SD FTW!!! or Why I Have Invested $1,000 in Steem Dollars

9 months ago
55 in steem

1000 Steem Dollars

Steem Dollar Milestone!

After a few rounds of buying, I am now the proud owner of 1,000 Steem Dollars!

Steem Dollars?

Steem Dollars are pegged to the US Dollar, or at least that's the idea. In practice they are trading somewhat below parity, currently at around 90 cents for a Steem Dollar.

As a result of the peg, Steem Dollars don't have much upward potential though, and in the cryptocurrency world anything that can't potentially increase its value tenfold in a year is quickly dismissed as a lousy crypto-investment.

However the other side of that limited upward potential is limited downward risk, which make Steem Dollars a more stable store of value than traditional free floating cryptocurrencies.

Steem Dollars FTW!!!

There are however two main benefits to holding Steem Power:

  1. There is a 10% annualized interest rate, with interest paid each month.

  2. There is a fair chance that the system will be tweaked to move Steem Dollars closer to the peg. For instance, the changes in the previous hard fork, seem to have been successful in moving it in that direction. I'd expect further changes with similar effects, as the peg is a stated goal of the Steem project.

On the downside, if the Steem project is not successful, there will be nothing much to uphold the peg, and all value could be lost. However I am betting that the Steem project will be successful enough to maintain the value of Steem Dollars close to the peg.

The interest rate on Steem Dollars is higher than any interest bearing account in US Dollars or Euros, and if the Steem team manages to get Steem Dollars to trade closer to the peg, that would mean an additional 10% gain for today's investors.

That's a pretty nice potential gain to offset a minor risk in my opinion, which is why I have made the investment.


Nothing in this post should be construed as investment advice, invest at your own risk!

This is a 100% Steem Power post as I already have enough Steem Dollars ;-)

Also don't forget to follow me or you'll be late, like in the late insert your name.

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74
  ·  9 months ago

Well put. I have tried to hold some SD too although my strategy is to keep slowly powering up.

and in the cryptocurrency world anything that can't potentially increase its value tenfold in a year is quickly dismissed as a lousy crypto-investment.

So true. It made me chuckle.

Also don't forget to follow me or you'll be late, like in the late <insert your name.

Already done lol for your intelligent responses to my post (even though we don't agree 100% but that is half the fun).

All the best:)

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55
  ·  9 months ago

Thanks! Regarding your post, I should have stressed that I fully agree there is a problem, and in fact any discussion about it and suggestions to solve them are great - the only way to improve something is to discuss the problems and suggest solutions. You're doing that!

Are you coming to Amsterdam by any chance?

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74
  ·  9 months ago

I will try. It all depends on my health but I will definitely try to come:)

65
  ·  9 months ago

Good point, which raises an interesting question. Are the whales powering down to cash out, or to hold SD instead of SP?
You should follow me back, because I raise interesting questions. See above.

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55
  ·  9 months ago

Apparently @steemit did buy a lot of Steem Dollars to support the price, but that's the only one I heard about.
Followed you back!

58
  ·  9 months ago

Have you tried trading in and out of Steem in internal market? The volume is somewhat low at this point. It has me thinking that the only reason to hold Steem Dollars is if you think the Steem price will go down further, so that you can buy Steem back later at a lower price. But that too is a risk as SP increases up each day.

Great post by the way.

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55
  ·  9 months ago

I didn't use the internal market as as I am not switching between Steem and Steem Dollars, but buying both Steem and Steem Dollars for Bitcoin. Or at least that is what I have done until now.