STEEM DOLLARS "GONE ROGUE":SBD PUMP AND ITS IMPLICATION FOR STEEMIT PLATFORM ?
The steem ecosystem has been designed to work in a particular way with each and every elements assigned to play their different roles in keeping the wheels of the steem blockchain rolling. The most significant elements being steem, steem power and the steem backed dollars
Just like in some fiction movies where an operative is trained and given specific orders to follow and adhere to stops carrying out those laid down orders and no longer adheres to protocol and instead does things out of their own volition, SBD has gone rogue.
Its no more news that sbd has pumped way beyond our expectation and still holding strong, still looking bullish, doesn’t seem to be getting back into the $1 range anytime soon. Whats the implication of this for steemit platform? Is sbd rewriting the steem’s platform whitepaper?
EXCERPTS FROM STEEM’S WHITE PAPER
The Steem community provides the following services to its members:
A source of curated news and commentary.
A means to get high quality answers to personalized questions.
A stable cryptocurrency pegged to the U.S. dollar.
Free payments.
Jobs providing above services to other members.
SOME MORE EXCERPTS
The primary concern of Steem feed producers is to maintain a stable one-to-one conversion between SMD and the U.S. Dollar (USD). Any time SMD is consistently trading above $1.00 USD interest payments must be stopped. In a market where 0% interest on debt still demands a premium, it is safe to say the market is willing to extend more credit than the debt the community is willing to take on. If this happens a SMD will be valued at more than $1.00 and there is little the community can do without charging negative interest rates.If the debt-to-ownership ratio is under 10% and SMD is trading for less than $1.00 then the interest rate should be increased. This will encourage more people to hold their SMD and support the price.If SMD trades for less than $1.00 USD and the debt-to-ownership ratio is over 10% then the feeds should be adjusted upward give more STEEM per SMD. This will increase demand for SMD while also reducing the debt-to-ownership ratio and returning SMD to parity with USD.Assuming the value of STEEM is growing faster than Steem is creating new SMD, the debt-to-ownership ratio should remain under the target ratio and the interest offered benefits everyone. If the value of the network is flat or falling, then any interest offered will only make the debt-to-ownership ratio worse.In effect, feed producers are entrusted with the responsibility of setting monetary policy for the purpose of maintaining a stable peg to the USD. Abuse of this power can harm the value of STEEM so SP holders are wise to vote for witnesses that can be counted on to adjust the price feed and interest rates according to the rules outlined above.If the debt-to-ownership ratio gets dangerously high and market participants choose to avoid conversion requests, then the feed should be adjusted to increase the rate at which STEEM paid for converting SMD.Changes to the interest rate policy and/or any premiums/discounts on the STEEM/SMD conversion rate should be a slow and measured response to long-term average deviations rather than attempting to respond to short-term market conditions. The blockchain is paying liquidity providers for their service in absorbing short-term demands.It is our belief that these rules will give market participants confidence that they are unlikely lose money by holding SMD purchased at a price of $1.00. We fully expect there to be a narrow trading range between $0.99 and $1.01 for SMD under most market conditions.
excerpts from the white paper shows that SBD is supposed to be a stable currency of the steem’s blockchain that is pegged to the value of USD give or take. Every now and then a little inflation is expected which as stated on the white paper they are measures put in place to checkmate this .
I might be wrong here but I think this is the first time SBD has passed the $4 mark, reached an all time high of $22 in some japanese exchanges and currently trading on most exchanges at different prices that suits it, the lowest I have seen so far being $6.5, SBD is as it is, doing what steem is supposed to do.
With this ongoing situation with steem dollars, a couple of questions going through my mind are
1. Are the steem platform witnesses working to get sbd back to its supposed peg value with the measures put in place to check inflations like this?
2. Is this just a pump or sbd is finding its true value?
3. Will sbd ever get back to the $1 range as it was originally created to be?
4. Is sbd interchanging roles with steem on the platform?
5. What will be implication of this on the steemit platform if sbd keeps mooning?
I truly would like to have these questions answered and I hope to get knowledgeable steemians like @jerrybanfield @deanliu @donkeypong @stackin @ats-david to share their insight and their opinion on this is, and probably help provide answers on this issue.
DID WE SEE THIS COMING?
Sbd is a cryptocurrency and with cryptocurrencies you can never really tell, can a cryptocurrency truly be pegged? We have witnessed bitcoin surpassing all predictions for year 2017. We have had steemians like @gokulnk @l0k1 @etcmike @hotsauceislethal @dan-atstarlite and especially @stephenkendal all predict steem to get to atleast $4 by the end of this year, well that hasn’t happened yet and the year is just some days to ending so I guess with this sbd situation their predictions were right in a way but just not the right way.
The saying about water always finding its course seems to hold true for cryptocurrencies, they will always find their true value. Time will tell if this thing with sbd is just a pump or sbd growing a mind of its own, refusing to be pegged to usd value and finding its true value .all in all this is good for the steem blockchain and I dont think those laid down measures to keep sbd in check should be unleashed at it. What do you think? Would love to have your opinion in the comment section
image source 1
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These are just my opinions:
I don't think they are and that's ok with me for now. There are great benefits to SBDs trading high right now ie. post payouts, upwards pressure on STEEM price. As longs as witnesses maintain a steady price feed between STEEM and usd... they are doing their job IMO
pump
Yes
No
People will sell their SBDs for lots of STEEM... driving the price of STEEM up
" A stable cryptocurrency pegged to the U.S. dollar"
Pegging STEEM to the US Dollar is unwise for several reasons:
The USD is a depreciating currency.
The USD "value" is controlled by people/corporations/governments which do not want a competing currency.
By definition, pegging SBD to a devaluing currency devalues SBD.
In places where the US dollar is taxed (and SBDs go untaxed) the SBD should have a "value" greater than the USD.
If the SBD would have been designed to maintain purchasing parity to the USD from 1913, then 1 SBD would buy about 25 gallons of milk, 7.5 gallons of gasoline or 1/20 of an ounce of gold.
I would rather have people holding things that hold value rather than holding price.
I think that if the USD was going to lose against crypto the algorithm would be changed to make it independent and only work in correlation with Steem...but this is actually a great point!
Exactly!
the USD loses at an average of 2% per year
But that's how it's designed to be! SBD never was supposed to be the "main currency", Steem was supposed to be that. SBD was designed to be a token with a fairly static value so that people could be sure of the amount of money they had without worrying about fluctuations.
I mean, that's one of the main drawbacks of crypto right now! You may pay for your coffee with BTC when it's at $16k, but by the time the transaction completes, btc might be at $18k. So now you have to handle all that complexity. SBD was supposed to be a solution to that problem.
SBD doesnt have the transaction bottleneck problem that BTC has, so purchasing latency is quite comparable to the USD
Hypothetically, if SBD reaches $1000, I can still sell a pound of tomatoes for 0.001 SBD. The SBD will still serve the utility needed by both the buyer and the seller.
The only problem is reducing price volitility (stabilizing prices)
As with all currencies(crypto, central bank fiat, seashells, etc.), there will always be some level of volitility. The volitility will decrease with time and use. Eventually, SBD and STEEM can reach some level of parity but that comes with a reduction in volitility.
Hard pegging the SBD to the USD will mean the people holding SBDs will have the same ammount of control of SBD value as they have with USD value, which is none.
Telling people: "This new STEEM crypto currency is pegged to the USD, so you'll only lose about 2% of your purchasing power per year!" makes it hard to convince people to use it.
The most beautiful part is that the design can be tweaked to fit the needs of the users.
As every reward is worth 8x times what it's supposed to be. I'm not complaining.
As long as it's not creating a bubble like BTC, I'm fine with it.
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Great update. This question really needs a proper answer. Upvoted and Resteemed. @mrfelix sends his regards.
Wish I could give an opinion, but alas....I don't know jack!
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Flip them for Steem, problem solved XD
Won't it go down as more people get rewarded? Sorry if it is a stupid question, Im pretty much a noob when it comes to this things. Anyway Everything that goes up, must go down. On the other hand people willing to pay $10 right now for a SBD might be a sign it could go much higher. Not a bad idea to hold some.
I think that it is a bad idea to hold some right now...this clearly is a sell time (you of course can be greedier and go for the ATH 35 dollars mark but do you truly think people are gonna be that crazy to buy SBD for 35 dollars?:P)
Yes, they are crazy enough to pay 12, 16, there is really no diference, since the coin is supposed to be worth only around $1.
Unless alot of people join Steemit all at once and start posting and getting rewards, the price won't crash, it is slowly coming down, too slow maybe. So slow it might not return to normal. my two cents on it.
Imo it is not a problem at all...The SBD is pegged only from the bottom for a reason - it is enough. SBD is just a coin that is backed by Steem up until 1 dollar price. There is no rational reason to buy SBD when its too much over 1 dollar (and actually a lot of to sell it when it costs so much). It is BOUND to go down again and the only ones that are going to pay dearly for that are those that were buying SBD at those levels. it could be problems for shops (they would need to stop buying the SBD for a while too) but SBD is not supposed to be any kind of MAIN currency right? The shops could be accepting more cryptos. Or do I miss something here?