just needs to be a better means for creating and managing them.
If a crash occurred from $20 to $1, there are bigger things at play that need to be addressed. A 90% loss doesn't just happen for no reason. If STEEM and SBDs were more widely used as an actual currency, and if the Dollar peg remained intact, then the odds of a 90% crash in such a short period would be virtually zero at any given time.
There are ways to discourage holding SBDs and there are ways to manage the relative risk of having them. Scrapping them because it might be too hard at some point sounds like a pretty lazy solution to me.
I have my personal views, and while I am leaning in one direction, I haven't made up my mind yet..
One question that I have though - Other than the reasons SBD is good on it's own (stability, easy for adoption, easy to understand, etc.), in what ways does it actually benefit STEEM holders?
I have some of my own thoughts, but I am curious what you think.
More use of the blockchain benefits STEEM holders directly. In order to engage in a large volume of transactions (for example as a merchant or payment processor, but perhaps even someday as a regular user) you need to hold sufficient SP. That defines your bandwidth allowance, is the substitute for transaction fees in this system, and in turn contributes to buy-and-hold demand for STEEM. The need for more SP (i.e. the implied fee rate) will increase as usage increases and blocks start to fill up.
Despite the currently-low usage (most blocks are relatively empty), I experienced this directly in needing to power up more SP to my market maker bot to avoid having its transactions blocked by the bandwidth limiting (though it was still only a small amount).
However, that benefit (implied transaction fees) being said, I personally believe the greatest benefit to STEEM holders remains helping to build a larger user base for the entire platform and a larger user community, for the reasons described by @ats-david. Without a large user base this entire platform will inevitably become (nearly) worthless. We need to keep our eye on that ball. I guess it is a matter of opinion but I personally think that the presence of SBD helps a lot more with the critical issue of growing the user base than would the incremental simplification of removing it. The systemic risks and other issues are also a factor though.
I will give my main answer to my question:
SBD is beneficial for merchants. Merchants are really the ones that need a 'stable' currency in order to function.
For an actual business to try and sell their goods and services (which have fixed costs to produce) they need to be able to set fixed prices. Having a stable and widely used currency will attract more merchants to sell their goods and services using the digital currency.
Merchants are beneficial to STEEM holders because "non crypto" users will have more things that they can do with their earnings from the site.
I remember trying to explain the money thing to my non crypto friends, and lots of people lost interest when they heard you have to register in an exchange, provide your bank account information, trade your SBD (or STEEM) for BTC, and then sell the BTC to get cash. I did this on behalf of many of my friends, but not everybody is going to know somebody who can do this for them.
If someone could see that they can take what they earn and go buy an i-Phone (or whatever other good/service they are interested in) in the internal marketplace using their earnings from the site - that would be huge!
Why was it in the whitepaper to begin with? What has changed since then that has this discussion taking place at all? Who benefits from removing SBD? I don't see any reason to remove it, only benefits of keeping it. Enlighten me.
You are right. SBD beneficial for MERCHANT.
It only causes harm to Steem holders. I hate to say this but witnesses (include smooth)would make some good tip from it too.
It has been easily in the top three obstacles to adoption of BTC (possibly top one) ever since I've been around, which is 2011. BTC has gained some measure of success (though mostly in a few specific markets) despite this huge barrier. Even there, the presence of the high volatility adds significant friction as many participants (especially the larger ones) converting to USD as quickly as possible. There is little incentive or mechanism for the economy to grow organically in most cases (for example, by those receiving it keeping it and using it for their own payments to others).
I'm speaking of use as a transactional currency, not speculation (for which we have STEEM). To be fair a huge portion of BTC's so-called use is still tied in some way to speculation and/or mining (itself another form of speculation).
I think this point is lost on too many people. Bitcoin doesn't really act as a currency. From what I have observed, at least since 2010, is that Bitcoin "users" don't actually use it - as you said. It's not a transactional currency. And it is quite volatile, despite its current price, market cap, and trading volumes. This has always been the large barrier to widespread adoption for merchants.
SBDs actually resolve this issue and can change the nature of crypto adoption for merchants. With SBDs, they don't have to instantly cash out in order to protect themselves from volatility. The SBDs can be held, remain in the STEEM ecosystem, and then be cashed out only when needed to realize profits in native currencies. As long as the peg can hold, there's no immediate need to ditch the currency - and this actually serves as support for STEEM holders by stabilizing the currency and the network altogether.
This notion that SBDs are only harmful to STEEM is absolutely absurd. There is no eternal "downward pressure" on the STEEM price simply because of the existence of SBDs. The pressures on the STEEM price are multifaceted and mostly have to do with factors that are wholly irrelevant to SBDs. The largest downward pressure on the STEEM price is the huge lack of interest in the currency and the Steemit platform. SBDs are an afterthought in that regard.
Can you explain how having SBD's costs the network of STEEM holder to maintain the peg?
Here is a post that explains a large part of it:
SBD Debt Issue - Riding the STEEM Price Roller Coaster
There is also the interest paid to SBD holders - which is not a large cost, but it is still a cost none-the-less.
Thanks. That helped a lot.
In reply to your other comment (at nesting level 6)
The primary purpose of SBD is to provide a stable currency. Merchants who want to use the currency to sell goods want to have something that has a relatively fixed value. If the value were constantly going up and down, then selling things would be really difficult.
Example:
What do you charge for a shirt that cost $15 to make, when one day 100 of the currency is worth $20, and a few days later it is worth $15?
It is also easy for non-crypto users to understand. Getting paid $10 SBD basically means they have $10 worth of currency that they can cash out / use. If that $10 was worth $5 a few days later - it would be bad for the user experience.
As far as what has changed:
Just a quick note: you write
That's not quite true yet. Because they reduced the power-down period, all of the past inflation is being released onto the market rapidly, resulting in a rather dramatic increase in the effective inflation of liquid Steem. It will be at least 3 months before the effective inflation actually starts to fall. However, 3 months from now is when @ned and @dan are released from their no-power-down commitment, so if they decide to divest, the effective Steem inflation will continue.
Good point.
Your response is extremely helpful to getting my head around these discussions. Thanks.
The more I think about the pricing issues, ie.
This really is a mute point. With POS apps like BlockPay for example, it makes no difference. The merchant charges the same price they charge non-crypto customers. In this example, $15 dollars. The app would take $15 of Steem at the price it is at the time of purchase and the merchant wouldn't even have to think about it or adjust anything in their accounting or books.
I hope you changed your mind.
SBD should be gone. ASAP.
When I look at the big picture I think you may be right. One thing I don't hear anyone talking about on any of today's posts on the subject is how posts would be paid if we made the change.
Next to a post today, the earnings are expressed in SBD and we know this is pegged to the dollar. If the change was made, would the posts earning now be expressed in Steem? And if so, pegged to what? Dollars or today's Steem price?
SBD causes harm to average steem holders since it generates downward pressure on steem price but it gives good tip to witnesses. It's a rigged system man.
Whatever, I don't mind witnesses getting good tips, they deserve it for the work they do. There would be no Steemit without them. Show me a system that is not rigged. Doesn't exist.
Makes no difference if I earn in SBD or Steem to me.
One thing I don't see discussed is how would payouts for posts be determined if not by SBD? In Steem? If so, pegged to what? Today's price? $1 USD?
When we see our potential earnings next to our post in SBD, what would it read if we made that change?
That's not a serious problem. Just keep current $ denomination is one way, though $ price will be changing.
Change denomination to steem is another way and I personally think this is better way to go.
Or replacing SBD on a post with USD. Easy for noobs to understand.
You do realize that the current price slump in Steem is due to the recent hard fork and the reduce power-down time, right? Steem Power was hyperinflated for months, and then 2 weeks ago they made the change to suddenly release this inflated Steem Power onto the market, causing a dramatic increase in the effective inflation rate of liquid Steem. It will be at least 3 months before this effective inflation stops.
Downward price pressure is caused by people wanting to get out of Steem; whether I get out of Steem via SBD or simply by selling my Steem is immaterial.
I'm curious what role you think Steemit has in "accepting help" marketing the platform. We don't own the blockchain or the platform. What's stopping you from doing whatever it is you would like to do to help?
Preach. Let's hear some answers. C'mon David!
This is a good read - but a hard read for a regular person like me. And as always the comments section is gold! My eyes glazed over a few times as a #CryptoNewb lol. I try hard!
I have always said without the ability to attract and maintain regular non IT/Crypto people like me, no platform will work really with a small spectrum of "special interests" largely populating the space.
I love you guys. I hope this makes sense. I want this to work.
Sincerely -- ## #RegularGuy
I agree 100%. We all knew the price of Steem would drop for at least 13 weeks after the new hard fork as Steem Power was powered down faster, flooding the supply on the markets. Everyone needs to calm down and let this time pass and stabilize the price.
Meanwhile, work on the things you mentioned in this post. Great post BTW.