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My friends @tcpolymath and @eonwarped showed up to my last post and correctly pointed out the mistake in my little explanation. I was trying to explain things about corn while holding popcorn. Hence why the message I was trying to convey just became confusing.
This is the absolute best way I can describe the plausible scenario, but Instead of using apple stock or any other controversial securities, I will use STEEM and BTC. Keep in mind that the exact valuation of STEEM and BTC won't be accurate, because what's important here is the logic behind this, and not so much the accuracy of the valuations of the coins.
Mary the hard working Steemian
Is hearing from expert traders that It might be a good idea for her to consider selling her STEEM at today's price. This means, that she would send her 100 STEEM tokens to an exchange, and get herself some Bitcoin. Now, let's say for the sake of argument, that 1 STEEM token equals 0.01 BTC - Granted that would be crazy, but please, this is so the math is as easy as eating cake.
Mary thinks to herself, I'm going to sell my 100 Steem Collect 1 BTC ( 0.01 x 100 = 1 ) and wait for Steem to go down in value.
Before we continue with the little story about Mary and her Steemian dreams, I should point out some things about Mary. She believes in STEEM, she has a long term mentality and she wants to grow her influence on STEEM so that one day she can help others. She's not too interested in selling her Tokens for FIAT at the moment, because that would ruin her plans.
In other words, the reason why she is selling her STEEM is because she wants to become a minnow one day, she is currently a plankton, and she's working hard for her goal.
If her plan works
It could go something like this: She could be holding the 1 BTC she now has, until STEEM reaches half of the valuation it had when she sold it. That would mean that 1 STEEM would be worth 0.005
0.01 / 2 = 0.005
The moment STEEM drops to the value she wanted, she swoops 200 Tokens with her 1 Bitcoin. She celebrates with her friends, orders pizza, and gets drunk. As any responsible adult would do after you've successfully managed to double your account.
If her plan fails
It could go something like this: She could be holding on to her 1 BTC, then when she went to sleep STEEM doubled in price. She realizes that she's gonna buy less tokens with her 1 Bitcoin, but she does not want to be left behind. She decides to buy and she ends up buying 50 Tokens.
50 * 0.02 = 1 BTC
Mary is upset, the pizza delivery never happens, she drinks cheap whiskey and loses motivation.
But she is still has 1 Bitcoin... right?
Yes, she does. She could sell the Tokens and get her 1 BTC out at any time. (I'm assuming no fees) - But, she wanted to grow her account, shes on this wagon long term, and she wants to grow influence on the platform. You see, Mary is a dreamer, she has great ideas, but the whales ignore her. However, she has a plan, this is her plan.
What if STEEM doubles again?
Yes, she still made more money in BTC. However, she remains a plankton account with limited influence on the platform. And now, it's even harder to collect 1 STEEM token, so to reach her 500 SP goal seems decades away.
OK @meno, you are being crazy
Yes, I grant you hypothetical Mary is a figment of my imagination. But, she is meant to represent the long term thinkers of this platform and present a possibility on the downside to the potential move some might be trying to make.
I was just telling a friend a little while ago that I'm done gambling. Now, I know I just said that, and someone might say. "But... @meno everything about life is a risk" - Yes, but I rather build something the long route, with a strong foundation. I want it to be sustainable. I don't want to rely on betting on the market to grow my account, and to one day fulfill all the plans I have for this platform and the ones that are one day to come.
Does that mean I'm Mary?
Hrmmm.... now that I think about it. Yes, I seem to be the Mary of the anecdote. But, since this is kind of akward, and I've cornered myself like this, I will make a small correction. This whole time I've been talking about Mario...Mario. You just read it wrong.
• What's the right move for Steemians?
• Very Special Songwriter Shop Talk Featuring Serena Matthews - paintingangels
• Comparison is the Killer of Joy
• Remembering Pascal - Taking care of our planet
• Why the hell not? - Trying out Dlive
So if we assume that Mary knew she would buy back in at $2 (a stop-loss) we can characterize this very simply in a way most people will understand:
Mary made a 50 Steem bet that the Steem price would go down, and lost.
hahahaha My post in one line...
Haha yup! You need only add one more sentence:
But I think you have that in the post too.
Damn you @tcpolymath!! I both think you are awesome and my intellectual fencing partner atm.
/me sharpens the arguments for next round
Hi meno. I think you are burning yourself out or going nuts. The first post was fine as you explained it in the comments.
Hahahah you know something. Unlike others, I love the little challenges and I love teaching. Now, if I have anything good to teach, that's another conversation all together.
But I'm a huge believer in proactively seeking and sharing knowledge. So to me, this is not a bother, quite the opposite, I learned how to be a better communicator today. Maybe, I moved the needle just a tinge, but that's a mega win.
I can see that and any confusion from post one should be rectified now. You got yourself in a mess as you didn't specify properly and we are not mind readers lol. Are you sure you are not a lawyer as that is the kind of tricks they pull. Give you half the story and then change it.
I'm a practitioner of mind ninjistics... and this blog is a virtual DOJO...
;p
I gave you an upvote for the simple fact that Mary made another appearance today haha
Yes.. much respect for Mary...
Well no complaints here. For someone that's long on steem I don't think it makes sense to do this kind of trade at all. We all know timing the market is a foolish endeavor.
If there are funds one has available, it's easier to be disciplined about periodic buys at whatever the price is. In my case though, knowing how volatile this market is, I do the same thing, except that I only act on dips. Sure, I could be buying the dip all the way down, but since I believe steem to have more potential than the market gives it credit for, it makes sense. I'm going to come out ahead of pure dollar cost averaging technique when the price recovers. Still, it's a gamble but remember if you are dollar cost averaging anyway you are counting on an eventual growth of the token too.
Yes Eon, we can go back to being friends. I knew this could happen if we only worked together for the benefit of Mary.
You can be Mary or Mario, it's fine by me lol.
I think Mary should watch out about her first Bitcoin plan though. Historically, Bitcoin dominance rises to 50 percent against other coins, then falls back again, so if that proved right, it might be the turn of alts to move up against Bitcoin next.
Of course, nobody knows. :-o
Listen I spoke to Mary... I mean Mario.. he's sticking to her guns... I mean, his guns... keep on keeping on the right way. the sustainable way.
Im done gambling... I'm done
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