STEEM Blockchain Dollars are currently trading above $3.00USD!
Why is this happening to an instrument that is supposedly pegged to the dollar? I asked 
SBD is what one might call 'half-pegged'. That is, pegged from falling much below $1 but not particularly from rising about $1. If it falls below $1, then market makers (or anyone) can profitably buy up SBD, and convert it into STEEM, both raising the price of SBD and reducing its supply. However, if it rises above $1 then the only mechanism to get more SBD into circulation and satisfy that demand is to wait for more posting rewards. There are both advantages and disadvantages to this system. A proposal was made by
to allow conversions in the opposite direction which would make it more of a real-time two-way peg.
Now, that certainly clears things up. SBD is pegged to a minimum that is a targeted equivalent of one dollar, but it has no upper cap. That sounds very reasonable to me since it allows for real supply and demand price discovery to the upside. If there is dire demand to acquire SBD, then the market is able to dynamically adjust to that demand without having to resort to liquidity measures. In essence, it makes SBD even more valuable both from a theoretical standpoint and a real use standpoint (as we are seeing with the current pricing of SBD).
That deals with the “hows”, but what about the “whys”? The question as to why SBD is currently worth more than $3.00USD is more complicated since we have to speculate on the market’s behavior in order to venture an answer. Many are speculating, and I agree with the hypothesis, that what we are seeing in SBD is the result of a “flight to safety” within crypto itself. As I mentioned in a recent post, A Disaster in the Making, there seems to be a huge dark unanswered cloud over USDT (Tether) that has many very concerned and questioning the safety of their funds held in USDT. That combined with the onerous process of converting back to fiat, as well as the disincentives from a tax liability standpoint, I think has people looking for an alternative crypto-dollar peg, with the end result being an obvious bidding war for SBD.
How high can STEEM Blockchain Dollars go? Your guess is as good as mine, but I would think that once the flight to safety really gets some steam behind it (pun intended), people will realize that STEEM is really just as good and just as safe, and that it is cheaper and it also has hundreds of times more upside potential as well. SBD and STEEM are family; they’re backed by the same business; they’re the same blockchain! Look out above! Once people realize this fundamental aspect shared by both, we may see a calming in the SBD price rise and find ourselves asking what is going on with STEEM!
Please leave your comments, input, questions, etc., below!
