Everyone is focussed on how to make money on Steemit by making posts, upvotes and replies. Others are focussing on the value of Steem and how a soaring Steem could make them a lot of money. But what many people are overlooking, is the incredible potential of the Steem Dollar. The Steem Dollar has more potential than just making holders of it accumulate more money over the long run. It has the potential of causing an earthquake in the financial landscape once more investors get to know how it works.

Interest rates

If you look at a chart displaying the historical interest rates in the US, you will see that in the past there have been impressive interest rates of 10-20 %. However, lately interest rates have completely plummeted. People have their money stored in a bank deposit but are getting absolutely nothing for it in return. The only thing they are getting for letting banks use their money is risk. Especially in the current environment because it isn't a secret that sooner or later our financial system will collapse and the money in bank deposits will melt like snow on a hot summer day.

People are not happy about this. Many people complain how useless it is these days to have their money stored in a bank account. Recently I noticed many people I know, are actually investing in the stock market. People are just desperate to find a way to get some return on their money. They are so desperate that they are even willing to play a game they don't understand. Things are even about to get much worse as a few days ago there was a report about the first Western bank to charge negative interest rates on bank deposits.

https://steemit.com/money/@diego24/are-banks-about-to-charge-negative-interests-on-deposits

How important are interest rates to investors ?

In this current environment of low and even negative interest rates, interest rates have become more important than ever. To understand its importance, lets go back to May. In May several voices in the FED started talking about possible interest rate hikes in June or July. This made the dollar rally 3.5 % in a matter of a few weeks. If we go back even further in time to December 2015, the FED actually raised interest with 0.25 %. But this small increase in interest rate made the dollar rally with more than 5 % !!! This all just shows how desperate investors are in looking for some return on their money.

Steem Dollar, the unknown return investors are seeking for.

So it is clear that many investors are seeking for some form of nice and safe returns. Even speculative talks about very minor increases in interest rates are enough to make tons of money flow from one market into the other. Now, we have here on Steemit something that is called the Steem Dollar. The Steem Dollar is a stable currency pegged to the dollar. But as a bonus every holder of the Steem Dollar is being rewarded by an interest rate of 10 % a year. Yes, you are reading it well ... an interest rate of 10 % a year !!! Does anyone know any sound investment that gives you a 10 % return on your money ?

I realize that the interest rate of the Steem Dollar is not fixed and that it can fluctuate. I read the whitepaper and tried to understand how the interest rate will be determined, and honestly I didn't really understand it. So if anyone could make an article or a video explaining it, that would be awesome and I guess it would lead to many upvotes. But what I do know is that the interest rate is currently around 10 % and even if this rate fluctuates in the future, the rate will still be much higher than those offered by banks around the world.

Maybe I am going to make a too strong statement now, but the Steem Dollar might make Steemit the first cryptobank in the world, but one that isn't controlled by governments and bankers. So they can never do a bail-in of your Steem Dollar. And if you want to get your money out of here, you can do it whenever you want. With an interest rate of 10 % it also makes all bank deposit look like a joke. The day majority of investors get to know about this, I expect an enormous capital inflow into Steem Dollars which will cause a tremendous boost for our community. Looking it from this point of view, I think Steemit is extremely undervalued at the moment.

How to turn 5000 $ into 2 million $ ?

Now, what is the best way to take advantage of the Steem Dollar interest rate ? Well, the easy answer is to take advantage of compound interests. Imagine you are a 25 year old person saving 5000 $ a year in your Steem Dollar account at an average interest rate of 10 %. Due to compound interests, at age 65, you will be the happy owner of 2.2 million $. Smart investors use this strategy but they look for this 10 % gain in the stock market, which is a risky environment. The Steem Dollar, however, is less risky and therefore a superior asset to use this strategy.

Conclusion

My article explains how investors are looking for a way to get some return on their money. Investors don't know it yet, but the Steemit Dollar might just be world's best asset for achieving their goal. Once they realize this I expect a huge capital inflow into Steemit Dollars that might even cause a tremendous impact in financial markets all around the world. The best way to capitalize on the Steem Dollar is by means of compound interests. Playing the compound interest in a smart way could make you are millionaire at retirement age.

Of course, you never have absolute guarantees. Buying Steem Dollars is still an investment in Steemit and if the project fails, it could hurt your investments in it. But if the project succeeds, you can do some wonderful business with this strategy. It is up to you determine for yourself the risk you are willing to take. But remember that having your money in a bank account these days, is a very risky investment also without even having the possibility to get a return.

ps: Don't forget to leave some comments if you agree or disagree on my view.