Tether [USDT], True USD [TUSD] and Steem Backed Dollars [SBD] are cryptocurrencies meant to keep their value pegged to USD1. While being a stable cryptocurrency, have they lived up to their name?

I chanced upon a discussion on stable cryptocurrencies and that led me to find out more about their purpose in crypto markets. Let's look at USDT, TUSD, and SBD.

Tether [USDT]
Tether was initially established as a token backed by real fiat USD paper money for every USD1. Ongoing suspicions for USDT, at the current USD2.2 billion market cap, is no longer backed with actual USD notes. There are no official audits done till now and Tether's can only vouch for the backing "in good faith". And by the way, "Federal Reserve notes have not been redeemable in gold since January 30, 1934." (Source: federalreserve.gov). So much for fiat currency being a 'physical' currency.

“We hope that the community considers the attached memorandum for what it is: a good faith effort on our behalf to provide an interim analysis of our cash position and our issued and outstanding tokens, as part of ongoing efforts to further professionalize the transparency mechanisms of Tether Limited.”

Source: cointelegraph

However, Tether does hold true to its word, keeping USDT stable above US$0.90 and below US$1.10 (see snapshot below). What I found strange is the decreasing value of 1 USDT towards BTC. Because the market volume has risen dramatically and the value of USDT remains stable, there is more USDT in circulation and thus in the crypto market, holds less value toward BTC every day. This is actually worrying as you might be losing more value to Tether's 'inflation' than keeping Bitcoin itself. Could this be a major fallacy of USDT?

I would want to stay away from such cryptocurrencies (USDT), but it definitely has a utility, helping me to hold 'digitalized fiat' US dollars during cashflow and trading without the trouble to 'top-up' actual cash from the bank into my cryptocurrency wallet.

Source: coinmarketcap

True USD [TUSD]
True USD is a fairly new stable USD-backed cryptocurrency that promises to conduct regular audits and is in the process getting listed on coin exchanges such as bitfinex. New TUSD coins are minted as the coin is bought. Using the improved trust we have for a USD-backed token such as TUSD, TUSD seeks to develop more stablecoin products in the years to come. More news will come for TUSD as I will keep the Steemit community updated.

Img source: https://blog.trusttoken.com/trueusd-a-usd-backed-stablecoin-you-can-trust-9688796cfd0d

Steem Backed Dollars [SBD]
Lastly, SBD. SBD is generally influenced by market volume. Although much efforts have been made to peg it to USD1, it has not been effective. SBD is also not a USD-backed cryptocurrency.

The role of witnesses who, provide price feeds are encouraged to keep SBD pegged down, and also incentivize SBD with increased interest rates (%APR) on SBD when SBD drops below USD1. However, when SBD prices shoot over the roof, who has control over SBD prices? I do hope to see SBD become a more 'stable' coin because it helps to regulate STEEM and SBD payouts from the STEEM blockchain. Currently, author rewards are set to either 100%SP, 50%SP+50%SBD or declined, and hence unable to re-balance SBD prices. Payouts could adopt a more flexible payout scheme in the future. Maybe during the upcoming Hard Fork 20 (aka Velocity)?

Trust is an intagible asset.

-tysler

All images used are under the CC0 license.