Pegging Steem Dollars (SBD) to USD : A Pro and Con Argument

in community •  7 years ago  (edited)

This is a complicated topic and thus should be discussed with care due to its impact in the financial viability of many people and or steem ecosystem. On the other hand, however, it remains an important topic to explore because of its importance.
Moreover steemit witnesses have been bombarded with questions and arguments especially from those against pegging SBD to USD because of some valid worries examples, going against free market economics, dealing with unhappy members who will get less in sbd conversion and thus might abandon steemit , rewarding and motivating content creators with high sbd etc
In light of all these worries, the question remains should SBD be pegged to USD ? if yes when will be the best time? What are the advantages and disadvantages of pegging SBD to USD?

Pic Source

In answer the afore-mentioned questions, I will start with SBD definition according to steem white paper

Steem Dollars (SBD)

Stability is an important feature of successful global economies. Without stability, individuals across the world could not have low cognitive costs while engaging in commerce and savings. Because stability is an important feature of successful economies, Steem Dollars were designed as an attempt to bring stability to the world of cryptocurrency and to the individuals who use the Steem network.

Steem Dollars are created by a mechanism similar to convertible notes, which are often used to fund startups. In the startup world, convertible notes are short-term debt instruments that can be converted to ownership at a rate determined in the future, typically during a future funding round. A blockchain based token can be viewed as ownership in the community whereas a convertible note can be viewed as a debt denominated in any other commodity or currency. The terms of the convertible note allow the holder to convert to the backing token with a minimum notice at the fair market price of the token. Creating token-convertible-dollars enables blockchains to grow their network effect while maximizing the return for token holders.
One example of an issue that may take some time to correct is short-term market manipulation. Market manipulation is difficult and expensive to maintain for long periods of time (Pls see the white paper for more informations)

In light of the whitepaper, we can argue that the initial plan of the founders of steem ecosystem was to create a stable currency that moves in tandem with USD, why?

Stable Currency: stability leads to investors’ confidence which is good for steem ecosystem-moreover,we should not deal with 2 unstable currencies in the same platforms (Steem and SBD). Therefore if sbd is created to bring stability to the ecosystem and to cryptocurrencies , we can rightfully argue that traders are manipulating sbd for their personal gains-which is not illegal because this is a decentralized economy and we all believe in free market isn’t it?
Moreover having a stable coin in our ecosystem will make us stronger-this argument is supported by Myles Snider in his article AN OVERVIEW OF STABLECOINS

Stablecoins are one of the highest convexity opportunities in crypto. They aim to become global, fiat-free, digital cash, so the total addressable market (TAM) is simply that of all the money in the world: ~$90T. The opportunity for stablecoins is, intrinsically, the largest possible TAM. This vision is larger than that of Bitcoin itself. A fiat-free currency that’s price stable will challenge the legitimacy of weak governments around the world.

In light of these points, I lean towards pegging SBD to USD maybe after summer this year (or any other time agreed by witnesses and members of the community). Reason is that, sensitive issue like this should not be done in a hurry in order to avoid resistance and issues with the community-rather a pragmatic time line should be discussed and agreed.

What do you guy think? Send in your comments and or suggestions, resteem in order for others to join the discussion and upvote in order to send in your support.

Click here and read my former post: Steemit Education: The concept of Needs and Wants in our Private and Community Life?

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SBD could be pegged on a downside - you always could exchange 1 SBD to 1 USD worth of STEEM.

SBD is not pegged on an upside. To do that you need to be able to print limitless amount of SBD and dump it to feed any demand. Is steemit.inc do so or a community as a whole incentivized to behave such way then it would be peg to 1 usd.

Good point, reality is indeed different . Thanks for your comment

I don't think t pegging to dollar is needed.
We are now at the very early stage of Ecosystem. It's better market decide it's value.
Through due process, SBD will be stable, in my think

Very good point indeed, I agree to allow free market to decide now . However even if the witnesses decides to peg SBD to USD (will be a difficult process) , then it should not be a hurried process and community should know before hand.

The whole debate is somewhat moot, because there are already built-in controls to bring SBD back to $1 in the mid-long term.

I think once all the speculators realise that the system is constantly creating new SBD to meet the demand that there'll be an "oh shit" moment and we'll see a mass sell-off... the price will hit $1, the built-in "convert to Steem" option will return to keep the currency stable, and volume of SBD will drop back down accordingly.

So enjoy it while it lasts, because the plunge to $1 is inevitable.

Very good point indeed, thanks for your comment. Lol we all have to enjoy the SBD now before its too late because am sure that it will drop back to USD before end of this year

Woff, woff!

Hello @charles1, Nice to meet you!

I'm a guide dog living in KR community. I can see that you want to contribute to KR community and communicate with other Korean Steemians. I really appreciate it and I'd be more than happy to help.

KR tag is used mainly by Koreans, but we give warm welcome to anyone who wish to use it. I'm here to give you some advice so that your post can be viewed by many more Koreans. I'm a guide dog after all and that's what I do!

Tips:

  • If you're not comfortable to write in Korean, I highly recommend you write your post in English rather than using Google Translate.
    Unfortunately, Google Translate is terrible at translating English into Korean. You may think you wrote in perfect Korean, but what KR Steemians read is gibberish. Sorry, even Koreans can't understand your post written in Google-Translated Korean.
  • So, here's what might happen afterward. Your Google-Translated post might be mistaken as a spam so that whales could downvote your post. Yikes! I hope that wouldn't happen to you.
  • If your post is not relevant to Korea, not even vaguely, but you still use KR tag, Whales could think it as a spam and downvote your post. Double yikes!
  • If your post is somebody else's work(that is, plagiarism), then you'll definitely get downvotes.
  • If you keep abusing tags, you may be considered as a spammer. It may result to put you into the blacklist. Oops!

I sincerely hope that you enjoy Steemit without getting downvotes. Because Steemit is a wonderful place. See? Korean Steemians are kind enough to raise a guide dog(that's me) to help you!

Woff, woff! 🐶

Thanks doggy

This is a very sensitive but important topic. As a new member and a young lady in need of some SBD money , I will like to see high sbd price in order to gain however if it will go against the intended use and be an instrument for speculators then I am all for pegging as you rightfully indicated in this post. We should think long term and not short term and pegging is is better in the long run however it should be done wisely.

Speculation profits bring in new users, stability keeps them active

Hahahah good point which can be argued.

Sure, but isn't that why we have Steem and Steem Dollars?

i agree with your view @ronja, when we think short term, we would have problem on the long run, i love how you crafted the sentence "As a new member and a young lady in need of some SBD money"

Thanks for bringing this up @charles1, this is not the time to start loosing members on the platform, but then i am concerned if the SBD is raised, won't people start posting "nonsense" all in the name of earning some SBD?

I believe the two sides of the coin must be looked at.

Point, thanks for your comment

if the SBD is raised, won't people start posting "nonsense" all in the name of earning some SBD?

You say that like it's not already happening.

Good points indeed, there are 2 sides to the story

This is interesting, when I first came in to steem I always wondered why the platform said it was pegged but the value did not reflect it. I like the free market and the fact that is not pegged. I believe they should leave it as is and change the definition to not confuse new comers.

Good point however I am not sure that they will allow it like it is now for long. However, good for us to earn more

I feel you...I do hope I get a chance to see sbd at $13. I was not around for that wave.

I am against the peg for a simple reason.

SBD is a debt instrument. For each one issued, $1 of STEEM is required to pay it off.

Since November we saw the amount of SBDs outstanding jump from 3.5M to 9.8M...So the ecosystem must have more debt?

Not really.

Back in Nov STEEM was $.85 meaning it took 4.1M STEEM to pay off the debt. Today it takes 2.92M STEEM.

The debt actually costs less STEEM today than it did 4 months ago when there were 1/3 the SBD outstanding.

Very good point indeed, I agree with you. However it means that you support 2 speculative currencies in the ecosystem? there are two sides to the arguement too however as stakeholders we would prefer the best to win.

Yes that is an issue.

Although I am not sure what is speculative about SBD...it states it is worth $1 of STEEM...people want to pay more, that is up to them but the value still is the same for redemption.

It runs up to $30, it is still worth a dollar.

But you are right, it is a subject of great debate.

Also, the market might take over. As more SBD produced, the value should be driven down.

I agree with your view point however based on making more money via my post and thus gaining from free market economics however as you indicated, the other side has a point which Charles analysed well...speculation is not good for the ecosystem and having 2 speculative coins is bad.

Good point, I agree with you. I believe in free market however this is an issue that needs to be resolved before the end of this year in order for members to know their fate on time with regards to SBD.

Cheer Up! 무슨일인가요? 사람들 반응이 엄청나네요?

  • from Clean STEEM activity supporter

Cheer up too...thanks

I think that at one point it should be pegged to a 1$, but not before Autumn, as you said. A lot of writers who earn 1,2 SBD per post will stop posting so the platform will lose a lot of members. First, witnesses need to educate the community and spread the word on other social media so people can prepare for it

Good point indeed, thanks for your comment

SBD at 12$ is what pulled me in originally on Steemit. Even when it dropped to 3$, I didn't give up on it, since I mostly share my topics from Youtube, thus increasing profits, even if they are a few pennies per post.

I agree. High SBD motivated me to write daily since end of last year. However we should not forget other side of the argument.

I'm curious to read what people have to day. As a content creator myself, I feel obviously a high SBD can help with the costs of creating content and adds motivation to create better content more consistently. It can also have the opposite effect and attract a lot of garbage content just trying to capitalize..

Not that I defend it, but most of the capitalization of garbage is self-votes. Bot votes are paid, so it's not certain they make their money back. Removing self-vote from the rewards (without increasing the worth of the post for promotional reasons) would fix a big part of it.

Good point, I agree.

I don't think that SBD can now be pegged. Currencies can be pegged relatively well if they are that way from the beginning.

I believe that any attempts to peg it now will lead to some irrevocable damage to both tokens price and ultimately will be unsuccessful

Good point , it will also lead to less wealth to spend isnt it? however I think that the whales will go for it one day-thanks for your comment.

Finally, I was able to work on an illustrative analysis in response to this. I dedicated a post about the topic here. I just hope I didn’t make myself look like “funny”.

Good post indeed, thanks. Upped.

This is truly a delicate topic however, timing matters and steemians should be made to know when it is coming. Best give 3 months timeline as many might invest in sbd and loose out if pegged immediately. But on the long run, it's best to peg it.

Good point, thanks for your comment

Welcome as always

Latest Steem Backed Dollars (SBD) - BTC Historical Price Chart. Steem Backed Dollars or simply Steem Dollars are stable value pegged assets issued in the Steem.it platform. SBD are pegged to the value of the USD and can be redeemed on the Steem.it platform for about one dollar worth of Steem.

Point

grouping SBD is important for the long term, we need standardization for market management ecosystem. because the step now determines the future market.

Point, thanks for your comment

Hey @charles1! I wonder if SBD will ever find it's way back down to $1.... perhaps less?

I dont know however if it does then am sre you will buy many hahahah

In my humble opinion if SBD would be plagged to US dollar and stay that way a huge amount of minnows would left platform. Even from whales perspective it would be dramatic cut of income. Maybe if rewards increases proportionaly or initiating mass adoption, which could provide better and higher rewards.
But, as you said there are always two sides of medal.

Good point, hence the need to be careful and follow it with wisdom

Does the abbreviation of the words SBD is dollar bromin steem? I am very happy with your post I continue to ask sbd with rupiah currency if there is little difference between the two. and I would like to ask you how you melted sbd into your country's currency currency. whether we use other applications. thanks to you because I in the following few days to follow your news because it is very interesting and very much useful knowledge that I get in your post. whether you have discord community. I want to follow
@charles1

Please read the steem white paper in the post for details. SBD can be converted to steem or other top cryptocurrencies and subsequently to your local currency.

This is an important message fr we steemians, Let all be with pegging, stay for a long term, because if we don't go with it we will stay fr a shot term and No CASH, because we will not be on this platform again, it will be bored.

Point, thanks for your comment

I'll be trying to use my econ knowledge to try deciphering the effects. My analysis can contain a lot of flaws since I haven't actually applied whay I learned that much. Anyway, I'll have to sit on this first and maybe try to graph stuff.

One thing is for sure though, it will shake the market and will cause potentially multidirectional shifts -- hopefully to something positive for the majority.

  ·  7 years ago (edited)

Good point.. I hope for the best

I think about this quite a bit. I would prefer to let it float for earnings but as I invest more time, money and effort into steem, stability seems more attractive than earnings from content creation

Good point indeed, there are 2 sides of the story

sp~equity, sbd~currency.
Stability is the primary objective of currency, it means a lot for the distributed autonomous ecosystem. How about the mode of USDT? You give me 1$, then I will give you 1SBD, the exchange rate is stable and the free capital flow can be ensured.

Good point indeed, thanks

As a new Steemian, I would like to see SBD remain high so that I can rack up Steem Power to grow with the platform. It takes quite a bit of effort to create original content for the platform and it is a struggle to justify the time and effort expended. The 'promise' of the potential rise in the value of Steem keeps some of us vested. It would make sense for the platform to eventually be valued primarily on a single token.

Not an easy issue to overcome. As you've rightfully said - there are 2 or more sides to this.

Good point indeed, thanks for your comment

...dealing with unhappy members who will get less in sbd conversion and thus might abandon steemit...

Steemit is still relatively new, so pegging SBD to USD now will make make new members lost interest in it.

I think the pegging should come after Steemit has gained more popularity/visibility.

Good point

sir your very well post..
& great post..
thanks for sharing..
sir i just #resteem & #upvote

stop spamming my posts with your comments

haha... i dont know what to do... i will just cry .. STEEM or SBD :p

스팀이 햇수로 3년도 안 된 걸로 알고 있는데 어떻게 보면 초기 단계를
인데 벌써 부터 큰 변화를 가져온다면 혼란을 일으킬 수 있다고 본다.
현재는 매우 안정적이라고 판단한다.

এই একটি জটিল বিষয় এবং এইভাবে যত্ন সঙ্গে সঙ্গে আলোচনা করা উচিত অনেক মানুষের আর্থিক প্রবক্তা এবং ইমিও সিস্টেম বাষ্পে তার প্রভাব। USA

Hey @ , pos bagus!
Saya menikmati konten anda Terus bekerja dengan baik! Selalu menyenangkan melihat konten bagus di Steemit! :)
https://steemit.com/utopian-io/@boyhaqi97/hello-everyone-join-to-utopian-io

remove your spam link

Thanks for the excellent information

what do you like about the post?

One thing is for sure the $ amount next to our posts are extremely misleading to Crypto neophytes.

why?

Because often they don't know the actual value of SBD. It's SUPPOSED to be pegged at the USD, but, right now, it's not, so, new people who think they're "only" earning a few pennies are actually earning 3-4x as many USD pennies as they think.

I still don't understand why would you tag "kr" on your post. KR is usually posts related to Korea. Anyway, nice post. ))

The issue related to all steemians incuding Korean members

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Thanks

Luar biasa

very important topic.

why? what do you like about the post?

Very interesting, I would really like to see steem to be exchanged for usd. However, I think it should happen before summer. Why do think it should happen in summer?

The topic is SBD and not steem ...

Wao, such an insight, thanks sir, keep it up

what do you like abiut the post?

good posting
have a good day

what is good about the post?

Hi, I'm new to the steemit community, I love your publication, it inspires me, I invite you to see my first publication, I hope you like and support me, blessings!

kr-guide!

Wow

why? did you read the post?

lol..thats probably a no

Hahahh, I agree. Most throw in spam mass comments to get upvotes...Lol

I know I hate it.. I dont really know how many human followers I have ..smh

What is the point of having a 1 to 1 currency? Without deflation there wont be a real attraction to cryptocurrency

Stability!!! there is steem too which is inflationary

nice explaination, thanks

what is nice about the post?

This post has received gratitude of 10.23% from @appreciator courtesy of @charles1!

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I hope you give me tips to become as successful as you

did you read the post? if yes , do you agree or disagree and why?

thank you for share

Spammer ...you didnt read the post!!!

Charles thank you bantu v

Spammer ...you didnt read the post!!!

hi if u want keep in touch with all the news about sneakers Im going to post them in my new account. Thanks :)

Spammer ...you didnt read the post!!!