A $13 SBD - The Poisonous Apple For The Steemit Minnows
image source: Pixabay
You all know the story of Snow White and the 7 dwarfs. The part that is relevant to this post is the one in which the old lady give her a very healthy looking, but poisonous, apple. Snow White eats it and we all know what follows: she falls asleep (to me that sleep always looked like a coma, but whatever) and it takes a very handsome guy, on a horse, to appear magically and finally wake her up with a kiss. And then they lived happily ever after.
I'll keep this short: the $13 SBD that everybody believed is the beginning of a STEEM revolution, back in September 2017, pumping up rewards beyond imagination, was in fact a poisonous apple. I mean it looked so good on the outside: my God, getting 4-5 STEEM for 1 SBD, that was insane! Too good to be true, actually.
The bitter reality is that SBD was taken for a pump and dump. It happens in all the markets. It was just a question of time until it happened in the Steemit ecosystem too. For an asset with just a little under 14 million tokens supply, it was bound to happen. Even at $13/SBD, the total amount of money moved was under $200 million. In today's crypto market, this is affordable. It's tempting. It's possible. And it happened.
So, somebody took this token for a ride. The interesting story is that pumping up a stablecoin didn't create havoc, as it usually does. On the contrary, some people - well, the majority of minnows, not just some people - enjoyed this tremendously. And the FOMO kicked in and they started to stack up SBD. At the same time, witnesses reacted and increased the SBD supply, which in turn put pressure on the price. The rules of supply and demand kicked in, but the HODL approach of minnows prolonged the inevitable end with months. Some minnows, genuinely ignoring the white paper and all the supply and demand laws - which, just like gravity, still work, guys - put all their hopes in this pumped asset. They ate the entire apple and then they were hungry for more.
Alas, there's no more apple. And, as the price of SBD inexorably inches towards the $1 level, all who ate the apple are entering a hurtful coma. I feel for all the people who engaged in this game. I just hope it's a good enough lesson for them and they will continue to stick around this crypto thing, because, eventually, something very, very good will come out of this.
As long as you pay attention, control your greed and take gravity seriously, you will thrive here. But if you didn't, if you thought gravity works backwards, then you will probably have to wait for a prince to wake you up for this lethargy that got the best of you.
I have a hunch that this prince will come in the form of STEEM trading above $10, but I don't know how soon this will happen.
I'm a serial entrepreneur, blogger and ultrarunner. You can find me mainly on my blog at Dragos Roua where I write about productivity, business, relationships and running. Here on Steemit you may stay updated by following me @dragosroua.
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Absolutely right. It makes me cringe every time I see someone telling people to hold onto their SBD. If I can sell my SBD for anything more than $1 USD I consider it a huge gift and sell it immediately!
This is absolutely the right approach! I laugh when I see SBD stackers waiting for another pump party.
As @mejustandrew says, the thing about markets is that they are unpredictable. Nothing says SBD won't pump again, for no good reason.
And actually, there are very good reasons for manipulating the SBD price. Remember that a few weeks ago @themarkymark wrote a post about how steem was creating new accounts for spambots ... and nobody else. At the time I was wondering why they were doing that ... I had recommended my 81 years old dad to get a free steem account and he never got one and gave up, yet at the same time steem was delegating like mad to fake accounts ... Now a few days ago the reasons for that became a bit clearer as the official anouncement went out that the network reached 1 000 000 accounts. That made me smirk ... We all know that there are maybe 200 000 accounts for real people, not all of them active anymore, and the other 800 000 are multiple accounts and spambots. But the press fell for it.
What would be the next step to attract more people after HF20 for insance ? Why, an SBD pump, of course! So that people posting pictures of their cats (at best) would see their post make 10 SBD = 150 USD and talk to their friends about how great steem is.
I agree with @dragosroua, Steem is a great platform. Even without these shenanigans but Ned and the rest of the people from Steemit Inc prefer to use these cheap tricks ...
Just to play the devil's advocate: what if SBD pumps back to $15?
Of course that could always happen, no one knows what the future will hold, however you have to make the best bets you can based on probabilities. I'm betting that it's more likely that STEEM will go up and SBD will tend towards $1 than the other way around. I think that the SBD pump back in November was a very rare event and I am not comfortable betting on it happening again. Doesn't mean other people don't want to take that gamble though!
Still I don't like when people who are regarded as knowledgeable on the Steem platform give advice to hold SBD - I think that causes other people to do it who don't understand how big of a gamble it is.
SBD is pegged only to the lower end that is it can't go below 1 USD backed by STEEM. However, it is not reverse pegged to keep it within one USD. Therefore, there is no upper limit where SBD can go.
Moreover, there is another significant motivation behind pumping SBD up since rewards are mostly related to SBD's current price (e.g. the higher the better). People are earning more due to high price of SBD.
On the other hand, high price of SBD is probably suppressing STEEM's price, however, there is no way to prove it. Moreover, stable currency nature of SBD is lost too.
At the end, I believe due to lack of reverse-peg and strong positive correlation of reward with SBD's valuation, it is hard to keep SBD at one USD. Now add to that speculation (e.g. history of several pumps), SBD will be always vulnerable for more pumps.
Indeed, these are very wise words! If somebody wants to bet on something, first he must understand the risks! Well... at least SBD shouldn't go below 1$, so the loss is calculated too.
I only buy SBD if I intend to spend it, STEEM if I intend to save.
At this moment the whole crypto market is like a big gamble. One day we go down with 15% and next day up with 7%. And that's not a one time thing, it almost happens 8 days per week!
And how many pumps have there been? At least 2 I would say. The lower the market cap the bigger the chance for a pump, right?
Although I believe SBD could be correlated with the Steem price, I do agree that it might be better to directly sell the SBD or get Steem for it. Cause when if they correlate, the price gap increases when the Steem price gets higher.
The SBD is pegged to the US Dollar. This means that at every point in time, the Steem Dollars is supposed to be worth 1 USD, anything more than that is a bonus that needs to be cash out before it comes back to its original Peg.
So the most of the members are waiting for a kiss by the prince which will make their life happy! :D
The patience has a sweet reward! So just HODL.
Mehn these words of yours are just too hard to take in but they are just the bitter truth. Its unfortunate it happned that way but i think I have gotten myself too deep into this to turm back now. Still hoping for better days ahead.
I was among those that enjoyed the SBD pump of 2017 but I would have been happier if I had a good orientation of the steem platform to have exchanged my SBD for steem and I'm sure this is the same with many minnows.
... that was like free money on top of free money
Haha I am also thinking the same. I wasn't at steemit when the pump happened. I would like to convert my SBD into STEEM.
Guess you have a small typo here, or did you really mean ‘Shite’?
People forget that the initial idea behind SBD is to be pegged to the dollar.
I have been converting all my SBD to steem to power up, regardless of the ratio. What seems expensive now, would look like a bargain in the future.
As you know already I have been accumulating SBD for a good cause now, otherwise it all would have been converted into steem!
Thanks for the heads up, yes it was a typo.
Thought so 😁
Well, a girl can dream, right? Or not? Even if so far seems to be a very expensive dream.. :D
Very well explained using that example of apple from the snowwhite haha and that's really true that many people fall for it those who know that is pegged to $1 at that moment i just saw this as a bonus and dind't hodl it infact steem is the king in the end anything over $1 is still a bonus and many people were saying that it will reach $34 per sdb i feel really sorry for them lol
I'm not so sure that Steem at $10 will actually be a prince for most people. That will mean that the SBD they're getting won't help them get much Steem/SP and it will be even harder to grow their account. It will be nice for established accounts though, so it's even more incentive to keep active and keep the rewards rolling in while the prices are lower.
A $10 STEEM will definitely impact the value of rewards as well.
Who is to say that another SBD pump won't happen again? especially if something like SMTs create a huge and sudden demand for steem and an easy way to get steem is? ... buy it with SBD that you previously acquired at rock bottom price and now is nice and pumped.
The odds are smaller now. But of course it may happen again. Markets are always right.