RE: How SBD could replace BTC: an Unconventional yet Possible Scenario

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RE: How SBD could replace BTC: an Unconventional yet Possible Scenario

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stimialiti (60)in #steemit • 6 years ago

SBD can not replace BTC.
BTC's POW blockchain should disappear, but SBD is a highly inflationary asset that is supposed to track the price of another inflationary asset, which inflation rate is not even subject to any rule or regulation.
In addition, Steem and SBD's sustainability is in doubt.
BTC should be replaced, and I believe that it will, but neither Steem or SBD will be its replacement.

very, very, very bright future of the Steem Ecosystem.

Its future is guaranteed demise.
The only question is when.
Both its userbase grows, and the amount of spam per each user grows.
I hope to board its replacement in time.

6 years ago in #steemit by stimialiti (60)

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scipio (65) 6 years ago

Have you not read what I wrote? What SBD was "supposed to do" - be pegged to $1.00 USD as a means to provide a stable crypto currency in terms of fiat value -, hasn't exactly been accomplished.

And I've explained what is in fact happening with SBD (and as I said in a reply comment to @bronevik above, I probably should have split this article in 2), in short:

it's only bottom-pegged to $1.00 USD, as the price data in the past ~ 6 months clearly shows;
more and more SBDs are circulating because they're not getting "burned" via direct Steem conversion;
exactly because more and more SBDs are circulating, the SBD market cap has, in the past 3 months, kept relatively stable in a downward SBD price trend;
we've already seen that an upward break-out of SBD price, SBD pulled Steem price upward as well, which caused a dramatic increase of new SBDs printed;
I've stressed out the importance of the Steem debt protective measures built into the blockchain rules, and I've shown (hopefully?) that when all things remain equal as they are now, eventually the "5% protective rule" will come into effect permanently.

So yes:

currently SBD is highly inflatoiry
but exactly because of that and the protective Steem debt blockchain rules, SBD will become scarce as gold.

$0.51

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stimialiti (60) 6 years ago

I read most of it now, but have to read it all again, repeat it, verify it, think about it and internalize it.
I have a remark about utility:
While BTC may seem useless to some, it and other currencies have an important utility:
dividends/airdrops
In this case, holders of currencies receive other currencies, which may in turn be very useful, like Byteball and Steem.
In your scarcity scenario, one of SBD's very few utilities, which is conversion to Steem is disabled.
Regarding gold, it is mined and may be either brought from space, or airdropped (which is how it reached earth) from space.
So gold supply increases and is expected to increase.

$0.10

3 votes

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scipio (65) 6 years ago

OK, good! Love to hear from you when you have re-read it , thought about it and internalized it! ;-)

SBD getting "scarce as gold" is of course just a comparison. I could have (perhaps?) better just said "scarce". And that scarcity is not just a hypothesis but a real effect caused by the way the blockchain prints SBDs.

BTW, I'm not against BTC, in any way. The BTC-replacement scenario part in my article is a possible scenario; unconventional yet possible. Things need to advance, regarding the Steem ecosystem, a lot even, and the "SteemCommerce parts" are quite important for the scenario I talked about (regarding SBD replacing BTC) being able to happen. Having said that, of course in the BTC world, regarding sidechains, also loads of possible advanced mechanisms can be implemented. Like the usage of sidechains. We'll just have to see what's going to happen!

$0.51

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stimialiti (60) 6 years ago (edited)

I have another problem.
Even if SBD will cease to be created, it will be temporary, until Steem's inflation will catch up to it,and then its production will be resumed, its so like gold, it will not be a limited resource.
Its inflation rate is and in average will continue to be much higher than gold.
Due to this inflation rate and the unsustainability of Steem's blockchain, it can never replace BTC.
It should be preferred over Tether, which is what you should have compared it with.

$0.29

4 votes

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scipio (65) 6 years ago

Even if SBD will cease to be created, it will be temporary, until Steem's inflation will catch up to it,and then its production will be resumed, its so like gold, it will not be a limited resource.

Well... no. I gave a quantitative example already in the body of my article above. Suppose there are 100 million SBD tokens circulating. Then in order to let the "5% rule" apply, Steem market cap needs to stay below 2 billion USD (roughly a price of $8.- per Steem). In order to print new SBDs, the Steem price needs to rise to - say - $10.- per Steem. And as an effect, temporarily, lots of new SBDs will be printed. Say there are then at some point 150 million SBDs circulating, then to overcome the "5% rule" Steem needs to have a market cap of at least $ 3 billion USD (roughly priced as $12.- per Steem). If Steem does go above that, new SBDs will be printed even faster.

Do you now get my point? The more SBDs are circulating, the higher the price of Steem is required to overcome the "5% rule". Yet if it does, then the printing of new SBDs will be ever faster. And eventually the Steem market cap simply cannot keep up with the circulating amount of SBDs. And as an effect, SBDs will be scarce for they will not be printed anymore.

$0.51

1 vote

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