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

[reggaemuffin]

Can you read this post and tell me your opinion? https://steemit.com/steem/@buggedout/steem-dollar-will-fall-to-usd1-usd-here-s-why

That shows how SBD is currently in hyperinflation because of the high price. Would be interesting if that changes your opinion or enforces it even more :)

Comments

[eonwarped]

I won't speak for him, but this is exactly what I've been sharing with others already. It will go down by itself long run.

This is what has been supporting my view point of wait and see. The market clearly has not adjusted to this new state of printing.

The steem market cap supports this issuance too, so it's not a bad thing, it is working pretty much as intended.

[phgnomo]

I read it, and i think he make some wrong assumptions... Here is my comment there:

Hello @buggedout, i read you article, and i also wrote one with my economic perspective, and i wish that your read it too, so we may improve this discussion. (BTW, i agree that a high SBD price will damage the system)

But i have one thing to point out on your analysis:

Wouldn't the destruction of SBD increase the price? Like you said, SBD conversion to Steem destroy SBD, reducing its supply. I think the effect would be the opposite.

As the basic supply/demand economic law states that shortage of something makes it price increase, the destruction of SBD would have the opposite effect on its price.

If you add to the equation an increase of SBD market cap, that would also mean a demand increase, wich also drive the price up.

I don't think bolivian currency would be a good comparison, because there is some weird government influence over it, and supply and demand isn't exactly what if defining its value. If you check the chart of USD/BOB, you will see that the price doesn't move as other currency markets.

SBD actually is more valuable than a USD, not the opposite.

And one thing that maybe you didn't took in consideration on your analysis is that between Aug-Nov of 2017, the demand for SBD pretty stable, as can be seen on alexa.

At December, the traffic towards Steemit.com increased a lot, driving the demand for SBD and STEEM a lot higher.

The situation with the SBD price is a consequence of demand.

Check my analysis, let me know what you think.

High SBD value is not a good thing, definetly, but i think forcing an extra increase of supply/demand on the system might do more damage on the long run.

[reggaemuffin]

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

[phgnomo]

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.

[bulleth]

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.

[phgnomo]

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.

[eonwarped]

We came to the same conclusion but sounds like we were reading something different. I responded to your comment.