Well, no backed by, but it is supposed to track it.... $.85 doesn't really look like tracking to me.  

But maybe I don't get it.  But your comment doesn't clear things up for me ;).

@bergy I believe you are incorrect.  Check this out:

![Screenshot_2016-08-08_19-40-55aa5b1.png](https://www.steemimg.com/images/2016/08/08/Screenshot_2016-08-08_19-40-55aa5b1.png)

2.41 STEEM per steem dollar.  

Now let's hit up coinmarketcap.com  

![Screenshot_2016-08-08_19-42-574baf0.png](https://www.steemimg.com/images/2016/08/08/Screenshot_2016-08-08_19-42-574baf0.png)
STEEM = 2.10

Now, let's combine, shall we?  

Internal market - 2.41 steem dollar per steem-- so either it's not exactly $1, or the internal market strongly diverges somehow.  

because if we leave the internal market, we find it matches prices on the internal market nearly perfectly:

SD = $.85
STEEM = $2.10

2.10 / .85 = 2.47  ....... just .6 away from what's going on on the internal market.    

#### Point is that I think that the external prices are being counted on the internal market.... and of course as both are markets, they **should** influence one another.  @steemulate seems to have the right direction in terms of patching this issue up.

**I leave this poor reasoning on my part here for posterity. **

when ANY cryptocurrency is launched it will have its ups and downs.  As the community grows and the market matures you will, I have no doubt, begin seeing this all evening out.

Let's also not forget---SteemBacked Dollars (SBD) earn interest ;)

What's good highlighting mean in this context?

Thanks for your detailed explanation.  Let me see if I can get that into the post, and please correct me if I get anything wrong.  I'm testing this IRL on the internal market to get a feel for things.  

BTW,  Thanks for clearing things up, and for making Steem / Steemit / Bitshares / Graphene.  

I'd be lying if I said I wasn't having a total blast with your software :).

PS:  
If posts are edited, do they lose out on SD/SP from upvotes?  If so, why?

Surely it's its own currency.  But... it's supposed to track the dollar.

Actually this has very little to do with BM being an "idiot" w/ 90% garbage ideas.  He has spent quite a bit of time since the early days of bitcoin arguing that there are a few problems needing solved by cryptocurrency:
1)  Scalability
2)  Efficiency (tx speed/volume)
3)  Volatility
4)  Self-Governance

For scalability and efficiency he developed Delegated Proof of Stake (DPOS), which is used in the STEEM blockchain (thanks to the #bitshares community and @dan)

For volatility there are "smartcoins" that use prediction market mechanisms to peg to the value of various real world stocks, bonds, cryptos, currencies, commodities...etc

Self-Governance
It is possible with DPOS based chains for witnesses to be elected and kicked out of power within seconds should they be doing a bad job or a corrupt actor attempting to do something outside the benefit of the system.  Generally 1 share/token = 1 vote...so those with more get more votes.

The design of steem has painstakingly been constructed after Dan learned many lessons in #bitshares.  And I can tell you nowhere near 90% bad ideas come from that guy when it comes to crypto, at least...which is mostly what my experience comes from).

Some of this is still being tested, but it looks like @dan got it pretty dang close right out of the gates this time.

Somehow, I think that you are wrong.  No offence or what have you, but that is my instinct here.  Bitshares had a pretty complex mechanism for creating virtual currencies and I think that carries over to SBD.   But.... fact is, I'd like some detail on this.

Hey, you mind going into more detail?  It sounds like you may get it... and I still do not.  

So-- when I do a 7 day conversion, what happens behind the scenes?  

If the market expects that STEEM will go down, then..... SBD will trend lower because.... ?  

Sorry, it seems to me like you're the best hope of really understanding this mechanism better than I do now :).

High inflation of STEEM one of the most significant risk that's being factored into this 7-day lock-in period.

as pointed out by @hisnameisolllie in his article: [STEEM Dilution Rate - MUCH higher than you might think…](https://steemit.com/steemit/@hisnameisolllie/steem-dilution-rate-explained-currently-much-higher-than-you-might-think) at current level the dilution rate of STEEM is nearly 1% per day. That means the STEEMs you get 7days later is worth ~7% less compared to instant conversion.

In that case, let us all heap praise on @anyx.

Witnesses can, indeed, make changes to help adjust the peg.  Lets not forget we are in Beta and this is the MVP!??? (jeez that is crazy how addicting the MVP is...)

It's not pegged to the outside markets. If the price on bittrex is 0.5$ for 1  SBD you will still receive only 1 steem dollar. It's your decision to then sell it on the market for 0.5$ or not

Add in the interest you get paid and you will see that it gets pretty dang close to evening out and is the best solution out there in crypto for its use case (that actually doesn't rely on a trusted party).  

The market doesn't "disagree" either.  It simply moves a bit further in that direction over a spectrum of sentiments.  ;)

it is its own currency no? like this Australian dollar? meaning it has its own independent value?