Steem Dollars (SBD) are one of the scariest cryptocurrencies in the market because we know nothing about them. Yet Steem Dollars were CoinMarketCap’s ninth-most trending cryptocurrency, with a $2.28 Coin Price on 2 October 2023.

Frighteningly, the only descriptions of Steem Dollars I could find online were Steem’s whitepaper, a six-year-old answer to a Steemit question and a five-year-old Medium post. There is no description of Steem Dollars at Steem’s website, and few articles about them.

So what are Steem Dollars? They intend Steem Blockchain Dollars (SBD) to be stablecoins. A stablecoin is a cryptocurrency that contains a smart contract that makes payment in a fiat currency. For example, the Steem Dollar smart contract is supposed to pay in US dollars.

The hope behind stablecoins is that they will be more stable because they pay in historically stable currencies such as the US Dollar. Unfortunately, Steem Dollars are not stable.

If the Steem Dollar was a true stablecoin was stable, SBD would be worth $1 like Tether (USDT). Yet, the Steem Dollar (SBD) had a $2.26 Coin Price on 2 October 2023. Hence, Steem Dollars are worth over twice the cost of a dollar. In contrast, CoinMarketCap gave Tether (USDT) a $1 Coin Price on 28 October 2023.

Thus, the Steem Dollar is unstable. I consider Steem Dollars unstable because there is no evidence they pay in dollars. To explain, they envision Steem Dollars as convertible notes. A convertible note is a short-term debt instrument that converts to equity (shares) at a future point. For example, when a company is sold, or issues stock.

Therefore, there are no dollars backing Steem Blockchain Dollars. Instead, they promise to have dollars for payment in the future. Hence, a Steem Dollar is an IOU. There is no evidence Steem has the dollars and no guarantee Steem will make payment.