SBD TOO STRONG: What Actions Are taken to bring and keep SBD value at 1US$?
Over the last week(s) SBD is continuously TOO strong, far away from the US$ peg as per Steemit whitepaper.
At the time of writing this post, SBD is worth 0.0009 BTC with BTC at 1.335 USDT at Poloniex. And USDT/USD is 0.98 at C-Cex.
I understood Steem witnesses are adjusting parameters, and some of us (including myself) started to post with 50/50% to allow for more demand of SBD. But it seems these measurements are not working.
I also noticed several times a pump/dump on SBD. A couple of weeks ago with almost a factor of 7, and last week with around 50%.
IMHO, we really need to have a stable SBD, otherwise it'll harm the growth of Steem and Steemit. Why? SBD could be the perfect coin to give people and businesses some form of de-risk when using crypto currencies in there commercial models; As you know all of us have to deal with FIAT currency dominated economies, ie each individual has the pay the majority to all of its bills with FIAT currency, as well as the majority to all of the income is in FIAT. A highly volatile currency is therefore unwanted for growth of any currency. VIVA coin apprently has a solution for this, but they are not in the market yet, and they are not Steem/Steemit in which we all have an interest.
What are the following measurements we shall take, and who is able to take them to get SBD to 1 US$.
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follow me @edje
I'm not overly concerned. Ultimately SBD is a store of value for those wishing to hedge against bitcoin (or Steem) volatility without cashing out to fiat.
I suspect traders are just speculating on value without understanding how the coin works. Many coins are being pumped without much rhyme or reason.
However there are potential legitmate reasons why SBD is going at a premium, e.g.
Any bitcoin pair is likely to be volatile because bitcoin is volatile. IMO for SBD to work, it needs to be always redeemable for 1 USD worth of Steem. That way the success of SBD as a transactional coin will be more reliant to Steem liquidity rather than the easily manipulated SBD-BTC pair on Poloniex...
At the moment most regular SBD users will have earned it (through post rewards or tips). I suspect very gew regular users are looking to buy SBD. So a strong SBD is better than a weak one IMO.
Ultimately, if there is geniune concern, a little market making on Poloniex by those who own or earn SBD will correct the price in minutes. However I suspect many are holding back selling there SBD in anticipation of another inexplicable Poloniex spike.
I agree with you from a value/trading perspective and the bonding with Steem.
From a point of view to use SBD (part of Steem and all) for commercial businesses, I do see an issue. SBD is to volatile to base finances on in a FIAT world. Hence the only commercial business that can be explored with success are truly circular economies, and these are scares. It would be so great if Coca Cola, Wallmart, Tesco and all will start accepting Steem/SBD, but they will only do so when their expenses/cost can also be paid in the same currency, at least income and cost shall be balanced, when not, they will not start accepting Steem/SBD or any other crypto.
Note: In any international business, CFOs look for balance of income and expenses per currency they accept. Exchange rate fluctuations can be insured, but that is so expensive this is not done very often. The same they could do for crypto currencies, but the dependencies towards their suppliers is too big, ie their suppliers must also accept the crypto, and their suppliers as well; That complicates the whole thing. Now if we would have cryptos with a try peg to Euro or $, at least in the Euro and $ markets, businesses can start accepting cryptos as a payment method, whilst not have any risks on exchange values, ie taking away a big concern of the CFOs.
We are a long way away from SBD being used by commercial businesses. There are currently only 1m SBD in circulation. Thus a marketcap of around $1m.
There would need to be at least x1000 more SBD for any serious commercial adoption SBD to even begin to be considered. Which in turn would need Steem to x1000 in value to support such debt. At which point we're looking at a completely different ballgame to what is occurring now.
Provided the Steem marketcap can sustain the SBD debt I'm unconcerned. I personally believe Steem itself will be used for transactions ahead of SBD. With payment processors facilitating fiat conversions of Steem. I see people primarily holding SBD as a fiat-pegged interest bearing hedge against Steem volatility.
I do agree wrt market cap required for commercial businesses.
Maybe I was just dreaming a bit, and playing with the question: why not distribute way more Steem and SBD then we do now. In parallel develop an ecosystem where users earn and spend Steem. Not only Steemit, but goods and services.
Today I was reading about VIVA. There story is super, and seems to be Steemit ++++++ I don't know anything of this coin, the people behind it and so on. I see they have an exchange real, the rest I don't know. Some coin needs to take the next steps, maybe VIVA is the coin to take the steps I was hoping for Steem/Steemit to take. Dash supposedly also eyeballing supporting ATMs and POS and other ways to bring the currency out of trading section of the market.
Why is that?
SBD is like Steem, BTC and other altcoins a tradable coin on the exchanges. When a coin is tradable, speculators are using it to make money an trading. USDT is also an altcoin pegged to the US$, but for some reason that coin is more stable to the US$ then SBD is, or at least that is what I think is the case looking at these coins for the last 6 weeks or so.
Thanks for the detailed message.
Thank you, you're welcome :)
Personally i don't care for the Steem dollar. Been selling it lately.
Me too ! Buying Steem :)
Selling SBD is good to bring the price down, it is to high up to the US$. So please continue :)
Buying Steem is a ok then ?
Steem does not have a peg to some other currency, or at least that is not the idea. Buying Steem means the price goes higher, or at least you create more demand for Steem which should drive the price higher. That is good, since we all have Steem and like Steem to be valued 100$ instead of the 20ct it is now :)
Why don't you care? It is kind of a stable currency, therefore interesting to keep the crypto savings. Or are you primarily a trader in altcoins? When so, I do understand you are not interested in SBD. But don't you think SBD and USDT and such altcoins are required for commercial business to start accepting altcoins? And don;t you agree that such commercial businesses are required to make any altcoin dominant at some point in time?
i trade them to something i think will rise. sbd won't even with these feverish attempts. doing busness is another question. If i wanted something stable for consistent pricing, i would choose something like usdt or bitusd. but i dont shop for bread on steemit, so it is one of those what if questions. i have a lot more steem because of them.
I fully understand your point of few, like many of the people in cryptoland, you are a trader. That's cool! :)
right observations.
Thank you. I immediately had to think about the stuff you want to do with Steem and artists. The instability of Steem and SBD was the reason I mentioned to you to focus first on the promotion side of things for the artists in Italy (and beyond), not so much on selling their art with Steem. Maybe SBD could be a way to go, but still, it volatility is a big issue to win artists over to actually work with you. So the promotion on Steemit in a art section of the service, interacting with their followers, bring them some revenue in Steem/SBD which is maybe sufficient to get a group of innovators in your community to be onboarded on Steemit. That is already a good step. You require a good solid front end to show the art of the artists, the current Steemit UI is not good enough. It should be personalisable art galleries. and it needs to look professional. If that not in day one, at least in day two, ie very quickly after launching and promoting the idea, otherwise hardly anybody will start using the service. At least that is my opinion :)
I thought one SBD is 1dollar worth of Steem. Don't think the trade value has anything to do with it.
Absolutely the trade value has everything to do with the peg to US$. SBD is not at all a fixed rate to US$, the exchange value is determined by the markets on the exchanges. Like the value of Euro and US$ are determined by the market. The Witnesses have some methods to influence the SBD, but apparently are not able to counter the value changes caused by the market/traders through the exchanges.
The fact is that SBD is like any other altcoin a tradable coin.
OK, thx for the extra information Edje!
Your welcome! :)