What is Steem Backed Dollars SBD?
Steem Backed Dollars are stable value pegged assets issued in the Steemit platform. Its a token that is meant to be worth about $1 USD, making its value much more stable compared to Steem. SBD are pegged to the value of the USD and can be redeemed on the Steem platform for about one dollar worth of Steem. Steem Dollars is supposed to be the equivalent value of one dollar, however, the price seems to be all over the place. 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.
With SBD, the value of any crypto can be locked in at the top, and then swapping it back into the crypto after it crashed, retaining almost all of the purchasing power, and not have to rely on centralized exchanges. When Content creators receive rewards on the Steem platform they are made available in 50% Steem Power, which can be redeemed continuously over a period of 104 weeks, and 50% SBD which can be fully redeemed for Steemit in a 5 day period. SBD can be transfered on the Steem Platform and can be exchanged outside of the platform. If the value of Steem USD isn’t tied to any actual dollar value amount, and the price can fluctuate this much in one day, that means there is the possibility for the value of SBD to fall just as much in one day.
Crypto Crash is not a problem?
As specialists say, when stock market crashed in the past, the money went to precious metals. Last huge crash was 2008, and there were no cryptos back then. When a crash happen it’s unlikely many people would run to cryptos, so might be precious metals again. The 2008 crash was part of cyclicly crash system that looms over our credit based economy. Crypto has gotten to a point where it’s probably a great alternative to the usual rush to gold when the stock market crashes.
Many advise that you should be able to lock in your value at the top in USD, and then after the price crashed convert back into the cryptocurrency in question and retain the original purchasing power of your crypto while gaining back more units of it at the bottom price, from where it can go up again. Technically simulating a short position, but without the risks of it since it will be a direct trade not a CFD.