Why I Love SBD and You Should Too
Have you noticed lately that SBD price has gone totally berserk on HitBTC exchange?
The reason is the small amount of SBD that is on that exchange has been stuck there for 5 months. No SBD can go in or out of HitBTC. That has provided us a glimpse of what is expected to happen when the Liquid STEEM supply gets very low. Since the SBD supply on HitBTC is very low and no new SBD can enter their micro economy, people buy it up and demand goes wild along with price. Just a few days ago, the price of SBD got as high as $140. That is insane! Think of this anomaly as an experiment to test what is expected to happen in the future if the conditions allow.
Can the same thing happen to STEEM on a giant scale?
It is very possible.
It will take a while for this to happen and require many people to buy up the supply of STEEM to store away in SP. But lets entertain this concept. We just barely hit a million accounts. In the grand scheme of things, we are barely scratching the surface of social media users. 1 Million accounts is nothing. If we grow to the size of Reddit, then we would need to have well over 1,000 times the accounts than we have today. That is over a Billion!
Right now with 1 Million accounts, the need for STEEM has consumed 71% of the currency in the form of SP. Why are so many people buying up STEEM and converting it to SP? Because it makes a great return on investment even when the market is flat. While other cryptocurrency investors are sitting on their thumbs waiting for the market to turn around, STEEM owners are making money many different ways on Steemit, Dlive, Dtube, Busy, MinnowBooster, etc. Imagine how much STEEM would be consumed when there are a Billion accounts. There just wouldn't be enough STEEM to go around even at really high prices.
This would cause massive demand for a limited a very limited supply of STEEM. When this happens, the scenario that played out on HitBTC could very well become a reality for STEEM currency.
What is the difference between STEEM and Liquid STEEM.
Liquid STEEM is something that is available right now. Either someone has it or it is being produced and distributed to creators, curators, stakeholders, and witnesses. This liquid STEEM can be sold at any moment. That is why it is liquid. STEEM that is not liquid is stored in the form of SP. To get the STEEM back out of SP, one must initiate a "Power Down". That power down process takes 13 weeks to fully pay out into Liquid STEEM. While the STEEM is locked away in SP, it is not available to sell, thus it is not Liquid. Remember that 71% of the total STEEM supply is locked away in SP. That leaves only 29% STEEM left to buy. However, not all of it is for sale. Much of that is in people's wallets. It is only available when they want to trade it for something. Lets examine what is happening to STEEM:
I collected this data and charted what is happening to STEEM Supply. You can see that the total supply increases as it is printed (Blue Line). Even though the amount of Liquid STEEM is going up slightly (Orange Line), the overall trend is that the supply of Liquid STEEM is going down (Dotted Line). People are buying STEEM and converting to SP faster than it can be printed.
Why do I love SBD so much?
To get to the point of my article, the STEEM supply could become so limited that the price can go through the roof and cause volatility. That would be a problem as a stable currency is needed for an economy. This is why I love SBD and think it is so important to STEEM. In the future there will be more SBD supply available and price will start to follow the peg mechanisms. With huge numbers of users and large SBD supply, SBD will be a very stable currency holding itself very nicely against the dollar. Not only will SBD be very stable, but it could be traded like Tether or TUSD. Creators of STEEM had the foresight of currency economics to know that there must be 2 currencies for an economy.
Here is how the economics works on SBD.
Getting paid in the quantity of SBD actually floods the market with the currency. This increases supply and price falls. Once the price of SBD drops below a US dollar, Steemians switch to the 100% SP reward system and supply of new SBD drops causing a shortage and price goes up. This is the just one mechanism that fixes the price to the US Dollar. It is really amazing how popular SBD remains as the evidence of price continues to stay well above the peg.
The only problem with your logic, is that Steem and Steem Backed Dollars will eventually lose all their value, because all the people as you say making returns on their investment are bot accounts, and do absolutely nothing positive for the blockchain.
What value could a currency have if it serves no purpose I ask you?
The top earners on here post the same lame shit everyday, and the same idiots all up-vote them, but nobody real is actually engaging. Then come the third worlders, leaving the same copy and pasted comments on said posts... again no value... so I ask again.
What value will Steem or its dollar have a year from now, when the whole blockchain is auto-bots spewing shit content to the top each and everyday?
Thats true. People can post virtually anything and still cash out big. When you have a trail 9f bugs behind you to upvote you can cash out on just writing your name and post. This is going to drive the real people out and leave you with the bots. Who will trade in steem and sbd then?
Exactly @gaintshoulder, but I hope I'm wrong.
The other accounts need voting power. In order to get voting power they need to invest. When someone invests into these bots, they invest into STEEM. This grows the STEEM economy. If they choose to sign up for free accounts to vote some dust on another account, it is not going to make a difference. The bot owners would be really working hard for dust. It would just be easier to blog or comment occasionally and get some votes that are worth more than dust.
They buy a shit load of Steem one time, and then earn the rest, so is that sustainable?
Every investor who want STEEM has STEEM! There is nothing sustainable here!
The @Smartsteem bot solves that problem. Most of the bots will eventually move to whitelisting and quality control. So it's just a temp problem for now.
I don't think you understand the point, the bots don't actually engage with your work, so if it's just all bots doing the up-voting, regardless of whether or not your post is of quality, what's the point if no one real is reading or watching it?
There will always be people reading and watching. Remember, a lot of people earn on Steemit just by doing commenting. Not everyone is a great author. So there will always be human interaction on Steemit.
@tolkatore, I am really focused on what you have to say. I understand your concerns and I think I have a solution that may improve the future.
I don't like bots either. I experimented with the upvote bot and really felt dirty. The other bot accounts that go around and fish for votes really don't make an impact. I don't feel like bots create a threat. They are more like parasites. STEEM Inc is working on a mechanism that devalues bot usage and a plan to enlist oracles to discover bots. The other concern is whales owning the supply. I'm not sure what there is to complain about. 20% to 50% ROI over a year's time is very doable here. One can invest on MinnowBooster and get at least 20% returns and do absolutely nothing to get those returns. That is a pretty good deal to me. I've never been able to get those kinds of returns on the stock market with my retirement account. You are lucky if you get 10% or just not going negative.
All social media platforms had crap content when they start out. I had the idea for YouTube long before it was invented. I remember that there was all kinds of stupid cartoons and videos. Most all crap. In fact, I recall one video was about a superhero was propelled through the air by crap coming out of his but. It was literally that bad. Despite that, I still felt that social media was the future. When YouTube eventually came out there was terrible content. It eventually got better, but there will always be crap. These people are not professionals. That is the nature of social media.
If you are really inspired to make a difference, I am pooling a bunch of Witness voting power to persuade witnesses to accomplish tasks that we want them to do. My first challenge for witness is to get STEEM or SBD on a major exchange. That will help provide access of STEEM to more people and strengthen the currency. Will you join me? If I get enough people to do this, then this could be the future of how witnesses operate. The do the work of the consensus of the people rather than what they feel is good for the community (likely themselves). What do you say? A witness vote doesn't take away from your earnings or cost anything. You have a bunch of unused votes.
If this task is completed, then I will find a new task for the witnesses. We will keep doing that until we clean this place up. All you have to do is promise to vote for the witness that gets the job done. It is just that easy.
https://steemit.com/steemit/@socky/witness-reward-bounty-180-102-464-vests
Come on man, you know as well as I do that Witnesses don't do shit. They all hang out in Discord and bullshit about how much Steem they make from running a node. Most of them don't give a shit either, so long as they can turn their Steem into dollars at the end of the day.
How many witnesses do you know? I know a witness that lives near me. His node cost him more than he earns (Way More). You don't see people voting for him. You see people voting for the same old witnesses that make all the money. If you don't participate, you can't expect to make a difference. You might as well be part of the problem and let bots take control.
@tolkatore, I went and looked at your profile and discovered that you have a real distaste for SBD. I'm trying to understand your point of view. I think that bottom line is you really don't like the fact that SBD doesn't hold the peg. I get it. I would prefer that SBD to hold itself against the US dollar. Us Americans have a difficult time understanding different currency prices. This is because we grew up with a single stable currency system. It is really difficult for us to wrap our heads around change.
I think you misunderstand economics. You wrote:
You can't just write into code a value of currency. You can try printing new SBD and flooding the market with SBD to lower it, but that will backfire and force high interest payments which will come from STEEM. That would hurt the Steemit economy. The problem is not the code or the peg mechanisms. The real reason SBD is not holding to the peg is that there isn't enough of it. Other coins started out with a massive supply and everyone just buys the supply at a set price. SBD didn't start out with a supply. The only way to create SBD is to generate it through rewards. We only have 14.8 Million SBD created so far. That is an incredibly tiny supply. Compare that to another coin with an incredibly tiny supply (Bitcoin of 17 Million supply). Bitcoin value is at $7500. Since we are no where near $7500, I'd say that our system is doing a hell of a good job holding SBD to the peg.
My point is that all the manipulation in the world is not going to peg SBD when the real factor is supply.
Removing SBD wold be a terrible thing to do. Getting rid of SBD would remove a huge source of growth for Steemit. SBD plays a key role in growth by creating an avenue for investors to essentially pay Steemians for the work that they do. The price above the peg is caused by demand. Demand is good. Whey people buy up our SBD, they are putting money in our pockets. That incentivizes growth on Steemit. Getting rid of SBD would be a huge blow to our economy. It would also never give SBD a chance to build up a supply large enough to allow the peg mechanisms to work.
Either way, I'm done with it, until they figure this mess out.
Y los que publican buen contenido son ignorados... Y, ay cuando las celebridades empiecen a hacer vida en steemit
We need to drain out the steem supply and that would drive demand high and that way price will skyrocket @socky. But that would take awhile before we can get to be likes of reddit
New apps are showing up all the time and SMTs are going to be launched very soon. Reddit only has 1 thing. STEEM has many. In the future there will be many thousands of different uses. Think about that! We could have way more accounts than Reddit and many times the use cases.
I am surprised Steem has not grown faster now that it can do that same thing as Reddit through Parlay.
Also, promoted posts are paid only in SBD.
Coins mentioned in post:
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Very illustrative your article friend @soucky, SBD is already outlined in the game of the world economy. Best regards
Glad you liked it
Right on, Socky. We are all going to be doing very, very well a year or two down the road, if the world economy stays afloat. And, the nice thing about more users and the scarcity they engender is that people are going to have to produce quality content in the future in order to have any hope of prying those scarce SBDs out of the revised-and-improved rewards system. As quality improves, new signups will accelerate.
The future is truly beyond the sky for this platform and it's currencies!
Hey @mepatriot. It is going to be a fun ride!
Indeed!
Not only that, but the witnesses then increase the interest rate, encourage users to put their liquid SBD into savings. Also, they change the ratio of the payouts so the people who don't change to 100% get mote Steem and less SBD. If we choose our witnesses well then it is a great system!
You got it. That is the other mechanism. Witnesses will eventually come around to doing really great things for STEEM. They have already done great things, but that will get even better.
Me gusta la idea, mas si no me afectaria al contarario ser beneficiado
This is so far from the truth anything can be... The STEEM on hitbtc is an isolated event and the buyers know it cant be influenced with more SBD, probably same guy who do most of the traiding and just hopes for by orders...pump n dump... This will never be the case in the "real world" SBD will have a stable availability from the reward pool and be steadily exchanged, nothing will change this!
Add the fact that STEEM inflation and lack of human users will drive the price to the ground and we have an oppiste effect!
I know this. That was my point. I was using this as an example of supply and demand economics. HitBTC has created an environment with its own supply and demand.
Explain how it can be influenced with more SBD. You can go look HitBTC's wallet and see for yourself that no SBD is going in or out of the exchange. There is no more SBD at HitBTC.
Do you even read? The thing you quoted says CANT as in CAN NOT :)
Yeah imagine buying SBD from your other account at hitBTC and then declaring the losses to IRS! tax free life :)))