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RE: How SBD could replace BTC: an Unconventional yet Possible Scenario
Many tokens are pretty scarce. Not sure if SBD is something special
Many tokens are pretty scarce. Not sure if SBD is something special
It is special, because it's -1- backed by Steem, -2- it's strongly correlating to Steem because both are the only ones tradeable against eachother in here, on the internal market (a dedicated exchange used only for 2 coins).
We're discussing a number of things here, let's not confuse them:
the upward price potential of SBD
In nov / dec 2017 SBD mooned, and what happened then is likely to happen again: due to the (now!) low market cap of SBD (as compared to major tokens) its price can be relatively easy pumped by a number of factors. If you look at the volume of open sell orders regarding SBD on - for example - Bittrex, you'll find it only takes a few million USD to make SBD price go toward the $25,- mark by simply buying all current sell orders. As a consequence, many automated trading systems will follow, putting more and more capital into SBD, suddenly causing a high-SBD market cap.
SBD price pulling up Steem price
What then happened in dec 2017 / jan 2018, is that - presumably because of the internal Steemit market -, SBD price pulled up Steem price, which is because Steemians favor Steem for its ability to power up to SP. Also on the internal market, trading SBDs for Steems and vice versa is currently the only trading pair on the internal market.
faster SBD printing due to high-Steem price
The higher the price of Steem, the faster new SBDs will be printed, and since nobody converts (as opposed to trades!) SBD for Steem at a $1.- price point anymore, that will only lead to a larger amount of circulating SBDs.
Steem debt protective measures inside blockchain rules
And as I've explained in my article, the situation that more and more SBDs are circulating will eventually lead to the "5% rule" (# circulating SBDs / market cap Steem) which will cause zero new SBDs to be printed. That's the "SBD scarcity effect" I was referring to! How many SBDs needed to (relatively) permanently sustain that situation, is of course dependent on the market cap of Steem.
Prediction: SBD market cap / Steem market cap => 1
And as a consequence, I predict for the mid to long term that the SBD market cap will eventually be equal to the Steem market cap.
PS 1: I probably should have split this article in 2:
part a) about SBD's potential market cap
part b) about SBDs possible ability to replace BTC
PS 2: I'm thinking about doing a follow-up post, in which I'll compare historical Steem & SBD market data, graph that data, and discuss the data.
I get your point. But don't agree wit it competely.
Nov-dec 2017 was the rise of paid upvote bots with SBD as the only paying option. So the transaction demand lifted SBD mcap to 40M approximetely. Then STEEM rose and SBD token mass began to grow significantly. All the time maitaining mcap at 40-50M range, with price steadily declining. Then upbotes get STEEM paying option and SBD mcap fell to 20-30M where it is right now roughly. So the whole story was a simple transactional demand for a scarse token.
My vision is SBD return to 1 usd range. With steem economy transacting mostly in STEEM tokens as in such a condition the whole system is less volatile and any economy tend to reach its less volatile state.
I really don't think the upvote bots have anything to do with it. In any transaction, one party buys what the other sells. Prices go up when demand is higher than supply. That's not caused by people sending SBDs to bid bots, because there's not even a trade involved there, it's rather like a "gift" where wallet X sends SBDs to wallet Y.
What really drives prices up or down, are the external markets. Because the SBD market cap is quite small, and so is its trade volume, any whale is able to pump its price by simply buying all open sell orders on an exchange. If you have a look at the current SBD sell positions of SBD on Bittrex, then you'll find it only takes a few million USD to buy all open sell orders, which will cause a gigantic price lift, which will trigger other bots to further increase its market cap.
And if you would read my article ( https://steemit.com/steemit/@scipio/how-sbd-could-replace-btc-an-unconventional-yet-possible-scenario ) and the comments underneath, you'll get my point on what's really happening in reality, regardless of the original intentions with SBD to be USD pegged.