It's cool how you just assumed I didn't know what I was talking about, and then wrote a novel to tell me that I'm wrong. I think you just mansplained me.
You can't remove the option to convert SBD to Steem without destroying the peg
Indeed. But right now people are converting in droves because they don't understand what it means. Steemit can remove the "convert" button, but leave the blockchain operation intact.
Be happy with the upturn, be patient, and the great forces of the Steem economy will return the peg shortly.
The forces only push the peg in the right direction if people understand them. Hence my post, helping people to understand them. We are all market participants, and I am currently participating in your mystical "great forces of the Steem economy!" It's actually pretty magical.
Please forgive me for 'mansplaining to you'. My actual intention was to mansplain to any one who did not understand the situation or for normal people, just explain. So that everyone that read it can not only participate in the solution but profit from the solution. Please note that this response was not directed to you. It was a response to the whole thread in general. You simply provided me with a good segue into the topic. BYW, how do you know that I'm not a woman? In which case you should have said 'womansplained'.
As for the removal of the convert button, yes, the blockchain would still function. I never said it would not. What I said is that the unique usefulness of SBD would be lost as the peg to USD would be destroyed. This solution would prevent people from converting when the price is above 1 USD. However, it would also prevent people from converting when the price is below 1 USD, which could potentially allow the value of the SBD to drop to 0 and destroy it even if Steem is strong. The convert button is a tool, and with any tool people do need to understand how to use it safely. So they don't disadvantage themselves. That is why I 'wrote a novel' not to embarrass you but to inject a bit of understanding into a thread that I hope will be read by many and of course maybe get a few upvotes.
Also, since when is 4 paragraphs a novel? It's like 10 minutes of writing.
All fair, you're more than welcome to write novels and I apologize for jumping on you like that. I said "novel" because Steemit doesn't display long comments very well and it takes up a lot more space than it could, but of course you didn't do anything wrong. Oh, and are you a woman? I could go change it if you like... ;)
My point is that if the blockchain operation still exists, then people who are technically savvy can execute conversions even if there's no button on Steemit.com. Surely you agree that the convert feature is an advanced feature that is more likely to be misunderstood than understood (just read the comments on this blog post if you're not convinced), and as such it's not unreasonable to take measures to reserve its use for advanced users. Removing it from the website would do this. The incentives to convert when it's appropriate would still exist, and the technically-savvy whales who have API access to the conversion feature would still easily be able to regulate the price of SBD. But it would save casual users from mistakenly losing 30% of the value of their SBD when the price is high.
At the very least, Steemit.com should hide it in some kind of "advanced features" section.
@biophil, Thanks for the apology. It takes a big man, or woman to apologize.
As for the display of long posts in Steemit, I fully agree. I’m reading your post and I’m looking at at a screen that is at least 3/4ths blank. I know it is supposed to be ‘clean’ and ‘uncluttered’, but it really is just a waste of space.
Moving on to the convert button, I still think the convert function needs to be in the control of the account owner. The purpose of SBD is to ensure that the contributors to Steemit receive a dollar (USD) of value for a dollar of work as defined by Steemit. Crypto-currencies are notoriously volatile. Being paid directly in a set amount of Steem would lead to periods of glut when Steem is up and periods of famine when Steem is down. Periods of glut would be OK for Steemit, people would still contribute. However, the periods of famine would be bad because contributors would not be paid very much and contribution would drop off. Being paid a variable amount of Steem calibrated to be equal to a dollar for each dollar of work done could work. The problem there would be the volatility of Steem could degrade your pay very quickly if the recipient was not on top of managing their currency. SBD was created to provide a stable store of value so that a dollar worth of work could be paid in a currency with a guaranteed minimum value of a dollar. SBD has no guarantee of always being equal to a dollar. Only a guarantee of being worth at least a dollar, due to the promise of the Steem Blockchain to pay a dollar in Steem.
So where it is nice to have a place move your money to that is always equal a dollar, SBD is not designed to be that place. I mention this because it is the only inconvenience that I see to the community. If you see any others, let me know. I would be interested in considering them.
With the convert button the SBD holder is guaranteed a dollar from the Steem blockchain. Any thing over a dollar gained by selling it is gravy. While I like my gravy and I hope everyone gets their gravy, loosing the convert button looses the guarantee of a minimum value of a dollar with the convenience of being delivered to you at your chosen time. Furthermore, if the price of having the convert button is that some will only get what they were promised and not any extra, I’m OK with it. I will do my best to explain to people how to get their gravy. So loosing out on the extra does not happen but I won’t advocate getting rid of the button.
I do agree that the convert button is not well understood by many. So let me propose a counter solution to removing it. What do you think about Steemit placing a ‘tech-tip’ icon next to the button that when clicked brings up a message explaining what conversion is and how and when to use it. That way we keep the button and hopefully educate people on how to use it.
No! The converter is guaranteed to receive a dollar in expectation (more or less). In practice it will be more or less than a dollar, depending on the fluctuations in the STEEM price between the time the conversion is requested and the time the STEEM is delivered.
Now I know many people do like to play the lottery, but in practice I very much doubt that the typical user of Steem is ever served by using that function and receiving some unpredictable amount of STEEM more or less than one dollar. It is part of the mechanism yes, but it can (and should) be left to sophisticated users and traders who can access it via other means such as the blockchain (cli) tools, vessel, etc.
I'm pretty sure that at last 90% of the time when the 'convert' function in the UI is used, the person doing it does not understand how it actually works, what they will receive, and how it is determined. Needless to say I agree with @biophil about removing it from the standard UI, or at a minimum hiding it in an advanced section.
Do you know a any source material that describes the how this works? I have read the white paper. Which tends to be a bit vague at points. Also, I've been supplementing this reading with people's interpretations of the white paper and other sources or sadly, maybe just what they made up. After digesting this information and disregarding much of what I read, I came up with what I thought was a coherent system.
My understanding of when the rate was determined was at the end of the 3.5 day period, not as you stated, over the whole period (my interpretation, please correct I am wrong). I have read that the purpose of the waiting period was to prevent gaming the market by large transactions of Steem and benefiting by a coordinated conversion of SBD. So if what you are saying is that the rate is the average over the waiting period, then it makes sense that disrupting a market for the whole 3.5 day period is harder than just at one point. Again, 'taking the average' is just my hypothesis. One that needs tested. Unless you can shed some light on this?
Anyway, this is the sort of logic I've been using to deduce the working of this ecosystem. I wanted to test this hypothesis but I still have not found where the conversion rate is published. Although, I was able to find out that it is the median value set by the elected 'witnesses'.
So, in conclusion I think I will go back and reread the white paper and if anyone can point me to any other official documentation describing this system, I would love to read it as well. Also, thanks @smooth for pointing out where I need to focus to clarify my understanding.
BTW, I still feel that if you hide the convert button, people will not even know that it exists and that will slow down their learning of how this system works by giving them a false sense that they already know everything. When in fact there are whole functions that are available to them with out them even knowing that these functions exist. That has always been the problem with CLIs. At least with a menu you can see the functions that exist and do some reading about them in some what of a random access order. With a CLI you have to start from the beginning of the manual and read to the end or at least until you find what you need. Of course, there are indexes to help but people will not look to an index without a prompt that a function exists.
Every hour the blockchain takes the median of the witness price feed inputs. After 3.5 days, it takes the median of those hourly samples (over the entire 3.5 day period).
So, yes it is more difficult to disrupt the price over that entire period, but the resulting payment may be more or less than $1.
Unfortunately the state of documentation on the Steem platform is not the greatest and there have been many rounds of changes and adjustments, not all reflected in documents, which in any case are often not complete. Unless you can work it out from the code itself, often the only way to find out how the system works is to ask someone who is familiar with the history and current rule set. Not an ideal answer, but it is the best I can offer.
Your counter solution is fine, but that explanation would need to be both concise and correct enough that people would actually read it, which is hard. Hiding the button in "advanced features" is still better, IMO.
You write
That's precisely how it works, except the Steem is paid as SBD. Everything having to do with the rewards pool is denominated in Steem; the rewards are only converted to SBD at the moment of payout. Back when Steem was 10 cents, people were being paid a tenth of what they are now.
Yes, 'concise and correct' is very important.
What I was getting at in the quoted text is 'directly in Steem', not in SBD that is effectively an IOU for Steem. The overall semantics of this passage is meant to be an argument for why SBD exists in the first place. Does that clear that up for you? Basically, it is an explanation of why being paid in Steem directly is a problem and the solution to that problem is SBD.
@voicie-of-reason I'm still new to Steem and still trying to figure how it all works. Your reply cleared up a ton of questions I had. Thanks for writing it.
pocketsend:501@toadmeadow, pocket all around!
Successful Send of 501
Sending Account: biophil
Receiving Account: toadmeadow
New sending account balance: 905393
New receiving account balance: 500
Fee: 1
Steem trxid: d40af1e86fd86d5c9292672888f5bea6db60b6bd
Thanks for using POCKET! I am running this confirmer code.
Your Welcome,
Its nice to be appreciated.
I read your article and was not sure why you were advising not to press the "convert" button. Was it because it would be a waste of cryptomoney for me and that I would make more money selling thorough the market, or was it because you thought the price being out of wack was damaging to the economy as a whole, and thus I'd add to the problem by "converting" SBDs? In other words, I wondered if you were advocating your position on ideological or practical grounds.
The reply from @voice-of-reason cleared that up for me. So please don't get butthurt from his elucidating comment. Maybe you can learn to bring more clarity to your own writing from his feedback.
Sorry, I'm more than happy to be unbutthurt -- thanks for your comment.
Really both, because the incentives are aligned. Doing the right thing for you does the right thing for SBD.
Thanks for the civil reply. Your article makes perfect sense to me now, and I see why the Steem designers did things the way they did. Steem is still new, and the people in it are on the bleeding edge of social media. Like most things designed by highly-technical people, the user-friendliness of Steemit still has a way to go until "even your grandma can use it."
Posts like the article you wrote are a necessary intermediary step from Steem being a geek toy to making it accessible to the masses. Cheers!