Steem Dollar (SBD)

From Steem Center
Jump to: navigation, search

The Steem Dollar (aka Steem Backed Dollar or SBD) is a token that is meant to be worth about $1 USD, making its value much more stable compared to STEEM (see STEEM Tokens). To be a bit more technical, a Steem Dollar is a promise to pay one dollars worth of Steem when it's redeemed.

The benefit of Steem Dollars is that business can accept them more comfortably since they have a more stable value. Can you imagine being a shop owner and trying to sell your $50 product for STEEM which a couple months ago would have been for 500 Steem compared to today being less than 50. Pricing their products and services are much easier when using a stable value, as well as knowing that what they've already been paid, won't lose value.

Creation of SBD

The unique way to create more SBD is through the content creation. The authors receive their payments in STEEM Power (SP) and Steem Dollar (SBD), and they can select the percentage of each one, with 50% of steem power as the minimum.

How it works

The SBD can be redeemed at any time by the users (the process takes 3.5 days[1]). The blockchain takes and destroys the SBD and next it creates new STEEM. The rate of conversion is calculated using the price in the market. If STEEM course is at 10 cents, one Steem Dollar could be redeemed for 10 STEEM. When STEEM is at 2 USD, a Steem Dollar would redeem for 0.5 STEEM. In this order its price tries to be stable and pegged to 1 USD.

Problems to be pegged to 1 USD

SBD course isn't fixed, in some times like in August 2017 it lowered to 0.8 USD, but in December 2017 it raised to 12 USD. [2]

If the price of SBD is less than 1 USD, the people can redeem it for Steem worth in 1 USD. In this order, its price will rise. However, if the price of SBD is more than 1 USD there is no an easy way to reduce its price. This is because the unique way to increase the supply is through posting.

Also, Steemit's Witnesses (see Steem_Witness) can change the interest rate paid (quarterly) for holding them in your wallet. Lately, this interest rate has been 0% with the SBD price being higher than desired. When it gets near or under the value of $1 USD, we will start seeing the interest rate increase.

Ways to convert to STEEM

There are 2 ways to convert it into STEEM: The first one is using the blockchain and the and the value guarantee of 1 USD (its price can be seen on steemd.com. And the second one is using the Internal market, which price could be very different from the first due to speculation.

Predecessor

Dan Larimer, creator of the Steem Blockchain, had the first insight to create a US Dollar pegged cryptocurrency with BitUSD and BitShares Blockchain. In June 2nd, 2013, he published the first idea of BitUSD in Bitcoin Forum – Creating a Fiat/Bitcoin Exchange without Fiat Deposits (see BitShares:Proposal post) – including a BitShares white paper.


References

  1. Steemit FAQ: What is the difference between STEEM, STEEM Power, and Steem Dollars? Retrieved in August 22nd, 2017
  2. Coinmarketcap.com : Steem Dollars (SBD) Retrieved in August 23rd, 2017

Links

Related articles

External links

In other languages




Help keep this wiki page updated. Register, click in edit, add or modify the text and save.
If you're already a steemian you can be rewarded with steem, see how in @steemcenterwiki.