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RE: Witness Discussion – SBD price and reverse peg

in #witness-category4 years ago (edited)

@reggaemuffin great respect and thanks for the discussion...
However, I disagree with your position and your 'Pros'. Stores and services that want to use SBD need to "VALUE THE SBD", see below.

@aggroed - great respect and thanks for your role here...
Generally, I agree with @aggroed position, I think there more 'Cons' than listed. The higher payouts have stoked more posts and more activity and more new users.

@reggaemuffin - The fact is that SBD is traded and susceptible to volatility, it is a cryptocurrency. If SBD is forcefully (programmatically) pegged to USD, then it WILL experience : "fiat and all the nightmare associated with that". It's a contradiction to want it to be tied to USD and believe it would store value better than USD or avoid problems of fiat.

"VALUE THE SBD"

@reggaemuffin I disagree that a 'non-pegged' SBD is a "bad thing for services using SBD".
Stores or services (that would 'want' prices in SBD that are tied to USD) should consider the SILVER and GOLD markets / stores / websites. The USD price of silver and gold is volatile. Several websites sell one ounce of silver, for example, but the USD price is up or down throughout the day. This is a known fact among buyers of silver. We buy silver and the price in USD is up or down by the end of the day. When we receive the actual 1 ounce of silver, we "VALUE THE SILVER", we do not consider the current USD price of it.

My suggestion for a store or service that wants to price products in SBD is that they must "VALUE THE SBD". It does not matter the USD price of it.

Edit: I am suggesting to look at silver selling websites as an example. They are selling a product where the prices rise and fall based on the relative value between the product and the currency.

Overall

Overall, I do not think a change is needed.
We NEED to "VALUE THE SBD" !! !! !!

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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).

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!!"