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RE: Fundamental of Steems Vs SBD

in #steemvs-sbd6 years ago (edited)

One thing you forgot to point out as a difference is that SBD is a debt instrument. Essentially, you get paid now in debt (SBD) in which the debt is cashed out later.

This creates an incredible source of revenue into STEEM ecosystem. It is a mistake to call it pegged in the whitepaper and goes to show how Steemit Inc doesn't understand economics. Don't get me wrong, SBD is an amazing tool to have. Think of it like the US savings bond. Let's assume that the price of STEEM is over $1.00 and the price of SBD is over $1.00, then the community cost for that SBD is less than the current price, and is a great way to generate commerce and is a stimulant for the economy.

The problem is that everyone thinks that SBD is a pegged currency. Since the pegs are weak, both Steemit Inc and witnesses have manipulated the supply to inflate it. They did this two ways.

  1. They removed the ability to "convert" SBD to STEEM. This was done for a good reason, but was never reinstated when SBD fell to $1.00. By not having the conversion option available to 99% of the population, the next best option was to use the internal market. This only transferred SBD and did not convert it keeping the supply of SBD high. This prevented SBD from being burned back when the conversion ratio was 1:1.
  2. HF-20 removed the conservative print rate cut-off of SBD. This was specifically intended to flood the market with SBD to artificially suppress SBD price if the market turns around.

What really happened is that too much SBD was created and we Steemians were left holding the bag to cover the cost of SBD conversions (paying for the debt by inflating STEEM). What is crazy is that the whole idea to suppress the price of SBD is counter intuitive. All it does is cut off the revenue stream into STEEM ecosystem and cause the cost of SBD debt to be higher to pay.

The first step to fixing the problem is to get witnesses to take an economics class so they can understand the economic implications of a debt instrument. We also need to reverse the SBD change from HF-20. At least we wouldn't be printing SBD when there is a 2:1 conversion ratio while we are at the very edge of the cost of that debt being too high.

Do we get rid of SBD? Absolutely Not.

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Great break down @socky I have been looking for the information of the change in SBD and never got any info that made sence to me.. :(
I agree, economy class would have been usefull befor HF20...

Before the change went into place (before HF20), I suggested that the change was going to be dangerous. I also recommended that witnesses and Steemit Inc consult an economics expert before implementing the change. None of the witnesses or Steemit Inc consulted an economics expert.

Thanks for responding & im sorry im late to respond.. So if it was informed by you, that they actually should take a economy -class or/and listen to your point. I cant understand why this wasent listen to.. :( currency and debt isent a -wing it thing, everything you do will have a concequence and effect.
I see your running for witness, i will take a closer looksy into this :)

I have a group of people that are willing to cast a witness vote to encourage witnesses to get STEEM or SBD listed on major exchanges. That is the only thing related to witness that I do. I am not a witness. Witness votes don't affect your earnings and can be reversed at any time. If you would like to join by simply promising a witness vote, then follow this link. https://steemit.com/witness/@socky/4kl87r-how-you-can-get-steem-or-sbd-on-an-exchange

ha ha nooow your post makes sooo much more sence to me LOL soo sorry, i wasent 100% paying attention... :(
Thanks for link :D Il try and read up on that, im streatched for time this week, so the weekend :)
Ha ha im familliar with witnesses and their job, but thanks for the info 🐲ℒℴve 🐉
I would love to pick your brain ; if you hade some time over ? about - distrebution/mining of STEEM & how Hf are desided, and a bit of other stuffies ;)

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