This is a complicated topic and thus should be discussed with care due to its impact in the financial viability of many people and or steem ecosystem. On the other hand, however, it remains an important topic to explore because of its importance.
Moreover steemit witnesses have been bombarded with questions and arguments especially from those against pegging SBD to USD because of some valid worries examples, going against free market economics, dealing with unhappy members who will get less in sbd conversion and thus might abandon steemit , rewarding and motivating content creators with high sbd etc
In light of all these worries, the question remains should SBD be pegged to USD ? if yes when will be the best time? What are the advantages and disadvantages of pegging SBD to USD?
In answer the afore-mentioned questions, I will start with SBD definition according to steem white paper
Steem Dollars (SBD)
Stability is an important feature of successful global economies. Without stability, individuals across the world could not have low cognitive costs while engaging in commerce and savings. Because stability is an important feature of successful economies, Steem Dollars were designed as an attempt to bring stability to the world of cryptocurrency and to the individuals who use the Steem network.
Steem Dollars are created by a mechanism similar to convertible notes, which are often used to fund startups. In the startup world, convertible notes are short-term debt instruments that can be converted to ownership at a rate determined in the future, typically during a future funding round. A blockchain based token can be viewed as ownership in the community whereas a convertible note can be viewed as a debt denominated in any other commodity or currency. The terms of the convertible note allow the holder to convert to the backing token with a minimum notice at the fair market price of the token. Creating token-convertible-dollars enables blockchains to grow their network effect while maximizing the return for token holders.
One example of an issue that may take some time to correct is short-term market manipulation. Market manipulation is difficult and expensive to maintain for long periods of time (Pls see the white paper for more informations)
In light of the whitepaper, we can argue that the initial plan of the founders of steem ecosystem was to create a stable currency that moves in tandem with USD, why?
Stable Currency: stability leads to investors’ confidence which is good for steem ecosystem-moreover,we should not deal with 2 unstable currencies in the same platforms (Steem and SBD). Therefore if sbd is created to bring stability to the ecosystem and to cryptocurrencies , we can rightfully argue that traders are manipulating sbd for their personal gains-which is not illegal because this is a decentralized economy and we all believe in free market isn’t it?
Moreover having a stable coin in our ecosystem will make us stronger-this argument is supported by Myles Snider in his article AN OVERVIEW OF STABLECOINS
Stablecoins are one of the highest convexity opportunities in crypto. They aim to become global, fiat-free, digital cash, so the total addressable market (TAM) is simply that of all the money in the world: ~$90T. The opportunity for stablecoins is, intrinsically, the largest possible TAM. This vision is larger than that of Bitcoin itself. A fiat-free currency that’s price stable will challenge the legitimacy of weak governments around the world.
In light of these points, I lean towards pegging SBD to USD maybe after summer this year (or any other time agreed by witnesses and members of the community). Reason is that, sensitive issue like this should not be done in a hurry in order to avoid resistance and issues with the community-rather a pragmatic time line should be discussed and agreed.
What do you guy think? Send in your comments and or suggestions, resteem in order for others to join the discussion and upvote in order to send in your support.
Click here and read my former post: Steemit Education: The concept of Needs and Wants in our Private and Community Life?
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