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RE: Found : The Crypto for mainstream adoption
That is right, @buggedout. SBD is one of the marvels of crypto land. I don't know how the steem blockchain manages to keep it pegged to $1 USD, especially with all this volatility!
If someone can explain that to me in plain English, I would be grateful.
SBD is so stable that if it goes below $1, you can buy it and guarantee a profit soon.
SBD is what steem owes u. Steem will convert the value of steem to make 1$BD. So if steem is worth 50 US cents, steem will need to convert 2 steem to give u 1$bd. So no matter the value of steem, your SBD will always be worth 1 USD.
Thank you, @foovler. That is an easy-to-understand explanation. Can you help me more please:
1- Who pays for the Steem used to convert the SBD? Is it withdrawn from the reward pool?
2- How does the system know the price of Steem? Does it have a live feed from exchanges?
Thanks mate for explaining it clearly.
Forgot to add.. unless value of steem is zero...
It's a bit complicated but basically the elected witnesses publish a price feed that says what the price of Steem is relative to Steem Dollars. So if Steem goes up, the witnesses increase the feed price and that keeps Steem Dollars at around $1 USD. You can convert from Steem to Steem Dollars and back within the blockchain at any time via this price feed rate.
Thank you, @buggedout. This is a little bit complicated. However, after I read @foovler's response, I am starting to understand it better.
Thank you, both.
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