SBD can be pegged to silver or gold or whaever instead of USD if we want. But the mechanism will still have the same flaws if conversion in the other direction is not added. For example, Golos (a Steem clone/fork) has their version of SBD pegged to gold, but it failed in exactly the same manner (too high and no good way to bring it down).
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Hey Thanks for the reply @smooth. I agree with you on this. I was not suggesting to peg SBD to silver or gold for the same reasons that you mention. My point was that silver sites modify price based on the dynamic price of silver.
My point is that SBD based stores should modify price based on the dynamic price of SBD. If so, then there is no need to peg to USD, or anything. Simply allow SBD to stand as its own cryptocurrency.
The thing is, no one would accept gold for a pizza, if chances are, the gold lost value on your way to the bank. In case of crypto currency, what if it drops 25% and you made a loss? You will have to raise your prices 25%. See steem gift cards, they have ultra high fees as they convert to btc and from there to usd. If they accept sbd with a strong peg, they can convert once every few days with less fees, or maybe at some point need no conversion.
Hey @reggaemuffin, much respect!.... My point is to "VALUE THE SBD", don't think in terms of converting to BTC or USD. That is a short term perspective., based on "what is it worth now". Think in long term perspective. Think in terms of wanting to hold STEEM AND SBD, Not trying to convert to BTC or USD.
Concerning your pizza/crypto example... if the pizza has a set desired USD price, and the crypto currency drops 25%, then yes, you have to raise prices 25%, and the prices have to be dynamically determined based on the current crypto currency price. This is just math and expected. This is because you value the USD price before your value of the crypto.
However, consider an asset that is based strictly on a cryptocurrency. Let's say a service sells monthly service for 10 SBD, without concern for the 'so-called' USD price of SBD. This service price of 10 SBD does not change.
This is why I keep saying "VALUE THE SBD!!"