Steem Dollars project purpose and description
What is Steem Dollars?
Steem Dollars (SBD) is a decentralized cryptocurrency designed to operate as a stabilizing coin for the Steemit platform. The coin differs from others such as Bitcoin and Ethereum because it is pegged to USD at a ratio of 1:1. This means that it is stable and people should not have the problem of associating it with the standard fiat currency.
The coin was launched in July 2016 by the Steemit platform founder, Dan Larimer. Dan Larimer is known for his works in the blockchain realms especially for creating BitShares and EOS that raised in excess of 4 billion through its ICO that ended in May 2018.
The Steemit platform is a social media platform that operates like Reddit but differs in design because it is based on the blockchain. This means that there is no censorship or danger of centralized failures. Here is a closer look at the Steem Dollar performance in the market.
- A closer look at the market performance of Steem Dollars
From the definition and founder’s target, Steem Dollars (SBD) is supposed to be stable and experience little or no variation. The coin appears to have achieved this goal though there have been cases of surges when the demand shoots up. Here is a closer analysis.
When Steem Dollars (SBD) entered the market in July 2016, its value was $1.34. The value swung slightly on both the positive and negative sides of the USD value until May 2017. For example, it hit $0.8 in July, $0.9 in October, and $1.01 in December 2016.
In May 2017, the value shot to $1.9 before falling back to the main trend of around $0.9 in August 2017. Towards the close of 2017, the demand of the coin suddenly shot up pushing the price to unprecedented heights. On December 8th, 2017, the value had risen to hit $7.36. But the growth did not stop there.
On December 21st, 2017, the value had grown to $13.8. This was the highest mark in its history. However, it was not good news because traders would find it hard to steadily market their products. After hitting the peak, Steem Dollars (SBD) value took a downtrend reaching its preferred rate of around $1 by June 2018. Around July 2018, the value was around $1.3 before declining further to $0.98 in October 2018.
What is the problem that Steem Dollars solves?
When Dan Larimer created Steem Dollars (SBD), he was very clear about the major challenges that faced the niche. Larimer had been in the industry since the early years of Bitcoin and had seed seen the industry get shocked by issues that had refused to go away. Here are some of the issues that Steem Dollars solve.
- High volatility
If you take a closer look at most cryptocurrencies in the market today, the most notable trend is high volatility. The value of the coins can swing to the extremes within minutes, hours, or days. The main cause of high volatility is that crypto coins are not regulated.
In the case of fiat currencies, the number of coins and notes in the market are increased or bought by central banks to control inflation. This helps to keep the supply and price of the coins steady. However, the crypto coins are not regulated and any surge in demand or supply results to price swings. This is the main problem that Steem Dollars (SBD) addresses.
- Poor adoption of cryptocurrencies in the market
Though the cryptos have been in the market since 2009, the adoption and use in the community has been very poor. For example, if you have coins such as Ethereum or XRP, the stores that accept them are very few. This means that those with native coins have to follow lengthy procedures of converting their coins to fiat before making purchases.
Poor adoption is also fueled by the fear of buying the coins and losing value. Many governments such as the Russian and Chinese administrations have been advising their citizens to stay away from cryptos because of the risk of losing money through high volatility.
- Centralization of financial services
Even as cryptocurrencies take the center stage of the emerging payment methods, the centralized systems still control the large market share. The main issue with centralized service is that they are run under local laws and also depend on the professionalism of the management.
The rules make processing transactions lengthy and expensive. In addition, users also risk losing their money in the case of mismanagement of their resources by the bank management. Take a situation where a bank is declared bankrupt. People with savings in the institution are likely to lose their funds or have them locked for a long time.
- Poor motivation for publishers and social media users
One of the main goals of Steemit is supporting the growth of social media. The social media community has for years failed to articulately motivate publishers who create quality content. For example, many people are rarely rewarded when they create quality content that attracts a lot of support on Facebook or Twitter. They only get likes and following. Steemit addresses the problem by creating a method of rewarding publishers and others who discover content in its system.
How does Steem Dollar solve the problem?
Having worked on previous blockchain projects such as BitShares, Larimer calculated the moves for the Steemit well to try and reach as many people as possible. Here are some of the methods he employed at Steemit with Steem Dollars (SBD) to address the above issues.
- Steem Dollars (SBD) value is tagged to USD
The Steem Dollar (SBD) was created to be a stable coin. This means that users can easily adopt and use it without worrying that the value will fluctuate. It is especially reliable for traders who want to appear stable and reliable for clients in online marketplaces.
The value of Steem Dollars (SBD) is attached to one USD. This means that if you have 1000 Steem Dollar (SBD), it is an equivalent of about $1000. Many people are finding it easy to run direct calculations when running transactions whether on the Steemit blockchain or making payment in the stores.
- The Steem Dollars (SBD) is run in conjunction with other coins in the same network
Steemit blockchain was the first to run a system with multiple cryptocurrencies. The Steem Dollars (SBD) is used as a stabilizing coin to help traders and people who want to make savings operate without worrying that their coins will lose value. But the Steemit development team argues that Steem Dollars (SBD) could not operate on its own. Other coins that work together with Steem Dollar (SBD) on the Steemit platform include Steem Power, and Steem.
Steem is the primary coin on the Steemit network that can be compared to others such as Bitcoin and Ripple. Note that unlike other coins, Steem is released on a daily basis with 75% going to authors and curators of content in the network. Only 10% of the coins go to reward block founders.
The other coin that works together with m Steem Dollars (SBD) is the Steem Power. This token symbolizes the amount of voting power that users have in the Steemit network. The more the Steem Power you have, the more the voting authority you have to upvote or downvote content on Steemit network. Note that you can only increase your Steem Power by purchasing Steem coins.
- The application of proof of stake protocol
One of the main causes of centralized mining and limited adoption of cryptocurrencies is the application of computing based proof of work protocol. Dan Larimer opted for Proof of Stake protocol because it does not require users to generate high computing power to mine the network.
The only thing that nodes need to do is staking the Steem Dollars (SBD) in the Steemit platform. This means that you can easily get rewarded by simply purchasing the Steem Dollars and holding them. The protocol ensures that the coins are spread evenly to avoid the danger of 51% attack.
- Targeting a niche with a lot of following
To help the crypto niche to grow rapidly, Steemit targeted a niche that has a lot of following. Today, almost everybody has some presence on social media. By using one of the Steem Dollar (SBD) sister coin, the Steem Power to read publishers and curators of content in the network, more people are likely to join the crypto niche and start using the native coins.
What makes Steem Dollar better than it’s competitor?
When Steem Dollars (SBD) entered the market, the rate of new tokens generation was approaching the peak. Therefore, the founder and his development team had to craft winning strategies to remain competitive. Here are some of the things that make Steem Dollars (SBD) better than competitors:
- The Steem Dollars (SBD) operates on proof of stake protocol that requires less power to mine. It also helps to ensure that more users can join and use the network with standard CPUs and GPUs.
- SBD coin allows users to join and own the network. Like other cryptocurrencies, the Steemit platform is owned by people who join and use the network. This means that you do not simply join the system to send value or upvote content, you also own it.
- The system provides users with a reliable network for sending value across the globe. Because the network operates on a peer2peer basis, sending of value is direct and easy. The transactions are near instant and there are no limitations on the value you can send.
- It is a reliable method of sending value without compromising personal privacy. When users join the network, all the details such as personal and transaction info is encrypted to ensure that no third party can easily acquire it. This implies that unlike banks where a lot of people have access to your transaction details, it is only you who have access to the personal account.
- The Steem Dollars (SBD) has been demonstrated as a reliable method of operating in the crypto world without worrying of price volatility. Whether you are saving money or pricing items on your store, there is no worry that the value will fluctuate and result to losses or scaring away clients.
- The Steem Dollars (SBD) operates together with two sister tokens, Steem Power and Steem that help Steemit to reach a wider niche. This means that users who want to save money, publish or curate content can operate in the network without having to look for alternative tokens from other platforms.
How can Steem Dollar be categorized?
Steem Dollars (SBD) is a unique coin designed to help blockchain reach a larger community in the society. The token has managed to address the issue of high volatility in crypto niche and made more traders to adopt it because they can convert, link and operate just like standard coins.
What is Steem dollars’ vision on security?
The Steem Dollar’s vision on security is ensuring that all its users can save, send funds, or operate in the native network without worrying of attacks. The token was released at a time when DAO Child attack on Ethereum had just resulted to split in the Ethereum blockchain. Therefore, the development team at Steemit opted to use the following methods to keep the network secure:
- The platform uses advanced encryption.
- The Steemit employs proof of stake protocol to facilitate even distribution of coins.
- The development comprises of some of the top minds in the niche. They regularly review the network and release new updates to keep the platform secure.
Examples of Steem Dollars use cases/ applications
In his view, Dan Larimer argues that any cryptocurrency can only be successful if more people appreciate and apply it in their daily lives. Here are the main use cases of Steem Dollars (SBD).
- Steem Dollars (SBD) can be used for paying goods and services.
- You can use the coin as a method of saving your money.
- The Steem Dollars (SBD) is a reliable method of sending funds across the globe.
- Paying for government services in countries that support Steem.
- Convert SBD to Steem Power to vote content on Steemit platform.
- Use it as a gift to friends and family.