My last post was uncomfortable to write although it was also a lot of fun. It was uncomfortable because it was a long way out of my area but as I wrote it, a whole range of little things clicked along the way to build a picture that I had only grasped glimpses of before.
First things first, this blockchain as a system is filled with brilliance and there are many hidden gems to its design that people rarely consider. It is easy to get lost in the payout side of the function without seeing the other potentials.
The next thing that became apparent is why SBD is so vital to the future and why it should be pegged. People have said it before but without realising how the system managed it, I didn't see the significance and even now am trying to get my head around it.
One trouble with crypto is that it is hard to spend as it is likely an appreciating currency, meaning what you buy today becomes more expensive tomorrow. Spend 100 STEEM today and if over night it doubles in price, what you bought is twice as expensive. This means there are lots of holders.
On the exchanges there are tethers like USDt where if prices are dropping, one can 'buy the tether' and then use the tether to buy back in later as the tether is equivalent to cashing out to fiat. This maintains some stability as fiat doesn't swing as fast as crypto. However, for a tether to be stable it is meant to have a 1:1 ratio with what it is tethered to, generally USD. It didn't and as the volumes increase, this gets even harder to maintain.
But, SBD doesn't have this problem as it is backed by STEEM and as long as it holds value, SBD holds value. This means that SBD can be used to trade for goods without having the risk of it fluctuating in price (hopefully) meaning that what you buy today would be the same price tomorrow as if you bought it in US dollars. Now, that doesn't seem to be so brilliant does it, why not just use USD? Well, because USD is USD and is a currency controlled almost entirely by banks and are subject to all of their fun and games.
The brilliance of the system here is that it cuts out the requirements for middlemen and fiat completely (potentially) and as crypto grows in uptake and usability, SBD can become a transfer coin. For cryptocurrencies to fulfill their promise, they need some stability but that is unlikely in the early days (as we can see) but, SBD could potentially fill a gap in the market and offer price security in transfer while the industry stability is developing with volume and distribution.
I think this would mean that any users could buy and transfer in SBD and that would be backed by the Steem community making the Steem blockchain vital to the crypto ecosystem. I think.
Really, I am trying to get my head around all of this and it is something I really should have looked into much deeper much earlier but, all the numbers and technicals scare me a little. What I am learning though is what I teach and that is, What I teach, I learn. I am not here to teach though, but spending the time trying to explain to others what is in my head does have that effect but with the added benefit of feedback, discussion and clarification. Discussion now is vital for the future.
There are a lot of complexities here that not only appear on the Steem blockchain but also in the world at large. To really understand it all one not only has to be willing to get technical but, also to get deeper into economics and politics, social development, psychology and education. One has to be prepared to forget everything that has been learned and slowly relearn new ways to live as a global community.
I know that sounds a little far-fetched and perhaps corny but, if we truly are going to make this world fundamentally better, we have to change the fundamentals and to do that takes a lot more work than any of us have done together before. Perhaps every generation and every person says this about the point they occupy but, these really are interesting times.
I am looking to get a little deeper into them, no matter how uncomfortable.
Taraz
[ a Steemit original ]
Something was taught to me early in one of my businesses when I was asked to take on a leadership training. As someone who was maybe 27 at the time I didn't feel I needed to teach these other people what I knew or that there would be any reason for me to invest my time in non money making activities.
A mentor at the time asked me why I thought they were spending time helping me grow my business. Honestly didn't have a legit answer for them as no money was being paid and they took 90 minutes a week to sit with me reviewing the previous weeks business activity and holding me accountable to my goals.
After forcing me to try and come up with an answer they explained that to become really good at something you need to learn it and practice it over and over, but to master something you must teach it.
So keep taking the time as uncomfortable as it might be to try and share your knowledge as it helps you master the subject.
Now to your point about pegging SBD, the argument that it could be a usable currency is good, but flawed. There just isn't enough of it nor will there ever be to make SBD the currency. Without implementing massive inflation to keep up with demand down the road to hold a $1 price in line and not have it increase seems impossible. More importantly it feels like a set up to major manipulation.
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The only way to keep the value of SBD down close to 1 USD under growing demand is to inflate the supply or restrict access to it. Restriction to access broke very soon after SBD was introduced on major exchanges. If I had understood this, I could've parked a significant portion of my crypto portfolio in SBD and have it explode tenfold in value ...
The only way to keep the value of SBD at 1 USD under decreasing demand is for there to be sufficient STEEM with sufficient value in terms of USD to keep the demand up artificially. The market cap of SBD will have to remain small compared to that of STEEM for that to be even possible.
Stablecoins are risky. But the downside of using fiat as a stablecoin is that conversion to fiat is a tax event. That is a huge, huge strike against using fiat for that.
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Yes, there are risks and it is not going to be an easy path but at some point, it is going to have to happen if a breakaway from the reliance on fiat is ever to happen. The volumes are indeed much to small for a global transfer currency but, it does have a chance of supporting a small amount as others build their chains. Again, this area pushes me into unfamiliar territory. Fun :)
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STEEM itself could become a global transfer currency given a large enough market cap but only if its value were based on something more solid than pure speculation. The value would have to stabilize around the value of Steem Power to commercial and other promoters in helping them generate monetary profit or other value in the real world.
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The point of Crypto is that it's not pegged to something more stable and if it was then it wouldn't be attractive for people to put money into and then good luck holding it's value as it would crash down. If we want stable then we hold US dollars.
Obviously just my opinion, but this realm falls into my wheelhouse as a finance guy. You will attract nobody to a new "currency" if you can't offer the potential for your capital to appreciate. When you bought your first XXX coin was it because you believed that all your transactions should be done in a new currency or because you hoped that the money you invested might grow?
For most people that hold any crypto it's not about creating a new world order, but rather they want to make some profits. Maybe they like the idea of having these profits made without bankers getting their share, but in the end it's was about the potential of making a profit that drew them to crypto.
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I wasn't talking about pegging STEEM to anything in the above. I was talking about its value stabilizing around its intrinsic value eventually. Its current intrinsic value is pitifully low compared to its current price. The traffic steemit.com attracts now is worth less than $100,000 per week and not the millions doled out as rewards.
I have absolutely nothing against people speculating on the price of STEEM. I'm a content creator and I LOVE being paid this well for my very modest creations here.
But to be useful as money the price of STEEM will have to stabilize around its intrinsic value in the future when Steem the blockchain has reached its potential. A form of money as wildly fluctuating in value as STEEM now is of low worth as a medium of exchange. A merchant would have to exchange it for fiat fairly quickly after receiving payments in it in order to minimize the risk of its price crashing.
I believe Steem may well develop into a platform serving dozens of applications as their data layer and hundreds of millions of users. In that future scenario, STEEM the currency would add to the value of the platform by enabling extremely fast and cheap payments across borders. There would also be a heavy corporate presence on Steem attracted by the large user base as well. In that stable situation, there could be significant money traffic between individuals and between individual and corporate accounts bypassing the need to take all that money to the bank.
If you don't believe in such a future for Steem, it makes no sense for you to power up, spend any significant time fostering relationships and developing community here. If you think Steem is a mere game of the Greater Fool, you should keep your STEEM and SBD in liquid form, play the market and cash out any time the price rises significantly.
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I didn't understand what you meant by your comment, that you for taking the time to explain it. Not sure why I assumed your comment meant pegging steem to something more stable, but that is how my brain processed it.
My view for the future of steem's value is similar to yours and that is why I'm attempting to grow my account. My plans are all long term with no thoughts of powering down anytime in the next few years assuming no major negative changes happen in the platform or my life.
I think that there might be a little more intrinsic value here then you feel, but still agree it's not high enough to justify today's price and for sure nothing to touch where it was in say Jan. Really would like to see $1 again as it would thin the heard of spammers a little and be more in the range of what I think the real value is currently. Might be buying more at today's prices just because the capital is available and who knows if we will ever reach the price I think is correct.
Over time as the SMT's allow for other coins to be issued making Steem the center of everything we are going to see prices rise as Steem intrinsic value will rise also. This is probably the best chance for a real sustainable rise in price going forward.
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In the US trading coin to coin is a taxable event. There is no need to convert to fiat to have a taxable event.
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Right. But in most of the world, conversion into fiat or good or services is required for crypto gains to be taxable. And in the US, that law has been in force only since the beginning of this year. It's a shitty law that makes accounting a pain in the ass for the crypto investor or it forces them to be holders.
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US is a very large market that must be considered when hashing out any plan to make something work widespread. Also as that law is new, I'm sure other governments will be watching to see how much added income that brings into the US coffers and then looking to implement it themselves.
I'm not very happy with this law as it make all of this a complete PITA. As if getting started in Crypto isn't a PITA enough, now the tax side is more complicated then most people can handle. This will hold back a ton of new money from coming into the market.
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Something makes me suspect certain little birds told the Congress that this law would be a good idea. But if you only buy some of the largest cap coins and just hold, the new law shouldn't be a hindrance. And it may actually make people say f**k it and not report everything.
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Teaching gives perspectives that are not looked at by the proficient as the task must be deconstructed and evaluated.
Yes, the circulation is much to small and very open to manipulation as we can see the last few months. This seems to be a move from a couple whales at most who understand what they are doing.
Now, what if Some other chains backed the idea too? Hypothetically, could a coin be created that was printed by several large chains similarly so that it would further decentralise and stabilise a transfer coin? Would this mean that the volumes could be high enough and the distribution wide enough (in time) to protect it from major manipulation?
At some point, the breakaway has to happen and approaching that point is going to cause some pain.
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Like you thought processes and please don't take my counter arguments as any disrespect. It's purely an open discussion and I see it differently.
You what if is a hard one. To get any chain to agree just on how to upgrade themselves to allow for growth has been an issue.
Can you imagine telling all your coin holders that hey we aren't really good enough to be a currency and we need to join forces with coins A B C & D to form a much bigger and better coin. This new coin will not effect our core value and is only for doing transactions. I know we said the core coin was here to replace currency, but it's just not going to happen. But keep Holding the core coin and then use this new coin for currency.
I just don't see this as a viable option due to the fact you would have to admit defeat. Don't care how it's spun at first, once people digest it and it hits reddit and steemit the reality would be you admitted defeat.
Now I don't have a solution, but you now have me thinking on the topic and if something comes up I will post my thoughts and tag you in it. Maybe over time with input from enough people a working solution can be figured out...heck if we do find one we all can become very wealthy...lol.
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I think at some point there will be more interaction across chain networks as they will occupy different spaces but might need to work together to soe degree. I am not technical but, having a common currency between them would also help all of them,i think as then they can 'cross-fields' more easily. not sure though tbh.
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It's hard to say, just know all the FUD out there and how negative things can be spun.
BTW, not sure if you noticed, but I tagged you in a post. Take a look and feel free not to take part, but wanted to make sure you at least noticed it.
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Fixing the exchange rate of sbd in relation to USD will be good as it will stop fluctuating. Nice writeup @tarazkp
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I'm doing that still!
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This whole post is excellent, but this ^^ part goes beyond the specific topic and hits on something universal. Discussion is vital, as is sharing what we know while being open to feedback and the idea of co-creation on a global scale. This is what excites me about crypto, Steemit, and this time in the world.
Keep being you. Steem on!
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Estás hablando de cambios profundo, @tarazkp, y la mayoría de ellos pasan por un tiempo y dedicación. Observo que cada día hay más integrantes en esta comunidad y me pregunto que tan bueno podría ser este fenómeno, en cuanto a lo económico. El mercado de las criptomonedas es un futuro que ya está aquí. El steem tiene ya un lugar asegurado en el ecosistema criptográfico. Realmente gracias por compartir tus inquietudes.
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Nice post @tarazkp
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