RE: Beyond SBD: A Stablecoin for the World.
thanks for explanations about difference of SBD and stablecoins! :)
We also need to demand to our witnesses to consult an economist before making decisions about our currency
I also feel like a lot of people on Steemit talking many things mostly out of wishful thinking (and often
rather more like cheerleaders), without even bothering to as much as do sufficient research on economics basics (i.e. everything already available online in free access), what to talk about actually consulting with economists.
also good point and comparison with Bonds! personally I have also recently written on this subject matter.
indeed, there is a lot of confusion on many things (in fact even within the Whitepaper itself). for example, author of this post writes:
SBD has been successful at providing a means of value storage and transfer in Steemit because it’s backed by STEEM. Naturally, the Steemit community has faith in the success of STEEM and thus are willing to accept anything backed by STEEM.
as I can udnerstand he means that SBD is "backed by STEEM". (although IMO it should be opposite: STEEM backed by SBD, no? if we are talking that SBD is a stablecoin pegged to USD; that what it supposed to be as I recall, to provide the stability, precisely because it is pegged to USD)
however, if so, what is STEEM itself backed by? :)
this comes to the matter of what constitutes STEEM's value and what influences its price.
now as I can see current STEEM coin price is ~$0.30 and looks like keeps dropping further down.
so, if SBD is "backed by STEEM", then its own value (price) accordingly drops too. (and it does seem so according to CMC)
although in my understanding, STEEM is "backed" by the Total worth of All the Circulated STEEM worth in BTC, i.e. tradeable on Exchanges! (in this regard, all the "Powered Up" STEEM, "locked" within Steemit - doesn't count, since it is NOT involved in trade on Exchanges but instead being held as Stakes or Bonds or as ... crypto tokens in some similar Lending platforms! :D)
while for SBD to be actually a "stablecoin" it must be actually really backed by USD !!!
that is like USDT allegedly keeps the EXACT amount in USD on their bank accounts (supposedly proved by audits) 1 to 1! while as I know (let someone correct me if I' wrong) - there is nothing mentioned or said that SBD has any such "back up" in USD. therefore, it is not even appropriate to use phrase "USD pegged" or as it is said in FAQ:
Steem Dollars - Steem Dollars (commonly abbreviated SBD) are liquid stable-value currency tokens designed to be pegged to $1 USD. Steem Dollars can be traded with STEEM...
LOL! :D "designed to be pegged to $1 USD" ? that's somewhat tricky and elusive verbatim, to put it mildly. it is NOT even said clearly "pegged to $1 USD"!
neither it is mentioned anything at all anywhere that there are some back-up sums of USD kept somewhere on actual bank accounts, supposedly equal to current Circulated Supply of 13,078,166 SBD (according to CMC). besides, as can see on the Exchanges which trade SBD, NON of them actually trade it to any fiat currency (except Korean Wong?)! especially to USD directly. it is also not being traded to any cryptos other than BTC mostly, well, supposedly to BTS too (on OpenLedger DEX) - but Volume is ZERO. :D
in fact according to CMC, SBD can not be also traded to STEEM there either.
(well, yeah, on BlockTrades perhaps - which is not listed on CMC, thus practically acts more like "internal exchange" for Steemit)
so, SBD is quite a peculiar crypto coin, not really much used (if at all) anywhere else than on Steemit.
with present Market Cap at $10,060,750 USD
(and Circulated Supply of 13,078,166 SBD )
while STEEM has $92,908,772 USD Market Cap - that's some >9 times more than SBD.
if SBD "backed by STEEM" - then shouldn't be current price of SBD be accordingly quite higher than its present price of $0.769278 USD? or else I'm quite confused by that such statement that it is "backed by STEEM".
but I do agree with your assessment:
SBD is not a stable coin
first of all, because as I know, Stablecoin must be backed by equal sum in Fiat currency - which is not.
if though we are talking about it being "cryptocurrency backed stablecoin" (as post author wrote) - then de facto both of them, SBD and STEEM are "backed" by BTC which is total worth on Exchanges, thus pegged to BTC price. then it is somewhat questionable whether or not it is appropriate to call it a Stablecoin either, since both of them fluctuate along with BTC price to USD (and in FAQ word "fluctuate" used several times for SBD). in other words, it can hardly be considered "stable". :)
True. SBD is not pegged by any mechanism from the US dollar. The US dollar is only a reference value to determine how much STEEM to pay during a conversion. The floor comes from the backing from STEEM (the ability to pay the debt). There is no upper ceiling and thus no upper peg. High price is a good thing as debt can be issued at a lower cost. Essentially the STEEM economy is getting a discount on issuing SBD with high SBD price (more bang for the buck). Witness manipulation of the peg has weakened the ability to cover this debt by overprinting SBD and preventing conversions (SBD burn when we could afford to do it). We could have had a conversion of 1 SBD to 1 STEEM if it was made available. But since witnesses and Steemit Inc refused to reinstate SBD conversions (to artificially inflate SBD supply), now we have 3.3 STEEM creation to every 1 SBD conversion. I wrote a post on bringing back the SBD conversion long ago.
https://steemit.com/steemit/@socky/should-we-bring-back-the-sbd-convert-to-steem-option
Yes, I was really mad about making SBD print to 9% debt, it is a terrible idea. How did that ever get accepted!
A witness suggested it and Steemit Inc accepted it. Just that simple. No consulting economic experts. I argued that it was not a good idea, but no-one listened to me.
Keep in mind that I don't blame the witness for suggesting the concept. We need new fresh ideas. Some of them might actually be good.
However, I blame all the witnesses that accepted HF20 and Steemit Inc because they didn't bring in an economic expert to evaluate if this would work.
Edit--
Actually, I believe it was discussed on GitHub and then announced before HF20 release. The problem about discussing economic decisions on GitHub is that it is the wrong forum for such discussions. GitHub has plenty of programmers and tech experts, but it is not the place where economic experts hang out. You get a bunch of devs on GitHub discussing what they think is a good idea for economic changes, but they might all agree that it is a good idea because they don't have the economic experience to know that it is a bad idea.
wow.......
One thing to remember from this change is that SBD will continue to be printed FOREVER. This is because the price feed will keep steem price at under 10% of the market cap no matter what, and SBD stops printing at 10%.
It is almost at a standstill now. There are more dynamics. When people were selling SBD in the internal market instead of converting it since that option wasn't readily available to most people, guess who was buying up all that SBD? Whales. All you had to do is look at their wallets. They have been buying and hording that SBD for a few months. They collected so much it is staggering. Now they are selling. They are smart enough to spend all this time to collect SBD in anticipation of the STEEM price drop, you can bet that they are smart enough to slowly convert that SBD so not to cause a collapse of the SBD. They are not dumping all at once to trigger that haircut. As long as they don't trigger that haircut, they can profit.
What was really disappointing is that steering people to the internal market by making the internal market link available in each wallet while not allowing conversions in the same wallet only benefited the whales. People sold their SBD on the internal market at a fraction of the price that whales are now getting for that same SBD.
Enjoyed your replies on this post immensely, thanks for insights! When you say whales, how many people are you approx. talking about? that's a dismal goal, sheez...;(