You know what they say. You can't teach a sheep economics. Actually, no one really says that but the fact that so many people are favor of having a SBD that has no use case other than to be a speculative asset really surprises me. I mean everyone raves about Steem's use cases while SBD (that other currency) really has none. You can not really use it as a means of exchange because it is not stable enough. It doesn't work as a good peg because the supply is too scarce. Hear me out.
Let's go over some of the pros of keeping SBD as a speculative asset and dissect why these aren't really that great of a reason.
Post Payouts Would Go Down
This is not exactly true. Since SBD production is dependent on the Steem price in USD, you would still receive the same amount of SBD and Steem unless the Steem price would change. But the argument here is that you won't be able to trade SBD for as much STEEM or other assets. The argument is that you lose the "arbitrage" opportunity.
But this "arbitrage" opportunity is based on the fact that SBD should be $1. So the suggestion here is that the price SHOULD go down to $1 in the future. But the free market could keep at $5 forever, so your perceived "arbitrage" is based on that the peg will be enforced in the future. So basically the argument is greed. You can make more money now and then once you got your fill, you can use the instrument as it was intended.
Or the free market could continue to speculate on the object and your "arbitrage" opportunity should be realized. I mean eventually as Steem goes up more SBD will be introduced to the market. But this reduces again to greed. Just long-term greed. In the meanwhile, SBD will suffer from wild swings in price and to the whims of the market, so essentially a gambling tool for "arbitrage".
But let's look at the ethics behind this idea of "arbitrage." You are essentially hoping for suckers to buy into an instrument that is unstable, knowing that it should be worth less in the future as the Steem price raises. That's not very nice. But trading is a cutthroat world.
This Would Punish Speculators Of SBD
And what's wrong with that? Trading is a cutthroat world. People should research assets before they invest in them. The whitepaper discusses SBD as an instrument that was intended to follow the value of the US dollar. So, if changes were made that made that a possibility, investors shouldn't be unhappy. They took a gamble that a pegged instrument would stay unpegged. And they know the risks of investing. So, are there any really problems, here?
Also, as Steem increases in price and SBD becomes more available, they would get punished anyway. Basically you are arguing in support of a gambling market. Granted that we haven't found a use case of SBD that does not involve trading in order to get a more valuable asset with actual use cases, well, you can see why I call it a pointless speculative asset.
This Would Punish Authors
Since, we are not implementing any sort of peg today, you have plenty of time to cash out that valuable SBD. If you are reliant on the price of SBD for your livelihood, I mean maybe you should make more prudent financial decisions. Especially since that would be gambling on SBD's volatility. If the whole market crashed 90% tomorrow, SBD would be $1. There's the problem with your speculative asset.
If it was stuck at a dollar, authors could make more rational decisions with regards to how much money they are actually making rather than being stuck at the whims of the market. And if the market crashed, authors would have more of their value preserved than with high SBD which would crash to around a $1.
User Retention Could Drop And Growth Would Slow Down
Since the only use cases have involved "arbitrage" and gambling on price, I not really sure I would really want the people around who only use the site because SBD is in that state. But a stable SBD might appeal to non-investors who want something connected to their precious fiat money. Unstable SBD adds more confusion and is less user-friendly. Being more user-friendly could help growth but maybe it won't.
That being said, this argument is speculative and is dependent on users who are greedy people. Just ask yourself. Are you the type of person who would leave Steemit if SBD was stabilized at $1? Because I find that kind of person unhealthy for the development and health of a community that cares about people over money. Because those communities are the ones that last.
Demand For Steem Could Decrease
This sounds like another argument derived from greed. You really don't have a good reason, outside of that? Well, let's say the value of SBD falls to $1. Now there's only one speculative asset on the platform rather than two. There's less competition from SBD amongst the speculators outside of Steem. Now they might chase another asset, but how many people are speculating on Steem solely because of the SBD price?
Sure the demand might go down, but people don't know Steemit as the place where SBD pumps and provides good opportunities for "arbitrage" of speculative assets. It's a social media platform that pays you to produce content. And again, if the price does go down, we purge some of the greed off of this platform. That's not a bad thing.
High SBD Is Growing The Community Now
First, correlation does not imply causation. Basic statistics here. Second, the price of Steem has also risen. So you don't know whether the correlation belongs to Steem or SBD. Third, let's say that you could determine that SBD and increased user growth were indeed related independent of the price of Steem. Is the price of SBD going up resulting in more users or are more users and activity resulting in a higher SBD due to its scarcity?
These are all questions that need to be addressed with statistic facts (rather than speculated about) in order to provide enough evidence of this. As Steem becomes more mainstream however, less people will care about high SBD because the Steem token is the main draw and they will be less familiar with investing in the cryptospace.
Final Overview
So, let's take all of these pro-unpegged SBD arguments. We see that all these reasons can be reduced down to one reason. Money and the greed of people to maximize that money. No use cases are really discussed and no real benefits can provably be observed from leaving SBD unpegged. If the asset serves no purpose but to be a speculative asset which Steem already is and is easier to manipulate than Steem due to its scarcity, then is there any point in having it? We should either scrap it or enforce a strong peg.
But perhaps you need use cases for SBD to be fleshed out if it were pegged to a dollar to be convinced. The first use case is that it becomes an instrument for trade. You can now develop an economy on a resource that has it's value preserved and stable. That way you can buy and sell things without the fear of losing value. With unstable SBD, a pizza could be worth 10 SBD one day and 2 SBD the next day. The person who the bought the pizza isn't happy.
With unhappy pizza buyers, people would be less encouraged to circulate SBDs and we lose out on developing a potential economy on top of the Steem ecosystem. A reason that there is little development of an actual economy within Steem and the cryptospace is because the value fluctuates and encourages people to hoard rather than spend.
The second is that it can be used as a protective instrument. You have a feeling that the cryptomarket is going to crash? With pegged SBD, you can preserve nearly all of the value in the asset. With unpegged SBD above $1, you are going to lose some value when the SBD crashes towards $1. Volatility is good for making money when you have a stable instrument to trade against. Why not have a crypto-dollar instead of moving into tether (with all the doubt there) or fiat money? That might drive more people towards Steem.
There are actual use cases here beyond that of the Steem token. That's the reason a pegged instrument was purposed in the original whitepaper. Because those sorts of things are useful. But if you would rather have an instrument that satisfies greed rather than one that has useful properties when stable, then that's your priority. I am just a long-term thinker who is sometimes wrong. But more often than not, vision is rewarded over short-term and money-centric thinking.
But this is a community decision and I recognize this is a democratic process. I can't make your mind up for you. I can only make my case. But if you do agree with me, I encourage you to vote for witnesses in favor of a hard-pegged SBD as they are the ones who ultimately update the blockchain with changes.
I am happy to hear your thoughts, concerns, and questions. As normally, 100% SBD of the post goes to the best commenter.
Sources:
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Witness Discussion - SBD price and reverse peg by @reggaemuffin
Still in Defense of a High SBD by @aggroed