Steem An incentivized, blockchain-based, public content platform.

Steem Dollars (SBD)
Stability is an important feature of successful global economies. Without stability, individuals across the
world could not have low cognitive costs while engaging in commerce and savings. Because stability is
an important feature of successful economies, Steem Dollars were designed as an attempt to bring
stability to the world of cryptocurrency and to the individuals who use the Steem network.
Steem Dollars are created by a mechanism similar to convertible notes, which are often used to fund
startups. In the startup world, convertible notes are short-term debt instruments that can be converted to
ownership at a rate determined in the future, typically during a future funding round. A blockchain based
token can be viewed as ownership in the community whereas a convertible note can be viewed as a debt
denominated in any other commodity or currency. The terms of the convertible note allow the holder to
convert to the backing token with a minimum notice at the fair market price of the token. Creating
token-convertible-dollars enables blockchains to grow their network effect while maximizing the return
for token holders.
Steem Dollars are referred to with the symbol SBD, an acronym for Steem Blockchain Dollars. Creating
SBD requires a combination of a reliable price feed, and rules to prevent abuse. Providing a reliable price
feed involves three factors: minimizing the impact of an incorrect feed, maximizing the cost of producing
an incorrect feed, and minimizing the importance of timing.
Minimizing Fraudulent Feeds
SP holders elect individuals, called witnesses, to publish price feeds. The elected witnesses are
presumably trusted by those who have a vested interest in the quality of the feed. By paying those who are
elected, Steem creates market competition to earn the right to produce feeds. The more the feed producers
are paid the more they have to lose by publishing false information.
Given a set of trusted and elected feed producers, the actual price used for conversions can be derived as
the median of the feeds. In this way if any minority of individual feed producers produce outliers they
have minimal impact on the actual median while still having the ability impact their reputation.
Even if all feed producers are honest, it is possible for the majority of feed producers to be impacted by
events beyond their control. The Steem network is designed to tolerate short-term corruption of the
median price feed while the community actively works to correct the issue. One example of an issue that
may take some time to correct is short-term market manipulation. Market manipulation is difficult and
expensive to maintain for long periods of time. Another example would be the failure of a centralized
exchange or the corruption of the data published by the exchange.
Steem factors out short-term price fluctuations by using the median price over a period of three and a half
days. The median published feed is sampled every hour on the hou