Preface
I am bracing myself for a massive backlash from public by posting this contribution since a lot of people (including myself) have been making a ton of money by selling their SBDs in open market for the last 2-3 weeks. Thats because SBD has been on bull run in cryptocurrency market despite being envisioned to remain tethered to USD with very little to no price fluctuations.
Recently we have seen SBD go as high as 17-18 USD value which is extremely bullish for a coin that has a very little market cap. Even at the moment of writing this, SBD is trading at 15$ as per coinmarketcap website.
However, along with SBD, Steem also had a rather upward trajectory and is currently trading at 3.20$ as per coinmarketcap website. But does it truly reflect the actual price of steem since SBD has broken its peg of 1$ and is sailing way beyond its designed limits?
How does SBD Work?
I hereby produce following flow chart to describe how the SBD works in Steemit and why it was created in the first place:-
Considering the above pasted flow chart, it is evident that SBD's job was to keep the balance in steem market by remaining pegged to USD or around 1$ value. The Steemit users are paid in SBD that is created out of parts of steem block.
But that doesn't seem the case at all right now because the idea mentioned above was formulated on this condition that SBD remains around 1$ value. But peg is long broken due to pump in local exchanges, SBD has sky rocketed and for the past 3 weeks, it has been trading at least @10$ or above.
What happened when the SBD broke the Peg
Well for starters, Steemians made a lot of money (Read : Steems) from their SBDs including myself. I remember selling my somewhat 20 SBDs to get almost 100+ Steems from it. Thats Massive...
But while we are all celebrating our little feat here by buying tremendous amounts of Steem with our SBDs, Steem value rose as well due to high demand.
While it looks good on surface, it is really bad for the steemit as a platform. This much volatility in SBD and (also in steem) makes the entire system volatile. When Steemit was designed, it was envisioned to be stable with steady and solid growth with respect to market cap. We came here on platform as bloggers and not as investors. Yes, Steem is still a cryptocurrency that can be traded on coin exchanges yet the platform itself should have grown with pace due to its increasing popularity rather than because of pump and dump schemes in local market.
Will SBD come back to its original value?
Yes it will, sooner rather than later, it will come crashing back down to 1$ value. But whats worse is that it will also take down steem with it. Right now, as steemians, we are the ones who are actually pumping the steem price since we are creating a high demand for it by selling our SBDs. But when the dust settles, the Steem will crash (I hope it doesn't crash back to 1$ as well along with SBD).
So the problem that has been created here is high on/off ramp and sudden price fluctuations in SBDs that are affecting Steem and hence the Steemit platform in long term.
Solution
I here by suggest that SBD should be killed on steemit platform since there is no way to create SBD other than on being Steemit and getting author / curation rewards.
Even though there are methods to control SBD price and to keep it tied down to 1$ value, yet SBD is and will always be regarded as a cryptocurrency in coin exchanges that can be bought and sold off as long as it lives. And we all very well know that a crypto can be pumped and dumped causing it fluctuate massively and end up getting destabilised.
So the solution I propose is that payouts can be given in 50/50% Steem and SP instead of SBD and SP with an added option of having payout as 100% SP. With SBD out of the picture and steem being the sole coin of steemit platform, the value of steem will become better as the network grows, thus depicting the true picture and value of steem in general and steemit in particular.
I conclude my contribution here...
Posted on Utopian.io - Rewarding Open Source Contributors