Should Steem Dollars ever be Hard Pegged to the USD (Briggsy's Unfiltered Thoughts)
Given the controversy regarding Tether and Bitfinex being subpoena'd by the CFTC, does it really make sense for the Steem platform to put itself under the same scrutiny?
Some might ask "well if Steem Dollars aren't hard-pegged to anything in the real world, why bother having two payout currencies instead of just one?"
And the answer to that is important. Steem itself is the "real" currency. A set amount of Steem is printed and distributed each day, no more and no less. As the Steemit platform grows and more authors are competing for that reward pool, your payout in Steem power is going to diminish more and more.
What doesn't diminish in quantity? Steem Dollars.
Steem Dollars don't care. They are not "real" Steem but a debt instrument that was originally supposed to represent $1 USD worth of Steem, redeemable in Steem and did not exist outside your Steemit wallet.
Times have changed. Steem is no longer worth pennies and Steem Dollars can be transferred to the open market, and as we saw last night when Bitcoin pinched a big loaf that pulled the rest of the market down with it, Steem dropped to $4 US dollars, then very quickly rebounded to near $5 US dollars within a half hour. That in itself shows the strength and confidence in the Steem Platform.
So getting back to the value of Steem Dollars. If Steem itself is worth (currently) ~$5 US Dollars, would it not make more sense for Steem Dollars to also be worth ~5 US Dollars? That seems like a no-brainer to me when it comes to a debt instrument that is meant to be redeemable for something else. I would suggest it represents stability in the system if the open market dictates Steem Dollars have equal value, even if they are being distributed in a larger quantity; I believe it shows that the market expects the value of Steem to keep going up.
As I said earlier, Steemians will be competing more and more for the Steem Power that is being distributed to authors/commenters/curators. Steem dollars on the other hand you are not competing for directly. In theory Steem Dollars should always have a lot of downward pressure on the price, especially given that more of them are being distributed compared to Steem Power. But without the payout in Steem Dollars, you might as well pack up your bags and quit.
So from a legal standpoint, Steemit is not Bitfinex. There is not necessarily a centralized power that can be brought down. However, there are Witnesses, and if the Steem dollar was to be hard-pegged to the US Dollar (it's currently not, only "soft-pegged"), the witnesses could theoretically be subpoena'd or messed with by authorities - which is not a good thing because the witnesses are the ones mining the blocks for Steem and securing the network. There are plenty of backup Witnesses yes, but not just anyone can be a Witness given the expense and responsibility.
From an author standpoint, without Steem Dollars being paid out, you would be fighting tooth and nail for the limited Steem Power distribution, and that doesn't even take into account the freshly hatched minnows who would be climbing a wall that never stops getting taller. There would be only one way around that wall, and that would be purchasing Steem on the open market, transferring it to Steemit wallet and powering up into Steem Power. The whales on Steemit will feed you all kinds of BS about working hard and earning your place, but unless you have a rich friend on the platform, all that talk is nothing but BS. Steem Dollars is the only current way to organically grow for minnows on Steemit, as long as they choose 50/50 rewards for their posts and actually get upvotes.
While these are just my opinions, I believe the platform is still delicate and any sudden change in how the system works can be devastating for most Steemians. Steem Dollars are not just some unnecessary second payout currency of the system, at least not right now. without Steem Dollars, I would be wasting my time writing this post. I would be better off just curating whale posts and feeding a system that would eventually collapse on itself. Again though, just my opinion.
if you want to be more proactive in this community, try using steemfollower (sign in is done through steemconnect using your steemit name and your private posting key - found in your wallet under permissions). This Video will explain how the program works. It is a great way to motivate you to produce great content, and to reward others for producing great content.
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Very insightful thinking! I see quite often that a lot of whales are exchanging sbd to steem on a daily basis. It makes me wonder if they know that sbd can loose its value? Its very interesting topic and I just resteemed your post. Awesome work @briggsy .
Thank you, appreciate it.
oh you can be sure they definitely know.
Witnesses are actively trying to drop the value of SBD back down to a dollar and stating it publicly that it's their intention. How they're achieving this is through the fluctuated printing of SBD, which is governed by how much your upvote is worth on any given day. One week it might require 20 Steem Power to give a $0.01 upvote, while the next week it could be 15 Steem Power. It's not so apparent to minnows, but if you have 5000 Steem power and your 100% weighted/100% power upvote fluctuates wildly from $1.65 up to as much as $3.00 over the course of a couple weeks, you know that someone is opening and closing the faucet deliberately in an experiment to control the price of SBD.
I find the whole thing fascinating on the one hand, but on the other hand it can be a disaster in the wrong hands. A slight adjustment here can have a butterfly effect somewhere else in the system, and there's definitely been some noticeable effects going on over the past few months lol.
I'm very impressed with your "insider" knowledge about Steem and the way the system works. I've been studying what others are saying, but you seem to have much more knowledge than others, and I'm your faithful follower from now on :-) I try to learn as much as I can every day, as I intend to start to promote the platform through every channel that I can, as my background is psychology and online marketing, and I make living of e-com. But because I like the platform so much, I'm planning to start marketing campaigns in the near future, once I simplify my main business (to have more time for the platform), and I'm pretty sure that I can bring quite a lot of traffic to the site. But my question is, why they would want to drop the price down to be equal to 1 USD? Does it have such a big impact on the Steem in the long run if the price of SBD is high? In my opinion, the value of SBD is the main factor that attracts a lot of people to start Steem journey. A lot of people don't think that they want to accumulate a lot of SP so they can have a nice backup in the next few of years, but they rather want to be able to have money now. I think for the Steem, as the social platforms, to be very successful it has to be very appealing to newcomers, and high SBD price is playing a huge role in it. From psychological point of view people are lazy these days, and it is much easier for them, and perhaps more entertaining to be engaged on FB or YT, and keep everything as it is. I can see it even within my family and friends circle. When the SBD price was low they were saying that this is too much hustle to learn all that new stuff, and the reward is not so amazing at the beggining, since you get only around 37,5% of this what your post is worth, and that you can immediatly withdrawl to Bitrex etc. And especially if you dont see much upvotes and rewards for your effort that is even less convinicng to stay here. But since I started to show them that SBD price is much higher than USD, then they started to open accounts and think more seriously about Steem based platforms :-) I've seen tons of accounts that look like a ghost town and my guess is, that this was the main reason why those people got discouraged. What do you think? Please correct me if my thinking is wrong. Kind Regards. Marcin
I agree with you, I don't want to see the SBD drop to a dollar. I should have phrased my previous post a bit better. There does seem to be a bit of a friendly game of tug-o-war with the witnesses. Some of them seem to want to see SBD at $1 USD, while others just want to keep it stabilized. @dragosroua seems to be one of the "good" witnesses who supports a stable SBD that follows the price of Steem. there are some others that want SBD to be usable in the real world, like a retailer being able to accept SBD instead of US Dollars and be confident in a stable value that is pegged to the value of a centralized currency.
So in that sense, I should try to be less negative about the topic, because not all the witnesses are leaning that way. But I think enough of them are that the price of SBD always has downward pressure on it.
I think that it should be decided through the community-wide referendum :-) because if the group would make a decision in behalf of all of us than in that case, it would be no different than real life, where the group of politicians decides of the future of the entire nation. That would be decentralised from the outside system platform which is centralised Internally :-) lol
This makes me want to build a website (if I had the time lol) that lists all possible witnesses, what they have done for the community, and what their views are on various topics. Right now the ~witnesses page has no information, so you really gotta dig to even see if you want to vote for someone in the top 50, let alone the rest who go unlisted. If they are the governing body of Steemit, then it stands to reason they should have to compete for that position a little harder.
Such website would be a great thing. I would want to see steem people as a united community that has one goal to grow together and change the world for the better place. Collectively not individually. I see this platform as the huge potential not only for financial profits but firstly as something that perhaps for the first time in the history can unite the immense number of people. But in order to do that we need people who understand quantum physics, spirituality and the way the laws of the universe work. I think that crypto world, in general, has opened another door but if people will use it only for own benefits it will undoubtedly lead to gradual self-destruction of the humanity, but if people will use this also as an opportunity to rise the consciousness collectively the magic change will happen :-) I hope that makes sense. lol im a deeply spiritual man. What is your name?
yeah, I wish there was a more transparent system for voting of witnesses. I find the current setup to be nefarious at best, because they only list the top 50 witnesses to pick from, while there may be hundreds. https://steemit.com/~witnesses
You can vote for someone else at the bottom who isn't in the top 50 list, but they have to work infinitely harder to get a vote because the system is designed to keep the top 50 where they are. I guess the more things change, the more they stay the same lol
thanks for the post, I looked it up and see the information I need for myself that all residents of steemit will support, and right away I write to you my joy, that there are good people who upload such videos thank you very much.
It would be terrible if that happened to remove the Steem Dollars for everything you explain, it would give a stop to the growth of Steemit, and you have a lot of reason when you talk about the confidence that there is towards STEEM, Excellent publication as we are used to and thank you very much for always clearing my doubts, many blessings my dear friend!
That is awesome food for thought.
As for the tether comparison, anything that distances SBD from that ponzi scheme is good in my book. I know the initial intent was to have SBD match the dollar in price but that would put it right in line with the TETHER problem, as SBD would have to be generated based upon the number of USD (they are freely printing at will) and be subject to auditing, and eventual subpoena like Tether is currently subject to(
).
I am okay with SBD fluctuating on its own and being separate from STEEM because I know many people making a living on STEEM (definitely not me yet) and it is a nice cushion between the 2 currencies when there are mouths to feed.
Perhaps just make it so that SBD is not trade-able on the open market?
I am going to have to put a couple more weeks of learning and observation and research into this. So keep posting the awesome info!
Yeah, that would be the only way to avoid legal problems, to go back to how it used to be when Steem Dollars were only redeemable for Steem inside the Steemit wallet, and would go "poof" after being redeemed. I'm sure bittrex would be annoyed by that lol.
Hopefully that does not happen that they eliminate the steem dollars friend since the confidence that there is in the steem at present is very good for the community. Greetings. Thanks for such an important information. Greetings.
Good post and food for thought. I just completed a post on the difficulty of maintaining pegs and currency crises, as applied to Tether, and chanced upon this.
Your post has made me think about SBD, and I'm currently penning a post about the SBD peg, how it's supposed to work (under the white paper), why it didn't and what options we have!
At the risk of appearing like a self-promoting goon, here is the promised post: Steemit Monetary Policy: Why the SBD Peg is Broken and How to Fix It. But Do We Really Want It?
I post it here because there is already a good discussion about the issue and I hope to add in my two cents and keep the discussion going!
It would be better if the blockchain was able to react to SBD price increases by arbitrarily creating SBD and trading it for STEEM from users in the internal market. The STEEM could then be destroyed in order to reduce the supply of STEEM and increase its price. The price increase of SBD would therefore be transfered to STEEM and the 1 to 1 SBD peg to the USD can better maintained.
good article @briggsy
Very important post friend always with a good contribution to the community to learn excellent
Ineresante post friend thanks I love