Steem Dollar has met it's End! [100% SteemPower]steemCreated with Sketch.

in steemit •  6 years ago 

shattered steem.png

Looks like it was a long experiment, that came to an end. Steem Dollar looks to be over. After creating unnecessary inflation for months, Steem Dollar looks to be taken out of circulation.

Just recently Steem Dollar is no longer awarded for posts, so there is no new one being issued, and the remaining ones are being taken out by people using them for promotion purposes. So the supply of Steem Dollar is approaching 0, although this would probably take a longer time.

I have already talked about why Steem Dollar was a bad idea, and that it should be replaced with something actually being backed by a real asset:


The main problem with SD was simple: It wasn't backed. When we talk about an asset, it has to be backed by something. A currency should be backed by consumers, merchants, investors actually using it. An asset like SD was supposed to be backed up by real dollars, but it wasn't probably because of regulatory issues, so instead it wasn't backed by anything. Therefore it has 0 value technically, and whenever SD was cashed out, it actually siphoned off real value from STEEM.

This is bad, very bad monetary policy. STEEM has it's own technical challenges, but STEEM could stand on it's own leg once those consumers, merchants, investors start using it for financial/economic transactions.

However SD had no leg of it's own, and all it did was to parasite off STEEM's value, this is obviously bad, and it's just a design flaw, it's nothing impossible that could not be solved by a better monetary policy. The 1$ peg is unsustainable without a real 1$ backing it, this is how reserve banking works.

So SD was a volatile instrument from the start, and it was pretty bloated, not to mention inefficient, but we see it's value plummeting very hard recently:


So I think people should sell their SD, and Power Up to Steem Power! At least this is what I did. I am also having 100% SP posts from now on, to help stabilize this change.

Now that SD is over, we should create a real asset that would be backed by Bitcoin, and redeemable in Steem & Bitcoin. This would be the ultimate way to fix Steem's long term price decline, an exchange rate stabilization fund if you will! I have explained it here:

Disclaimer: The information provided on this page might be incorrect. I am not responsible if you lose money using the information on this page! This is not an investment advice, just my opinion and analysis for educational purposes.

Upvote, ReSteem & bluebutton

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very good!

At least it'll make the Steemit eco-system easier for new minnows to understand now ;)

I am not sure if it will be easier, but it has to improve Steem's economy, and make the price go up again.

Let's take the pain now for the gain later when paid ads come along and drop money into the system :)

Keep it simple is very important to bring new users like me to steemit.

I think there are a few things wrong with your assessment.

  1. SD is backed by the shares the blockchain holds since this is also how you can redeem them. This however is not explained or documented well. I've asked several times how this works with no answer he on steem. This is very frustrating of course.

  2. Backing SD does not work, since backing with crypto like Bitcoin defeats its putrpose, which is to have stable value and backing with real USD does not work because well how would you actually technically implementing that.

So overall I find your posts a bit confusing or not making sense

  1. Well no, it's not backed by any shares. Whenever somebody redeems SD->STEEM, new Steem is printed up based on the price ratio of 1 weeks average. The 1 week average/ waiting period is to disincentivize front runners/arbitrage. But it only creates extra Steem when redeemed, it's not backed by anything, or technically by inflation, but that is not very good.

  2. Of course it does, currencies back eachother up. All central banks hold foreign reserves, everything is interconnected and back eachother. The same way Bitcoin is, and should be the reserve currency of the crypto world. I even think Steem should be an alt-chain of Bitcoin after Segwit will allow it. But nontheless, backing Steem with BTC would be a very wise idea, it would restrict inflation, and give value to it.

Look we dont need to invent the wheel again, we already have a stable currency like BITCOIN, we should just build on that. Steem should not try to reinvent the wheel, we should work on the social media aspect, while the value should be derived from Bitcoin.

Interesting, I never really understood the concept of why steem dollars and steem were both necessary in the first place.

It could have worked if SBD would have been really backed, but not in it's current form.