This is a follow on to @dan article

https://steemit.com/steem/@dan/steemit-s-evil-plan-for-cryptocurrency-world-domination

I was impressed that the creators of Steemit had visions 'so' far and beyond a blogging website. It really got me thinking about how this could all work, and how Steem Dollar could become a 'Stable Currency'. Something which the crypto community is crying out. This is going to involve some hypotheticals, so bear with me.

Let's imagine a few years down the line Steemit takes off, and we have over a million users, and money flowing into the platform buying up Steem (which is essentially voting power on the platform). A market place is created for the community to trade goods and services over, and things are going very nicely.

What does this mean for the Steem Dollar?

First of all, Steem Dollar has it's value linked to the US Dollar, and can be traded on the internal exchange for Steem. Steem Dollar pays a 10% interest rate per annum. At the moment, Steem Dollar is trading at a near 35% discount (0.65USD to 1SD in real terms) to the actual USD. This is because people don't yet view Steem Dollar as a viable investment by itself (well, they view it's value as 35% less than the USD, not bad really), and value Steem thus more highly than Steem Dollars.

Another observation is that you can currently do more things with Steem;

1. Power Up (receive 90% interest p.a currently)
2. Convert to Bitcoin, then whatever you like
3. Sit on them for a while

This is verses Steem Dollar;

1. Sit on them and earn 10% p.a.
2. Convert to Steem

There is also signs that Steem is in it's infancy, and people are actively cashing in Steem dollars at a high rate than people are buying them as an investment, and it's a function of generally not quiet enough money following into Steem to support the $1 price tag. This however can change.

Could Steem Dollar become worth more than a Dollar?
Short answer is Yes. If/when the market place arrives and Steem Dollars provide holders with the third use case, SD could take on a value of a USD. The 10% coupon, with Steem Dollar linked in value to the USD means that feasibly Steem Dollars should be worth more than a USD if there is enough money following through the ecosystem. How much more? At the moment if SD true value was 1USD, the 10% coupon compared to 1% a user would receive in a bank account, we could feasibly see a 10-100% premium when considering compound interest and level of trust in Steem as a whole. This could be the ultimate Stable coin on the Blockchain, as if this situation is ever reached, there will be market makers on both side limiting how far Steem Dollars can move in the short term...

1. If the price of Steem Dollars is too low, people will be able to Invest in Steem, covert it for Steem Dollars and, and use that SD to purchase goods and services relatively cheap. They could also sit on the SD, and get a 10% interest on something they may have paid (for instance) 60cents for. That would 16% in the first year...
2. If the price of Steem is too high, holders of Steem Dollar may sell for Steem to convert however they like. They will be receiving more dollars back than what they invested, and thus goods and services outside the Steem ecosystem just became cheaper.

It's a very interesting concept, and after ready today's article by @dan one which I will be watching ever closer.