Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche


What Value does the Steem Dollar (SBD) have?

The Steem Dollar (SBD) is one of three tokens the Steem blockchain uses. The other tokens are the Steem (STEEM) token and Steem Power.

Steem is a popular blockchain built to support social media apps such as Steemit, Tube, and Utopian. Steem’s builders, Steemit, hope to build social media platforms that reward content creators.

The Steem Token (STEEM) is a cryptocurrency used for payments on Steem. Hence, the Steem Token serves as the base token for the other Steem tokens. Steem Power (SP) is Steem’s access to Ethereum Gas. Steem users can buy “influence on Steem with Steem Power token. Theoretically, Steem Power allows users to increase the influence or spread of Steem posts.

A Steem Stablecoin

The Steem Dollar orSteem Dollars (SBD) is the Steem stablecoin. They call Steem Dollars a liquid stable-value currency tokens. Steem users can trade Steem Dollars for Steem (STEEM). To elaborate a stablecoin is a cryptocurrency that contains a smart contract that makes payment in fiat currency from a bank account when you spend it.

Interestingly, I consider the Steem Dollar unstable. I think Steem Dollars are unstable because CoinMarketCap gave SBD a $4.35 Coin Price on 28 February 2022. Moreover, Coinbase gave the Steem Dollar an all-time high Coin Price of $22.34. To elaborate, I think a true stablecoin maintains a price close to the fiat currency they peg too.

However, the Steem Dollar (SBD) does not. Instead, the supply and demand of the SBD determine the Steen Dollar price. In other words, Mr. Market determines the Stable Dollar’s price.

What Value does the Steem Dollar have?

Mr. Market, however, gives the Steem Dollar (SBD) enormous value. For example, CoinMarketCap gave Steem Dollars a $46.387 million Market Capitalization, a $46.387 Diluted Market Capitalization, and a 24-Hour Market Volume of $3.426 million on 28 February 2022.

However, they base those numbers on a Circulating Supply of 10.663 million SBD. I think a true stablecoin’s Circulating Supply should match the Market Cap. Since the Circulating Supply does not match the Market Cap, I consider the Steem Dollars unstable. The Steem Dollar was CoinMarketCap’s 550th largest cryptocurrency on 28 February 2022.

In contrast, Coinbase gave the Steem Dollars a $4.35 Coin Price, a $46.6million Market Cap, and a 24-Hour Market Volume of $3.4 million on 28 February 2022. They based those numbers a Circulating Supply of 10.7 million SBD.

Therefore, I consider the Steem Dollars a cryptocurrency rather than a true stablecoin. However, I think Steem Dollars offer some value because of Steem’s popularity?

What Value Could the Steem Dollar Accrue?

I think the Steem Dollar (SBD) could accrue some true value. For instance, CoinMarketCap gave Steem (STEEM) a 394.952 million STEEM Circulating Supply, a Market Cap of $130.401 million, a $6.6446 million 24-Hour Market Volume, and a $135.103 million Fully Diluted Market Cap.

Steem was CoinMarketCap’s 320th largest cryptocurrency on 28 February 2022. Finally, Steem had a 33.01₵ Coin Price on 28 February 2022.

Furthermore, there were 171,515 Steemit Accounts on 21 February 2022, Steemit user Vegansilverstack estimates. Conversely, Steemit user Jerry Banfield Steemit had over 200,000 daily active users who made over 50,000 transactions a day on 22 February 2022.

Hence, it is hard to determine how many active users Steemit has. However, Steem could give Steemit an enormous footprint. Steem claimed to have paid out $59.596 million to users between June 2021 and February 2022. However, they pay that money to users of all Steem apps.

Steem claimed over one million people were using over 324 Steem apps on 22 February 2022.

Smart Media Tokens

The Steem builders are testing a new class of cryptocurrency they call Smart Media Tokens.

I guess the Smart Media Tokens are cryptocurrencies that contain smart contracts. A smart contract is a digital robot that performs a specific task. For example, the smart contract in a stablecoin makes payment from a bank account.

To explain, Steem hopes to help authors and publishers build custom Smart Media Tokens. For example, a Smart Media Token that contains an author’s news articles. Users buy the Token and receive content from the author.

One hope for Smart Media Tokens is to allow creators to track all uses of their content. For example, a smart contract will track everybody who opens an author’s documents. They hope to help authors hold Initial Cryptocurrency Offerings (ICOs) for Smart Media Tokens. Hence, a creator could raise money from readers for a new project.

Smart Media Tokens are here

Smart Media Tokens contain customizable features so they can perform certain tasks. For instance, you could configure a token to contain video or audio content.

I think the Smart Media Tokens could boost the value of Steem Dollars (SBD) by increasing the demand for them. The Smart Media Token testnet is in operation, however, they do not say when they will release Smart Media Tokens to the public. Notably, the claim the Smart Media Token mainnet could process transactions and transfers in less than three seconds.

In the final analysis, I think Steem Dollars could become an enormous stablecoin if people widely adopt Smart Media Tokens or Steemit use soars. Until then, I consider the Steem Dollar (SBD) a cryptocurrency and stablecoin to watch.