RE: Steem experiment: Burn post #243
- Buy some
- Buy STEEM, increasing the STEEM price so that SBD has stronger backing
- Convince other people to do the same.
- To the extent #3 is unsuccessful figure out what changes need to be made to Steem or its marketing so that people view it as a good thing to buy.
There is a difference between structural imperfections in the peg where we can reasonably discuss tweaks that might improve it, and STEEM cratering because its value is not well-regarded by the the market. SBD isn't pegged by magic, it is ultimately backed by the value of STEEM.
To some extent this is related to structural imperfections, specifically the lack of an upper peg which led to rampant speculation and an explosion of the SBD supply far beyond what people actually needed for stable value. Attempts by some of us to make improvements to actually peg SBD to $1 and shut down the pumping were met with push back from people who loved the idea of overpriced SBD as a free lunch for authors. We warned about a boom-bust cycle and that is exactly what is playing out (specifically the bust part now).
Nevertheless, in the short term, there is little that can be done other than hope the STEEM price goes back up, or at least holds while the SBD supply is wound down. In the future we can think about introducing an upper peg to stop these boom-bust cycles, if we can overcome the objections of the free-lunchers.
So you are trying to tell me that SBD is now trading down around $.92 BECAUSE there was no upper peg on SBD? That doesn't make a whole lot of sense...
In fact it makes almost zero sense.
It is trading freely on exchanges, which means it will deviate quite wildly from it's intended peg on steemit.com, no?
But I wouldn't go as far as to say the reason prices are currently trading at $.92 is because there was no upper peg. NO, they are trading at $.92 because they are trading freely on several exchanges, and everything is going down right now that is trading on exchanges.
It may not make sense to you but it is absolutely correct. The only reason the supply got over 15 million and stayed there was the massive pump and continued holding after the fact in the hopes of another pump. Why else would people buy SBD at $5 (and then $4 and then $3, etc.) unless they thought it has going to go back to $10? And the whole reason for thinking it may go to $10 is the lack of an upper peg.
There is now over 9 million on Bittrex alone with $100K+ being sold every day after day because the pumpers and those who got burned by the pumpers (and/or their own greed to be fair) have finally thrown in the towel. Eventually this overhang will get resolved as the bust part of the boom-and-bust cycle plays out, but it won't happen instantly.
That's not how it is suppose to work. The conversion feature is supposed to provide a floor on the price because people will buy cheap SBD (say at 99c) and convert it. That does indeed work for reasonable quantities, but it doesn't work when the SBD supply gets absurdly bloated in a boom and then too heavily dumped in a bust.
How does one convert SBD to steem these days? It appears that feature is gone from my wallet now.
You have to use either cli_wallet or steemconnect. Here is a guide to using steemconnect: https://steemit.com/sbd/@timcliff/how-to-convert-sbd-into-steem-using-steemconnect
Thank you Mr. Smooth. On an unrelated note, how confident are you that SMTs will be successful for steem? By successful, I mean do you think they will bring in significant demand for steem and significantly increase the price from current levels?
I am not highly confident. It is a token system and there are many of those on different blockchains by now. It has some interesting differentiators, so I don't rule out that it could catch on a big way, but I don't see it as guaranteed by any means. To be a bit more specific, I don't think SMTs in and of themselves will do much at all, rather it will depend on useful applications being built to use them, or communities built around them, and such applications and/or communities becoming big enough to justify a high value for their respective tokens.
I see. On an unrelated note, I see SBDs are now trading at $.79.