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RE: SBD/USD peg: Taking examples from the "real world" economics

in #witness-category • 6 years ago

No one converts anymore, but more is created. So no destruction, much creating implies price goes down. Not sure what you read...

6 years ago in #witness-category by
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     6 years ago (edited) 

    Let me try to pinpoint what i understood from that post:

    • The actual mechanism (printing more SBD) is hurting the economy, because its creating an hyperinflation.

    While somewhat true, we dont have a hyperinflation now, because the SBD is more valuable. The more SBD being printed os indeed devaluation its price, and that is working as intended.
    When SBD price reach below 1 usd, less SBD is printed and the valuation mechanism kicks in (interest and burning SBD through conversion) wich takes a while, but Will Bring the price up again. And then the cicle restart.

    • He states that we should have a mechanism now to convert SBD to steem, and that would Bring the price down.

    Wich is exactly the opposite. I would only increase the price, since It would reduce the supply.

    My other arguments:

    • The SBD price we have now is related to the increase of more people joining the platform, increasing demand on both STEEM and SBD. With the mechanism we have, the price will Go down, If we dont have an increase of more people joining steemit.

    • Implementing another mechanism to drive price down could work, but also could generate a sell so big, followed by a mass panic sell, that the SBD price could Go way below 1 usd, and i think i would take a lot more time to Go up again, since a lot of the demand would go to other places because of the price.

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       6 years ago  

      While somewhat true, we dont have a hyperinflation now, because the SBD is more valuable.

      So refreshing. The vast majority of the crypto space can not separate monetary inflation from price inflation. They are not the same thing.

      He states that we should have a mechanism now to convert SBD to steem, and that would Bring the price down.

      You have this back to front sorry mate. The proposition is to implement a new mechanism that allows STEEM to be converted to SBD at a rate of SBDUSD $1.00. The mechanism you are talking about has existed from the beginning, but is currently hidden from the Steemit UI.

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         6 years ago  

        Actually the majority of the crypto space doens't know anything about basic economics. They only go with the hype, and the promisse that they will buy lambos.

        Cryptos is a damn interesting economy ecosystem, with lots of different models being applied, but most of the people don't want to know that. And that is where they loose, when "investing" in things that don't have fundaments that make it have a long term value increase (like SBD)

        STEEM to SBD is the proposal of some witness (wich i think will probably have a catastrophic consequence), but @buggedout wrote about that the conversion SBD to STEEM should be avaiable now to avoid hyperinflation. At least that is what i understood.

        (SBD to STEEM possibility is made avaiable as soon as SBD is below 1 USD, as a mean to burn SBD.

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